Britain has 12 days to save bioethanol industry, says AB Foods

By James Davey

LONDON (Reuters) -One of Britain's biggest bioethanol producers warned the government on Tuesday that unless it steps in with a support package for the industry within the next 12 days it will have to start closure processes at its plant.

ABF Sugar, part of Associated British Foods, and Ensus together account for nearly all of the UK’s bioethanol production capacity.

"We have 12 days to save this industry," Paul Kenward, CEO of ABF Sugar, told lawmakers on parliament's Business and Trade Committee.

Bioethanol is produced from crops such as wheat and is used to make petrol greener and sustainable aviation fuel. Byproducts include animal feed and carbon dioxide, the latter of which faced severe shortages in 2022.

ABF Sugar and Ensus have warned that last month's U.S.-UK trade deal, which will see the UK's 19% tariffs on U.S. ethanol fall to zero, on top of existing regulations giving overseas producers an advantage in the British market, have made the operating environment impossible.

They have said their plants at Hull and Teesside in northern England face closure.

Along with supply chain partners, the plants support thousands of jobs.

Kenward told lawmakers that by June 15 he needed to tell farmers whether he could sign new contracts for wheat supply.

"Why would I do that unless I have some confidence that the government's going to step in?" he said.

Kenward called on the government to urgently level the regulatory playing field, increase the amount of ethanol in UK petrol from 10% to 15% and support the development of sustainable aviation fuel.

He also wants the industry to have access to short-term financial aid of up to 150 million pounds ($203 million).

Kenward said AB Foods had invested 700 million pounds in the Hull site.

“Once it goes, it goes. Think what that does to future investors in green industries," he said.

A government spokesperson said business minister Jonathan Reynolds had met members of the bioethanol sector and senior officials "continue to consider what options may be available to support the impacted companies".

($1 = 0.7396 pounds)

(Reporting by James DaveyEditing by Mark Potter)