The UK’s largest bioethanol plant is set for closure with the loss of 160 jobs after the government confirmed it would not offer a bailout deal to the facility in Lincolnshire.
Owners Vivergo, a subsidiary of Associated British Foods, had warned that the plant would close without government support, and sources at the company have told Sky News the wind-down process is now likely to begin.
ABF, which also owns Primark, has not formally confirmed its closure plans and is yet to comment.
Vivergo have blamed the UK’s trade deal with the United States, which ended a 19% tariff on imported ethanol, for making the plant unviable.
Ethanol tariffs were cut along with those on beef as part of the UK-US deal, which focused on reducing or removing Donald Trump’s import taxes on UK cars and aerospace parts.
The plant, which converts wheat into the fuel typically added to petrol to reduce carbon emissions, was already losing £3m a month before the trade deal, with industrial energy prices, the highest among developed economies, cited as a major factor.
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Vivergo and ABF have warned of the threat to the plant since the spring, but had hoped negotiations with the government would lead to an improved offer by the end of the week. On Friday morning, they were told there would be no bailout.
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Government sources said they had employed external consultants to provide advice, and pointed out that the plant had not been profitable since 2011.
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A government spokesman said: “Direct funding would not provide value for the UK taxpayer or solve the long-term problems of the bioethanol industry.”
“This government will always take decisions in the national interest. That’s why we negotiated a landmark deal with the US which protected hundreds of thousands of jobs in sectors like auto and aerospace.
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“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.
“We recognise this is a difficult time for the workers and their families and we will work with trade unions, local partners and the companies to support them through this process.
“We also continue to work up proposals that ensure the resilience of our CO2 supply in the long-term in consultation with the sector.”
