The UK’s bioethanol industry, once hailed as a cornerstone of green fuel innovation, is facing a dramatic shake-up after the government confirmed it will not intervene to save its two largest producers from closure. Vivergo Fuels, based in Hull and owned by Associated British Foods, will begin winding down operations on Monday, August 18, 2025, with the first wave of layoffs hitting on Tuesday. Ensus, the German-owned operator of the Redcar plant on Teesside, is also at risk of shutting its doors, leaving the future of hundreds of workers and a vast supply chain in jeopardy.
This decision follows months of mounting pressure on the government to support the sector after a US-UK trade agreement, signed in May 2025, removed a 19% tariff on ethanol imports from the United States. The new arrangement, which allows up to 1.4 billion litres of US ethanol—roughly the size of the entire UK market—to be imported tariff-free, has fundamentally altered the economics of domestic bioethanol production. According to a report from BBC, both AB Foods and Ensus had previously warned that without government intervention, the market would become “commercially unviable.”
For the 160 workers at Vivergo’s Saltend plant, the reality of redundancy is already setting in. Layoffs are scheduled to begin on Monday, and the ripple effects are expected to be felt far beyond the plant gates. In total, the two facilities directly employ 270 people, but their closure threatens the livelihoods of thousands more throughout the supply chain—from local wheat farmers to logistics firms and industrial gas suppliers.
The government, however, has stood firm in its decision not to offer a rescue package. A spokesperson explained, “We have worked closely with the companies since June to understand the financial challenges they have faced over the past decade, and have taken the difficult decision not to offer direct funding as it would not provide value for the taxpayer or solve the long-term problems the industry faces.” This rationale, reported by Politico, underscores a broader reluctance to use taxpayer money to prop up sectors facing structural challenges, even when the stakes are high for workers and regional economies.
The bioethanol industry’s troubles are rooted not just in international trade but also in domestic policy delays. Industry sources have pointed to government inaction over the migration to petrol with higher bioethanol content—such as E10 petrol—as a factor that has hurt UK producers. While the government has set an ambitious target for 10% of all fuel used in planes to come from sustainable sources by 2030, including bioethanol, the immediate prospects for the sector look grim.
Vivergo’s parent company, AB Foods, expressed deep frustration at the outcome. “In making this decision, the government has thrown away billions in potential growth in the Humber, a sovereign capability in clean fuels that had the chance to lead the world,” the company told BBC. AB Foods insists that, under the right regulatory environment, the plant should have remained profitable, as similar facilities in western Europe continue to do. The company’s statement was unequivocal: “This plant should always have been profitable under the right regulatory environment, as similar plants in western Europe demonstrate.”
For Ensus, the situation is equally precarious. The Redcar plant is not only a major producer of bioethanol but also supplies 30% of the UK’s commercial carbon dioxide, a critical input for industries ranging from soft drinks to medical and nuclear applications. The government has acknowledged the importance of this supply, stating it will “continue to work on measures to ensure the resilience of the CO2 supply chain.” Yet, with Ensus at risk, there are real questions about how these needs will be met if domestic production falters.
The broader impact on UK agriculture is also significant. The bioethanol sector buys thousands of tonnes of wheat from British farms each year, providing a stable market for growers and supporting rural economies. The closure of these plants could leave farmers scrambling for alternative buyers, potentially depressing prices and hurting an already fragile agricultural sector.
Trade unions have been vocal in their criticism of the government’s approach. Charlotte Brumpton-Childs, national officer for the GMB union, lamented, “They’re not numbers in a spreadsheet. These are lives put on hold and communities potentially devastated.” She argued that the government was not living up to its promises on green energy and industrial strategy, adding, “A clean energy industrial strategy means nothing if we cannot protect plants long enough to deliver clean energy jobs here in the UK.”
The US, meanwhile, has long supported its ethanol industry with subsidies and tax credits for corn farmers in states like Iowa, Illinois, and Nebraska. These measures have helped keep US ethanol prices low, giving American producers a significant competitive edge over their UK counterparts. With the new trade deal in place, British producers now find themselves squeezed by cheaper imports, unable to match the scale or cost base of their American rivals.
Government officials have maintained that they are not abandoning affected workers. “We recognise this is a difficult time for the workers and their families,” a spokesperson said. “We will work with trade unions, local partners and the companies to support those affected.” However, the absence of direct financial support leaves many wondering what, if any, meaningful assistance will be forthcoming.
The closures also raise questions about the UK’s long-term commitment to green fuels and energy independence. While the government has ambitious goals for sustainable aviation fuel and other renewables, the loss of domestic bioethanol capacity could make the country more reliant on imports, undermining efforts to build a resilient, homegrown clean energy sector.
As the dust settles, it’s clear that the fate of Vivergo Fuels and Ensus is more than just a story about two companies. It’s a test case for the UK’s industrial policy, its approach to international trade, and its willingness to back up climate ambitions with concrete support for domestic industries. For now, though, the workers at Hull and Redcar—and the communities that depend on them—are left to face an uncertain future.
With the government’s decision now final, the next chapter for the UK’s bioethanol sector will be written not in boardrooms or Whitehall offices, but in the everyday lives of those who kept the industry running.
