The company said it had begun consultations with staff to “effect an orderly wind-down” and had already halted the purchase of wheat – its key raw material – as of 11 June
Britain’s largest bioethanol facility, the Vivergo plant in Hull, is on the brink of permanent closure, threatening 160 jobs and dealing a potential death blow to the UK’s renewable fuel industry. The site’s owner, Associated British Foods (ABF), has warned that a recent UK-US trade agreement signed by Prime Minister Keir Starmer could make the domestic bioethanol sector economically unviable.
The company said it had begun consultations with staff to “effect an orderly wind-down” and had already halted the purchase of wheat – its key raw material – as of 11 June. Although formal negotiations with the government are ongoing, ABF signalled that unless substantial support is secured, the plant will shut its doors by 13 September.
The crisis was sparked by the terms of the new bilateral trade agreement with the United States, brokered in May and due to take effect next week. The deal includes a provision that removes the existing 19% tariff on US ethanol imports, replacing it with a tariff-free quota of 1.4 billion litres — roughly equivalent to the entire current size of the UK ethanol market.
While the agreement has been hailed by Downing Street as a boost for British automotive and steel exports — notably through the reduction of US import tariffs on 100,000 British cars and ongoing negotiations to ease steel tariffs — critics say the benefits come at a steep cost to the UK’s green fuel sector. The government, however, insists that bioethanol producers have long faced economic difficulties unrelated to the US deal.
Vivergo and Ensus — the latter owned by Germany’s Südzucker Group and operating a plant in Teesside — together account for nearly all of Britain’s bioethanol production. Their combined operations support thousands of jobs across manufacturing, agriculture, and logistics. Both firms have warned since early May that the government’s concessions on US ethanol could wipe out their market share, effectively handing dominance to American producers.
ABF told investors it will only reverse its decision to close Vivergo if the government agrees to underwrite the plant’s short-term losses and devise a long-term solution that safeguards the industry. While the company had delayed its closure decision by 24 hours earlier this week, that window is rapidly closing.
A government spokesperson acknowledged ongoing talks and noted that officials and ministers had “consistently engaged” with both ABF and Ensus in recent months. They stressed that challenges facing the bioethanol sector had emerged well before the US deal was finalised. Nonetheless, the government said it would continue working closely with the companies involved to present a viable plan that “protects supply chains, jobs and livelihoods”.
Industry insiders argue that the situation could undermine the UK’s renewable energy targets and hit rural economies hard. Bioethanol, a petrol substitute derived from crops such as wheat, plays a key role in reducing greenhouse gas emissions from transport and supporting agricultural demand.
One ABF spokesperson said the company was committed to working “intensively and transparently with officials to try to find a viable path forward” but warned that the future of the Hull plant now hinges entirely on the outcome of these last-minute negotiations. Unless a breakthrough is achieved soon, Vivergo’s closure could mark a symbolic and material setback for Britain’s renewable fuel ambitions, with concerns that a precedent is being set where trade diplomacy outweighs domestic industry resilience.
