ABF announces closure of bioethanol plant after Government fails to support Vivergo

Associated British Foods plc has announced the closure of Vivergo Fuels, its bioethanol production plant in Hull, UK, which also produces high-quality animal feed for UK farms.
The Government will not support a business that would be profitable under a sensible regulatory environment, and which underpins billions of green investment into the region.
The plant’s viability was first undermined by the way UK regulations have been uniquely applied to domestic bioethanol producers - an approach that no other country in the world has taken - and has since been severely worsened by the Government’s decision in May to remove tariffs on US ethanol imports.
Over the past decade, ABF has invested more than £700 million in Vivergo, sustaining operations through extended periods of losses caused by regulatory distortions and market imbalances.
While the firm worked to absorb these losses in the hope that a fair and competitive framework could be agreed, the tariff-free access for US imports granted under the UK-US Trade Deal removed any prospect of returning to profitability without corrective intervention.
On 9 May, the UK’s two major bioethanol producers jointly wrote to the Prime Minister warning that the removal of the 19% tariffs on American ethanol made domestic production “commercially unviable.” Formal negotiations with Government began on 26 June, but it is now clear that the Government has chosen not to deliver a solution.
A spokesperson for ABF said: “It is deeply regrettable that the Government has chosen not to support a key national asset. We have been left with no choice but to announce the closure of Vivergo and we have informed our people.
“We have been fighting for months to keep this plant open. We initiated and led talks with Government in good faith. We presented a clear plan to restore Vivergo to profitability within two years under policy levers already aligned with the Government’s own green industrial strategy.
“In making this decision, the Government has thrown away billions in potential growth in the Humber and a sovereign capability in clean fuels that had the chance to lead the world. Hugely significant investment was lined up to go into the area, from ABF and other companies. Jobs in clean energy will now move overseas – principally to the US but also to other countries with a more sensible regulatory environment.
“This plant should always have been profitable under the right regulatory environment, as similar plants in Western Europe demonstrate. The Government’s own commissioned analysis spells out that Vivergo could and should be profitable under that environment.
“The loss of Vivergo will be felt most acutely by our dedicated workforce and their families and by the thousands whose livelihoods depend on our supply chain – from farmers to hauliers and engineers. We are hugely disappointed, on their behalf, that the press was informed of this decision before we were told – and before we had a chance to communicate to our staff. Our focus is now on supporting the working people at our plant in Hull.”