The US-UK trade agreement threatens the future of AB Foods bioethanol plant
After a warning that the future of Associated British Foods’ loss-making Hull bioethanol plant was uncertain last month, the removal of UK tariffs for U.S. ethanol as part the U.S. - UK trade deal may be the final blow to the facility.
The deal announced on Thursday will lower Britain's tariffs of 19% on U.S. Ethanol to zero by imposing a quota of 1.4 billion litres (370 million gallons) that is far greater than the U.S. exports in the UK for last year.
George Weston, CEO of AB Foods, said on April 29, that the group's ethanol division had "significant problems" due to "effectively subsided imports".
The group that owns Primark, as well as a number of grocery brands, including Twinings, Ovaltine and Twinings, claimed the UK's bioethanol regulations undermined the viability of the Vivergo plant, located in Hull, which produces bioethanol for car fuel and animal feed.
AB Foods wants to change the UK bioethanol import regulations. It warned that it would close or mothball the plant if talks with the government did not "improve" the situation.
"We are very clear about what we want to do in the ethanol industry - this is a regulatory matter that we require government support for."
The business faces a new challenge with the opening of the UK market for ethanol to U.S. producers.
The government's decision at the last minute to allow tariff-free ethanol to be imported from the U.S. to the UK has caused great anxiety for many people in northeast England, including the many employees, suppliers and farmers in the UK bioethanol sector," said an AB Foods representative on Friday.
The company added that it was discussing "the implications" and the details with the government.
The National Farmers' Union of Britain warned Thursday that the ethanol measures could result in the loss of an important source for the arable farmers who supply the industry.
The Renewable Energy Association warned the deal could allow U.S. manufacturers, supported by U.S. federal tax credits, sell to Britain at a lower rate than local suppliers can match.
INEOS shut down its ethanol facility at Grangemouth in Scotland in the first month of this year, blaming a decrease in demand for ethanol throughout Europe and an increase in pressure due to imports from other regions.
The U.S. removed 25% of additional tariffs for steel and aluminum in exchange for Britain's concessions on ethanol and beef. Also, the U.S. agreed to a 10% duty on 100,000 cars and a quota. The remaining tariffs remained unchanged.
The British Prime Minister Keir starmer claimed that the deal would help save jobs in the steel and car industries. (Reporting and additional reporting by Susanna Smout and Alistair Smout, editing by Kate Holton & Susan Fenton; Reporting by James Davey)
(source: Reuters)
