A flagship £1.25 billion investment in sustainable aviation fuel (SAF) could be diverted overseas unless the UK Government intervenes to stabilise the domestic bioethanol market, energy firm Meld has warned.
The warning follows a crisis at Hull-based Vivergo Fuels, Britain’s largest bioethanol producer, which has entered emergency discussions with ministers after a recent UK-US trade deal removed tariffs on US imports. The change has exposed the UK industry to subsidised competition and created a pricing imbalance, putting Vivergo’s operations at risk.
Meld Energy, which announced plans earlier this year for a SAF facility at Saltend Chemicals Park, said the viability of the project is now in doubt. The company cited the presence of an integrated low-carbon supply chain as a precondition for UK investment.
Meld’s chief executive, Chris Smith, said the co-location of a bioethanol plant is essential to their operating model. Without Vivergo’s input, the firm is assessing alternative sites outside the UK.
Vivergo is preparing to scale down production, with its final wheat delivery scheduled from Lincolnshire this week. The company has informed suppliers that it will only meet existing contracts while trade conditions remain uncertain.
Managing director Ben Hackett said the potential closure would derail plans for a regional fuels cluster in Hull. He warned of significant knock-on effects for jobs, investment, and the UK’s ability to meet decarbonisation targets.
Vivergo, a subsidiary of Associated British Foods, employs over 160 people and has started staff consultations. It has said production may cease by mid-September if no support package is agreed.
The Government confirmed formal talks began last month. A spokesperson said ministers are working closely with the company to protect jobs, supply chains and local economies.
Similar discussions are taking place with Ensus, another major UK bioethanol producer based in Teesside. Both companies say that current trade and regulatory frameworks have created an unsustainable environment for British biofuels.
External consultants have been appointed to advise on the design of a potential support package, with negotiations ongoing.
