Second UK bioethanol supplier warns of closure after concessions for US trade

A second UK bioethanol producer has warned it faces closure after the new UK-US trade deal has threatened to overwhelm the local market with American imports, according to an industry lobby.

Teeside-based producer Ensus said that the new trade deal agreed between the US and UK in May had "fundamentally undermined its business position" and could force it to shut its 400 million liters/year Wilton plant.

The plant closure would come despite weeks of crisis talks with the UK government over the fate of its bioethanol sector, which is dominated by two producers -- Ensus and Vivergo Fuels.

Both companies have warned that their combined capacity of over 800 million liters/day could now be at risk after UK Prime Minister Keir Starmer promised tariff relief for US agricultural producers in talks with US President Donald Trump to encourage concessions for markets like automotives.

Under the proposed deal, the UK offered to cut its 19% tariffs for its US bioethanol imports to zero for 1.4 billion liters of supply, a volume estimated to be roughly equivalent to the size of the entire domestic market.

With access to cheap corn-based feedstock, US producers have been treated as an existential threat to the European producers for decades, prompting the EU to impose its first tariffs on supplies as early as 2007.

Faced with the prospect of unprecedented access for US producers to the UK market, Vivergo owner Associated British Foods has already warned that its plant in Humberside cannot survive without additional support.

In an appeal earlier this month, ABF warned that it would be forced to make a decision on closing the plant before its June 15 contract renewal for its wheat feedstock, but has since appeared to extend its deadline.

Ensus did not disclose expected timelines before it decides on the closure of its site.

Demand-side support

Neither producer has explicitly called on the government to reimpose tariffs, and has instead campaigned for demand-side support.

ABF called on the government to lift ethanol blending limits from 10 to at least 15%, and has pushed for Westminster to incentivize bioethanol use in the production of sustainable aviation fuel.

Under UK law, jet fuel suppliers are obliged to make up at least 2% of deliveries with SAF in 2025, rising to 10% by 2030, but policy incentives are heavily slanted to the use of waste-based supplies.

Ensus is working with ABF to lobby Westminster to support the UK bioethanol demand market to exceed the US quota level, and to echo opportunities in the SAF market.

"We are part of the solution to decarbonising the UK's chemical industry and producing important products for the future, such as sustainable aviation fuel," said a statement from Ensus Chairman Grant Peterson.

He warned of a "catastrophic knock-on effect" for the UK economy if the industry fails, warning of 100 potential job losses at the Ensus plant and thousands more across its supply chain.

Suspension of its operations at Wilton would also result in a halt to the production of ethanol byproducts such as animal feed and carbon dioxide used in the food and drink manufacturing sector, the statement said.

Before the UK-US trade deal dealt a new blow to the market, negative price movements for the UK's wheat-based producers had already made economics challenging over the last year. However, with the right policy support, Ensus and Vivergo argue that both businesses can stay profitable.

Platts, part of S&P Global Energy, assessed T1 FOB Rotterdam ethanol barges at $532/cu m June 16, compared to the $572/cu m for T2 supply.