Explosive Alert: 5 Urgent Reasons AB Foods’ UK Biofuel Plant Could Shut After US‑UK Tariff Deal
Published: June 2025-
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Associated British Foods (AB Foods) has issued a stark warning: unless the UK government steps in, its Vivergo bioethanol plant near Hull may be shut by September. The company blames a US‑UK tariff deal that removes duties on ethanol imports—leaving domestic producers unable to compete. Here are five urgent reasons this crisis matters.
1. Tariff-Free US Ethanol Floods the UK Market
The recent trade agreement lifts 19% UK tariffs on up to 1.4bn L of US ethanol—an annual volume matching domestic demand.
Under the deal, imports can now enter tariff-free, undercutting local production costs :contentReference[oaicite:1]{index=1}.
2. Vivergo Losing £3 Million Monthly
AB Foods has revealed that its sugar and bioethanol operations, which include the Vivergo plant in Hull, are currently operating at a significant financial loss—estimated at around £3 million per month. This sustained pressure has been attributed to unfair market conditions created by the recent UK-US trade agreement, which slashed tariffs on imported American ethanol. With US producers able to sell at lower prices, UK-made ethanol has become commercially unviable. Vivergo’s CEO expressed deep concern, stating that the company has limited options if no government action is taken. The plant, once a flagship for green fuel innovation, may soon face mothballing or permanent closure, cutting off a key domestic supply chain for renewable transport fuels and putting hundreds of direct and indirect jobs at risk.
3. 160 Jobs Now at Risk in Hull
Vivergo employs around 160 staff directly, along with thousands in its supply chain.
The potential closure would devastate local employment and threaten broader green fuel plans .
4. Supply Chain and SAF Ambitions Jeopardised
Vivergo provides bioethanol for road fuel, animal feed, and CO₂ for food industries. Its closure would damage UK green-fuel infrastructure and disrupt sustainable aviation fuel projects .
5. Industry Demands Urgent Government Support
Facing mounting losses and an uneven playing field, AB Foods is calling on the UK government to step in with both immediate relief and strategic long-term solutions. The company has urged ministers to raise the national ethanol-blending target from the current E10 (10% ethanol content in petrol) to E15 or higher, aligning the UK with countries like the US and Brazil, where higher blends are standard. This shift would instantly boost demand for domestically produced bioethanol and provide critical breathing room for producers like Vivergo.
In addition to regulatory changes, AB Foods is seeking up to £150 million in targeted financial support to offset operational losses and invest in future-proofing the sector. The plea has gained traction, with other major UK producer Ensus and industry trade bodies such as the Renewable Transport Fuel Association echoing the call. They warn that without swift intervention, the UK risks losing not only its domestic ethanol manufacturing capacity but also undermining its renewable energy targets and rural employment. The government, they argue, must act decisively to prevent long-term damage to this strategically important green industry.
Next Steps & Implications
AB Foods has begun redundancy consultations and extended its deadline pending government talks. UK ministers have expressed concern and are reviewing options, but the clock is ticking.
The outcome could determine whether the UK maintains homegrown biofuel supply or cedes the market to cheaper US imports—impacting energy security, jobs, and climate targets.
For the latest updates, visit our Energy & Policy Hub or see official reports from the UK Government and Reuters Business.