UK bioethanol producer Vivergo is proceeding with plans to close its 416mn litres/yr Saltend plant in eastern England, but has outlined ways the government could prevent this.
Vivergo has said deliveries of wheat will cease at the end of July, and redundancies will begin in August, ahead of closure in September. It already said it had stopped buying wheat in June.
The decision to close was made by Vivergo's parent company, food and ingredients group Associated British Foods (ABF), after a US-UK trade deal agreed in May that allowed duty-free imports of up to 1.4bn l/yr of US ethanol.
ABF confirmed at the end of June that it was in talks with the government, but no timeline has been put on the process. The first stage of the talks was for UK producers, like Vivergo and Ensus, operator of the 400mn l/yr Wilton bioethanol refinery in northeast England, to submit their strategic business cases. Ensus has said it could close Wilton.
Covering costs
Vivergo told Argus it wants the government to cover losses of £3mn/month, or £35mn/yr, which it said have been incurred as a result of government decisions.
Previously, ABF proposed a support package of £75mn/yr, for up to two years, for the entire UK sector.
In the longer-term, Vivergo said there is appetite from private investors to finance future projects. It pointed to a recent initial agreement to supply ethanol for a prospective alcohol-to-jet sustainable aviation fuel (SAF) plant planned by hydrogen developer Meld Energy at Saltend.
Meld told Argus that while the project will be "underpinned by government support mechanisms", the "longer term plan is to eventually eliminate reliance on subsidy through reducing cost of production which will likely be through scale, efficiency and technology advancement".
Meld chief executive Chris Smith also told Argus that sourcing bioethanol directly from Vivergo helped "risk management". He said locally-produced bioethanol brings "greater certainty of supply" and "reduces local infrastructure requirements."
Vivergo said failure to support the bioethanol sector would be "shortsighted", because in order to meet projected increases in UK SAF demand by 2035 the country would need "seven more Vivergos", or a more than 3.5 times increase in domestic bioethanol production.
Regulation frustration
Vivergo said another key way for the government to help is to tackle the eligibility of unrefined liquid dextrose ultrafiltration retentate (Uldur) for double counting under the UK's renewable transport fuel obligation (RTFO).
Uldur, which is classfied in the UK as a waste ethanol feedstock, makes up a significant share of the total import pool from the US.
Biofuels made from certain raw materials classed as "wastes" and "residues" under the RTFO receive double the amount of renewable transport fuel certificates (RTFCs) for every litre of fuel produced. RTFCs are tradeable credits primarily generated by the sale of biofuel-blended fuels and are used to help obligated parties meet the RTFO mandate.
Vivergo says Uldur-derived ethanol is a co-product of the wet milling process rather than waste, and its eligibility for double counting is inconsistent with the RTFO's decarbonisation aims. It said producers using Uldur are able to make double-counting bioethanol using a more carbon-intensive production process than the fermentation of wheat, yet crop-based ethanol produced by Vivergo is ineligible for double counting.
Vivergo said producers of double counting product get an additional certificate worth around £260/t, meaning it is unable compete with the low prices of Uldur-based bioethanol importers from the US. And these will now be able to enter the UK duty free under the new US-UK trade deal.
The UK government is consulting on whether to continue classing Uldur as eligible for double counting.
Other changes proposed by Vivergo include increasing the ethanol mandate in road fuel, from E10 to E15 or E20. Vivergo previously said an E15 mandate could boost demand in the UK by 660mn l/yr. It also highlighted the potential for increased bioethanol use in marine and aviation sectors.
Capturing the moment
Another key point in the talks with the government is the capture of CO2, a by-product of bioethanol production, Vivergo said.
The company said it is 6-9 months away from having carbon capture facilities ready, at which point it would be capable of meeting around a third of the UK's 600,000 t/yr CO2 demand.
Ensus captures 250,000 t/yr of CO2 at its 400mn l/yr bioethanol refinery in Wilton, northeast England.
Vivergo said losing this would mean increased CO2 imports, and noted its output of high-protein animal feed as a co-product of wheat-to-ethanol production, which agricultural firms would otherwise have to import at a higher environmental cost.
The National Farmers Union has previously said that losing the UK bioethanol industry would be a "huge blow", as it currently has the "capacity to purchase around 2mn t of wheat each year", so without it "farmers would lose a reliable market for their feed wheat."
