UK bioethanol producers sound alarm over US tariff waivers

Britain's bioethanol industry could become a casualty of the new US-UK trade deal, its producers have warned, seeing little scope to stay competitive without the support of tariffs that have been in place for almost two decades.

Under the May 8 trade deal, the UK secured lower tariffs on its sensitive automotive sector and opened negotiations over its steel exports in exchange for reduced duties on US agricultural products.

The UK agreed as part of the deal to remove a 19% tariff on US ethanol imports and replace it with a quota of 1.4 billion liters, a volume equivalent to the size of its domestic market. The concession has triggered alarm across the British bioethanol sector, where producers have already struggled to compete with low-cost US producers.

A joint statement from the UK's two dominant bioethanol producers, Associated British Foods and Ensus, said May 11 that the policy change had triggered an "existential threat" for the industry and could force both companies to close their plants.

Between their two sites in Saltend, East Yorkshire, and Teeside in the UK's northeast, ABF and Ensus produce over 800 million liters/year of bioethanol.

However, global competition and preferential incentives for waste-based renewable fuels have put growing pressure on both businesses, leaving them exposed to an influx of US supply.

"The operating environment is now impossible," Paul Kenward, CEO at ABF Sugar, and Grant Pearson, chairman of Ensus, said in a joint statement.

EU lawmakers first imposed tariffs on US ethanol as early as 2007, and later followed up with antidumping duties to conserve the region's renewable fuels industry.

After a brief transition period following its exit from the EU, the UK adopted equivalent measures to support local producers to serve demand for its E10 standard petrol blend.

However, even with recent import duties in place at GBP85/cu m ($112/cu m) for denatured US ethanol and at GBP160/cu m ($210/cu m) for undenatured grades, producers were already struggling to stay competitive.

Existing struggles

In its quarterly earnings call April 29, ABF said it could be forced to close or mothball its Vivergo plant in Saltend, reporting that the plant had become a drag on overall profitability for the business.

A spokesperson for Vivergo told Platts, part of S&P Global Commodity Insights, on May 12 that the tariff waiver had made challenges for the business "more acute" but said that the company was still in dialogue with the government over potential support mechanisms.

As wheat-based ethanol producers, negative price swings over the last year have challenged ABF and Ensus, while margins for corn-based supplies in the US have stayed healthy.

Closures of the two major remaining UK plants would curb the production of animal feed and CO2 as byproducts of the manufacturing process, ABF and Ensus said, warning that shutdowns could close off a "promising route" for future production of sustainable aviation fuel.

Additionally, the National Farmers Union has worried that an end to UK bioethanol production could sap domestic demand for wheat production, forcing farmers to the export market.

Potential closures have added to the alarm over UK deindustrialization in the face of low-cost global competition. Ineos, a UK chemicals company, halted its synthetic non-fuel ethanol production at its Grangemouth site in Scotland in January 2025, and the neighboring oil refinery suspended operations in April.

Future outlook

ABF and Ensus argue that UK bioethanol companies still have the potential to become revenue-generating and have called on the government to prop up the industry.

"It's not the facilities that are unviable, the problem is how British officials apply rules and regulations that undermine their competitiveness," said the companies' joint statement.

Market watchers have proved less optimistic. "UK producers have already been struggling, and this might mean that we will see closures," said a trade source.

"It might eliminate UK volumes from the market," said a second.

The US exported 5.81 million barrels of ethanol to the UK in 2024, accounting for 12.68% of total export volumes, according to the US Energy Information Administration. Through February 2025, only 541,000 barrels, or 6.73%, of American ethanol exports have been sent to the UK.