By James Sillars, Business Reporter
The country's largest producer of bioethanol has suspended production and blamed the Government, raising fears for its future.
Vivergo Fuels, bought from BP two years ago by Primark parent firm Associated British Foods, said a collapse in profit margins meant it had taken its £350m plant in Hull offline for the "foreseeable future".
Its statement offered no guarantees to the company's 150 staff on their employment prospects.
Vivergo, one of the Government's Northern Powerhouse Partners, said the market "remained constrained by inaction" in the UK on the EU-led E10 initiative – making fuel producers use 10% bioethanol in petrol by 2020 to cut carbon emissions.
Unleaded petrol currently contains about 5% bioethanol – a renewable fuel made from feed wheat.
Vivergo argues that by not implementing E10 fuel, the Government is not only failing to cut emissions, it is also failing its industry and the 3,000 jobs it supports in the supply chain – mainly farmers.
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Its statement said: "While the plant is offline, we are taking the opportunity to bring forward and extend our annual plant maintenance work in order to maintain employment levels.
"We will closely monitor the market ahead of any plant re-starting.
"In the meantime, we will continue to work with all stakeholders and the Government to support the legislative process and the future roll-out of E10; the simplest, most readily available environmentally friendly option for consumers to help reduce the impact of road transport on our environment and providing stability and confidence in the future of the UK bioethanol industry and the jobs it supports."
The Department for Transport indicated its support for E10 fuel in a renewable fuels policy document in September but outlined several concerns.
They included the fact E10 fuel can not be used in cars which pre-date the year 2000.
A spokesperson said on Tuesday: "Almost doubling the sustainable biofuel supply by 2020 demonstrates our commitment to reducing carbon emissions from transport to tackle climate change.
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"We are on track to make changes to the Renewable Transport Fuel Obligation. This will double the use of renewable fuels, reduce our reliance on imported fossil diesel, and deliver emissions savings equal to taking another
one million cars off the road.
"We are working closely with the industry and motoring groups to consider the issues around a potential introduction of E10 and the role government can play in this."
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