Pressure is mounting on the UK government to reconsider its recent trade agreement with the United States, which allows US bioethanol to flood the UK market, with potentially devastating consequences for domestic industries reliant on carbon dioxide (CO2) gas. This unanticipated consequence stems from the agreement's provision permitting the import of up to 1.4 billion litres of US bioethanol under a new zero-tariff quota. Senior figures in the food sector have expressed serious concerns that this could replicate the gas supply crises experienced in 2021 and 2018, jeopardising essential operations across the agricultural and food processing industries.
In the context of this agreement, leading UK manufacturers of bioethanol, such as Vivergo and Ensus, have highlighted that the new import quota matches the combined annual output of UK bioethanol production. Vivergo, which operates the Hull bioethanol plant—a facility that not only produces fuel but also produces animal feed—warns that the operational viability of such plants is now under severe threat. George Weston, CEO of Associated British Foods, which owns Vivergo, maintained that the competition from heavily subsidised US imports could significantly undermine their business model, putting around 150 jobs at risk in Hull alone.
The implications extend beyond just bioethanol production. The UK’s agricultural sector, which relies heavily on the processing of domestic wheat into bioethanol, may face detrimental outcomes as well. The two million tonnes of wheat that local farmers supply each year as feedstock could see a drastic reduction in demand. Farmers have already raised alarms, stating that many will be forced to sell wheat for lower prices on the export market, particularly as they face rising costs for imported animal feed.
The urgency of the situation is underscored by comments from Tom Bradshaw, president of the National Farmers' Union, who described the government's approach as “scandalous” and highlighted a lack of foresight regarding the impact on the CO2 supply chain. CO2 plays a critical role across the food and beverage sectors; it is essential not only for the carbonation of drinks but also for the slaughter of livestock and for packaging that extends the shelf life of food products. Echoing these concerns, Nick Allen, CEO of the British Meat Processors Association, noted that neglecting CO2 supply on the National Risk Register is a troubling oversight, given how pivotal it is to food safety and production.
Some industry insiders suggest that the agreement, negotiated hastily, may have missed broader implications for food security. Both Vivergo and Ensus emphasised that without domestic CO2 production, not only does the food sector risk collapsing, but so too do essential services provided to sectors like healthcare and energy, where CO2 is vital for cooling in nuclear facilities.
While the UK government has claimed they are monitoring the situation and can intervene if necessary, forcing producers to manage against hefty influxes of cheap US ethanol raises pressing questions about support for the domestic industry. A spokesperson indicated that currently, there is no shortage of CO2, a claim met with skepticism by those holding stakes in the bioethanol sector.
The wider context of this trade deal is also concerning. As part of negotiations, the UK has made concessions, including this tariff exemption for US bioethanol in exchange for US reductions on tariffs related to steel and aluminium. Such moves, while touted as opportunities for growth, may lead to long-term harm to UK bioethanol production, further exacerbating the challenges local agricultural sectors face in a competitive global market.
The implications of this deal reach beyond immediate economic figures, triggering fears about food safety, supply security, and the long-term viability of the UK’s biofuel sector. What remains to be seen is whether the government will take the necessary steps to safeguard its domestic industry against what many see as unfair competition motivated by political agendas rather than equitable trade practices.
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Source: Noah Wire Services