Vivergo Facility on the Brink of Closure

The smell of yeast still hangs in the air in the Vivergo facility, but the machines have fallen silent. More than 100 trucks usually drive through here every day, carrying 3,000 tons of wheat. It is ground, fermented, and distilled, with the end product being bioethanol, a renewable fuel that is then mixed in E10 petrol.

A Turbulent Journey

The structure took a few years to build and required considerable investments, but it is now on the verge of closure. Management and employees are waiting for the government’s last-minute intervention, but time is running out. The work has already been affected by a US rival and has lost around £3 million per month. Vivergo and Ensus, based in Teesside, have been affected by US companies earning double subsidies.

Impact of US-UK Trading Agreement

The US-UK trading agreement has enabled 1.4 billion liters of American ethanol to enter the British market tariff-free, which has had a devastating impact on Vivergo. According to Ben Hackett, managing director of Vivergo, "We effectively gave the US producer the entire British market. If we had the same support that the US industry has, if we could use genetically modified plants, we would not need this tariff. We could be able to compete."

Devastating Consequences for Workers

The closure of Vivergo would have a devastating impact on its 160 employees, many of whom live in Hull and are nervous about alternative opportunities in the region. Mike Walsh, a logistics manager who has been working at the plant for 14 years, said, "It is not a great place at the moment. It is a very well-paid, very highly qualified role, and you have a chance in an area that does not pay as well, not as well as what people want."

Potential Ripple Effects

Thousands of others could be affected by the closure of Vivergo, including transport companies that may have to lay off truck drivers and farmers who could suffer a blow. Vivergo makes bioethanol with wheat, which is bought from farms in Yorkshire and Lincolnshire. The National Farmers Union has sounded the alarm, stating that biofuels are extremely important for the plant sector and that their domestic demand of up to two million tons can be very important to balance supply and demand.

Industry’s Plea for Help

The industry is asking the government to help, with Vivergo saying that it needs financial support temporarily, but the government needs to create a regulatory and commercial environment in which it can thrive. The rules that award double subsidies for companies that use waste products in their bioethanol need to be changed, as these rules are currently being used by US companies that make ethanol from a by-product of corn processing.

Government’s Response

The government has been in talks with the company since June, but the time to talk is almost over. The government has stated that it will continue to take proactive steps to overcome the long-term challenges faced by the industry, but a concrete plan is yet to be announced. The industry leaders are asking the ministers to increase the benzene content of the prescribed renewable fuel from 10% to 15% and for an expansion into aviation fuels, which would enable British companies to compete.