Tariff removal sparks industry concerns
The deal outlined plans to remove a tariff on US bioethanol imports into the UK. It was unveiled on May 8 and has been labelled as “disastrous”. The industry currently produces around 840 million liters of bioethanol per year.
Prior to the deal, any US ethanol imported into the UK was taxed at 19%.
The UK is currently home to two ethanol plants — Vivergo in Saltend near Hull and Ensus in Teesside. Their combined output from is equivalent to around 95% of the ethanol currently required in UK petrol. This is on a basis that the fuel must be 5.5% ethanol. And around 50% if blending was 10%, according to biofuels trade group Renewable Transport Fuel Association (RTFA).
Industry reactions and potential plant closures
Much of the industry has reacted to the news over the last few days. This includes both the chief executive of ABF Sugar, which owns Vivergo, and chairman of Ensus. Meanwhile RTFA published on social media that the tariff removal would have “catastrophic consequences” for the UK industry.
“This vital sector is now facing imminent collapse because of the trade deal,” the executives said in a joint statement on Sunday May 11, adding that “in our current situation, we will have to close these plants.”
This is despite the fact that both plants would be able to produce sustainable aviation fuel (SAF). And do so via an alcohol-to-jet pathway. The executives highlighted it was a “central ambition of the Prime Minister’s government”. The statement followed the UK’s signing into law of the SAF mandate at the end of 2024. It required that a 2% share of SAF be blended into jet fuel in 2025. In addition, it required 10% by 2030 and 22% by 2040.
“But without a stable domestic ethanol base, one promising route for British SAF production will struggle to take off,” the statement said.
Broader impacts on agriculture and domestic supply chains
The UK SAF mandate includes a cap on the use of SAF made through the hydrotreated fatty acids (HEFA) pathway using feedstocks such as used cooking oil (UCO). This will begin in 2030 with the cap set at 71% of the total SAF volume in the UK versus 100% at present, declining to 35% in 2040. This is designed to incentivize the production of SAF from other pathways such as alcohol-to-jet.
“This decision has major repercussions not just for the staff at the two large UK bioethanol plants who now face a very uncertain future, but for the wider supply chains that these plants support,” RTFA said on LinkedIn on Monday May 12.
The association warned of the impact on the UK wheat industry, which supplies the Vivergo plant, calling the prouder a “major buyer” in the northeast for feed wheat, “which will have a direct impact on farmers in that region; and also produce animal feed which many livestock farmers rely on and which provides a home-grown alternative to imported soya-based feeds,” the post said.
Vivergo, which also relies on sugar for feedstock, has had patchy production over the last several years. The subsidiary at regular occasions mothballed the plant or ran it well below its 420 million liters per year capacity. Although in the third quarter of 2022 the ethanol plant was said by AB Sugar to be ramping up much closer to its nameplate capability.
“Without domestic bioethanol, all UK petrol supplied will need to be blended with a minimum of 5.5% imported bioethanol instead (to comply with the EN228 standard),” RTFA said on May 12, adding that any change in future US bioethanol availability “could then leave the UK with serious fuel security issues if our industry has already closed.”
Increased US ethanol imports post-E10 implementation
The UK saw a significant uptick in US ethanol imports after September 2021. This was when the country moved to a fuel standard of E10 (up to 10% ethanol, at least 90% petrol).
At the beginning of 2023, Crop Energies, which owns Ensus, noted that production of ethanol in 2022 had likely fallen. But demand is likely to have increased with extra consumption year on year in markets where E10 has risen. For example, in the UK, France and Sweden.
The Ensus plant is 100% reliant on corn as a feedstock. And for long stretches over the past few years has sharply reduced or suspended production because of thin or negative margins.
In 2023, Crop Energies said it would invest up to €100 million ($112 million) in the Ensus facility in a bid to enhance profitability and reduce emissions.
Growing US ethanol usage in the UK
The UK government regularly produces updates showing the volume of biofuels used in the UK to meet blend mandates. This is given alongside details of the feedstock used and the origin supplied. But the data is published in arrears, with only last year’s data currently available.
Nonetheless, the third provisional release of data for 2024 shows that 1.44 billion liters of ethanol have been accounted for under the Renewable Transport Fuel Obligation framework in 2024.
That figure is already 40 million liters above the full 2023 data, when 1.4 billion liters were delivered. The final 2024 data set will only be fully available in November 2025. But the volume of ethanol supplied is likely to increase when the full data is available.
Rising ethanol imports and their impact
Of the volume of ethanol supplied in 2024, the vast majority came from US-based feedstocks, typically related to corn-based ethanol. UK data shows that 701 million liters of ethanol came from the US. This was at 48.6%, just shy of half the entire supply.
The US has been a major supplier of ethanol to the UK largely since the country’s exit from the EU. This meant US ethanol imports were no longer subject to dumping duties that had been imposed on US exports into the bloc.
That came soon before the UK government increased the volume of ethanol that could be blended into the country’s petrol mix. This went from a 5% minimum, known as E5, to 10%, or E10.
But the volume of imports from the US have already picked up sharply. 2023 data shows 626 million liters supplied that year, amounting to 44.5% of the entire supply.
Compared with 2022, however, total US ethanol imports were just 343 million liters, or 27.6% of total UK ethanol supply, according to the UK data.
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