150 jobs at risk as Hull biofuel firm Vivergo stops production

By Hull Daily Mail | Posted: 5 Dec 2017

A Hull-based biofuel producer has stopped production and may not reopen, putting 150 jobs in risk.

In 2012 Vivergo Fuels, the UK’s largest bioethanol producer, opened its £350m plant in Saltend and runs commercial offices in Hessle, but now management has decided to cease production “for the foreseeable future”.

Bioethanol prices have fallen significantly over the last six weeks, which managing director of the firm, Mark Chesworth, says is primarily a reflection of legislative uncertainty regarding the Department for Transport’s Renewable Transport Fuels Obligation, which was announced in September.

Mr Chesworth said the company reluctantly accepted the proposals but are “extremely concerned” by the decision not to introduce a framework for the roll-out of E10 fuel.

Vivergo Fuels site at Saltend Chemical Park

The company – part of Associated British Foods – says it supports 3,000 supply chain jobs around the region but has seen profit margins fall in recent weeks.

Annual plant maintenance works are currently taking place at the plant “in order to maintain employment levels” and no redundancies have yet been made.

Read more: Why Hull could be a 'global force in green energy' after Siemens creates 2,000 jobs

A statement from Vivergo said: “We reluctantly welcomed the Government’s Renewable Transport Fuel obligation proposals in September, but have remained extremely concerned that there is no roll-out framework for E10 in the UK, the absence of which could have serious consequences for the long-term future of the UK bioethanol industry.

“Over the past six weeks we have seen bioethanol prices fall significantly, impacting Vivergo profit margins further.

"Whilst there have been some supply increases this year, the bioethanol market in the UK remains constrained by the Government’s inaction.

“As a result of these market conditions and legislative uncertainty, we have taken the decision to take our production facility offline for the foreseeable future.

Mark Chesworth, managing director at Vivergo Fuels

“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.”

The firm says losses have risen due to government delays in making oil companies use 10 per cent bioethanol in petrol.

Bioethanol is a renewable fuel, made from organic material, in Vivergo’s case wheat, which is then blended into petrol to cut carbon emissions.

READ MORE: Vivergo Fuels fears 150 jobs could go at Saltend plant without Government help

Emma Hardy, MP for Hull West and Hessle, has written to Secretary of State for transport Chris Grayling, blaming the potential job losses on “political inaction”.

In the letter she said: “Mark Chesworth, managing director of Vivergo Fuels has told me that whilst this fall in price has, in part resulted from changes to supply, it is primarily a reflection of legislative uncertainty around the future of the Department for Transport’s Renewable Transport Fuels Obligation.

Wheat is used to make bioethanol fuel at the plant

“Having already made over £400m investment, predicated on Government pledges that have failed to be followed through, the business cannot continue to sustain losses due to political inaction.

"The knock on effect of this decision is that the 150 employees at the Hull site have been significantly impacted and their jobs are now at risk.

“On its face, this seems to be a relatively simple matter to resolve as it just requires the government to schedule some time to bring the legislation forward.”

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