UK Hydrogen Firm Warns of Spillover From Ethanol Plant Closures

(Bloomberg) -- Nascent green energy companies that are needed to decarbonize the UK warned they would be hurt by the closure of the country’s ethanol industry.

British ethanol makers are facing imminent shutdown due to competition from a wave of cheap product unleashed by a deal with the US that lifted tariffs. It’s “critical” that the Vivergo Fuels plant remains open to support the wider development of sustainable fuels in northeast England, said Richard Clark, development director at Meld Energy. 

Speaking at a stakeholder meeting at the Saltend Chemical Park in Hull, where Vivergo is based, Clark said Meld is working on a project to combine hydrogen with Vivergo’s ethanol to make sustainable aviation fuel. Should Vivergo have to close, Meld would be reliant on imports and may have to move their planned 100-megawatt hydrogen development to a different location. 

The UK’s biofuel industry is under growing pressure from cheaper American feedstock of both hydrotreated vegetable oil and ethanol. Greenergy, which is backed by commodities-trading giant Trafigura, has begun to shut down of one its biodiesel plants amid uncertainty about demand. Both of the country’s ethanol producers, Vivergo and Ensus, are at risk of closing, with ramifications for other industries beyond transport fuel. 

The loss of Vivergo “will put almost every industrial investment in green energy on notice,” said Neil Griffiths, commercial and transformation director at Vivergo. “We built the plant and waited 10 years for policy to deliver the market,” which is set to be thrown away by the US-UK trade deal’s elimination of tariffs on a huge volume of ethanol imports, he said.  

There are also more local concerns. Another plant closure at Saltend could deter other developments, said Patrick Pogue, group director for growth and innovation at PX Group, which operates the site.

“Investors will want to go to sites where they know they can develop the project, but they also want to be in successful sites,” Pogue said.

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