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US-UK trade deal removed UK tariffs on US ethanol

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AB Foods, Ensus say operating environment now impossible

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Plants will have to close under current situation, they

say

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Would be "irresponsible" to sign new supplier contracts

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Producers call for urgent government action

By James Davey

LONDON, May 12 (Reuters) - Britain's two largest

bioethanol producers have warned that last week's U.S.-UK trade

deal which removed tariffs on U.S. ethanol entering the UK has

triggered an "existential threat" to the industry.

Thursday's agreement will see Britain's 19% tariffs on U.S.

ethanol fall to zero through a 1.4 billion-litre (370 million

gallon) quota - a figure equating to the size of the UK's entire

ethanol market today.

Producers Associated British Foods ( ASBFF ) and Ensus, which

operate bioethanol facilities at Teesside and Hull in northern

England, together account for nearly all of the UK's bioethanol

production capacity.

Along with supply chain partners, they support thousands of

jobs. Both said the operating environment "is now impossible".

"This (tariff) change comes on top of regulations that give

overseas producers an unfair advantage in the British market,"

Paul Kenward, CEO of ABF Sugar, and Grant Pearson, chairman of

Ensus, said in a joint statement.

"This vital sector is now facing imminent collapse because

of the trade deal. In our current situation, we will have to

close these plants," they said, going further than a statement

AB Foods made on Friday.

Bioethanol is produced from crops like wheat and sugar cane

and is used to make petrol. Byproducts of its production include

animal feed and carbon dioxide, the latter facing severe

shortages in 2022.

Britain's National Farmers' Union has warned the ethanol

measure could mean the loss of a profitable outlet for arable

growers which supply the industry.

ABF Sugar and Ensus jointly purchase more than two million

tonnes of wheat annually.

"We are fast approaching the point where we need to decide

whether to sign new contracts. In the current conditions, that

would be irresponsible," they said, calling for "urgent

government action".

Britain's concession on ethanol and beef was made in return

for the removal of 25% additional tariffs on steel and

aluminium, and a quota of 100,000 cars at a duty of 10%.

A spokesperson for British Prime Minister Keir Starmer said

officials from the Department for Business and Trade had met the

affected companies, and that "close engagement will continue in

the coming weeks and months".