Data story: UK-US trade deal could reshape the biofuels sector
May 12, 2025
When the UK and US signed a new trade agreement, the focus was on headline sectors: steel, cars, whisky. But a quieter clause — the removal of tariffs on up to 1.4 billion litres of US ethanol — may have the most lasting impact. This decision has set off alarm bells in the UK biofuel industry and raised fundamental questions about energy strategy, trade policy and sustainability.
UK bioethanol industry faces a flood of imports
The UK’s 19% import tariff on US ethanol is gone. In exchange, British carmakers and steel producers gained better access to American markets. But for the UK’s bioethanol sector, this “win” comes at a high price.
Producers like Ensus and Vivergo Fuels, which run major bioethanol plants in Teesside and Hull, warn that the deal could wipe out domestic production. Why? Because US ethanol, mostly made from subsidised corn, is cheaper to produce and ship at scale. Without tariffs, British producers say they can’t compete.
"If these measures go ahead, this will collapse the UK’s bioethanol market,” said Richard Royal, Head of Government Affairs at Vivergo. “We’ll see hundreds of jobs go and serious environmental consequences too.”
British ethanol is primarily made from wheat, with stricter emissions and sustainability standards. It supports local farms and helps fuel companies meet renewable transport fuel targets through E10 petrol. If American imports dominate, much of that local supply chain could vanish fast.
Big oil’s biofuel pivot is accelerating
Globally, however, biofuels are booming. According to Rystad Energy, over 40 large-scale biofuel projects have been launched in the past two years. Oil majors like bp, TotalEnergies, Chevron and Shell are investing heavily in renewable diesel, ethanol and sustainable aviation fuel (SAF).
bp is building capacity in Brazil through its bp Bunge Bioenergia venture. Chevron and Shell are expanding renewable diesel output. And TotalEnergies has converted an oil refinery in France into a biorefinery, producing 500,000 tonnes of renewable diesel a year — much of it from waste.
In fact, waste-based fuels are the big shift. TotalEnergies plans to get 75% of its biofuel feedstock from used cooking oils, animal fats, and forestry residues by the end of 2024. These advanced biofuels avoid the land-use, food security and emissions concerns associated with first-generation ethanol.
What role will ethanol play in the UK’s net-zero plan?
The UK has committed to net-zero emissions by 2050. While electric vehicles dominate the discussion, biofuels still have a key role in hard-to-electrify sectors like aviation, shipping and heavy-duty transport.
Ethanol, blended into petrol, helps meet the Renewable Transport Fuel Obligation (RTFO). But its future isn’t guaranteed. With US imports now tariff-free, local producers may scale back or shut down entirely, risking energy security and domestic investment just as the country needs more, not fewer, green jobs.
And while US ethanol is cheaper, it isn’t necessarily cleaner. Its production relies heavily on industrial corn farming, which brings its own environmental challenges. UK-made ethanol typically has a lower carbon footprint and a clearer sustainability chain.
A strategic energy test
The ethanol clause in the trade deal is more than a technical detail — it’s a stress test for how the UK plans to manage its energy transition. Will it back homegrown green industries, or prioritise trade flexibility at their expense?
TotalEnergies’ ‘Mobility Revolution’ report suggests biofuels won’t disappear — but their use will evolve. As EVs expand and green hydrogen becomes more viable, biofuels will shift into aviation and long-haul transport, where they remain more competitive.
To stay in the game, the UK biofuel industry needs clarity: support for advanced biofuels, incentives for waste-based feedstocks, and a level playing field against heavily subsidised imports.
