UK Bioethanol Faces Defining Moment Following US Trade Deal

5th June 2025 The recent decision by the UK government to remove a 19% tariff on ethanol imports from the United States — as part of a new transatlantic trade agreement — has created significant reverberations across the UK’s bioethanol industry. While framed as a step towards liberalising trade and reducing fuel input costs, the move has, in effect, exposed domestic producers to aggressive pricing competition from US suppliers, whose economies of scale and production models differ substantially from those of the UK. Leading producers including Vivergo Fuels and Ensus have publicly warned that the influx of cheaper American ethanol could place the viability of UK facilities at risk. Both companies, which operate large-scale plants in Hull and Redcar respectively, play vital roles not only in biofuel supply but also in the production of high-protein animal feed and industrial-grade carbon dioxide — underlining their importance to the broader UK economy. Now, GapumaGroup, through its biofuels business in Switzerland, has joined the growing chorus of concern — but with a call for balance and long-term thinking. Misenga Tshitungi, Head of Biofuels at Gapuma Switzerland, says:“With the stroke of a pen, the government has effectively handed the entire UK bioethanol volume to the US. The implications go far beyond trade — this is about energy security, the future of UK-based green jobs, and whether it can retain its role as a credible player in the global clean energy transition.” A Strategic Industry at Risk — and a Policy Dilemma The UK bioethanol sector has, over the past decade, become a pillar of the country’s climate and industrial strategy. The introduction of E10 petrol in 2021, with its 10% bioethanol blend, was hailed as a major milestone in reducing transport-sector emissions. However, the sector is more than just a supplier of low-carbon fuels. It supports domestic agriculture, contributes to food security through co-products, and is integrated into several critical supply chains, including those for medical-grade CO₂ and sustainable aviation fuels. Government urged to reconcile free trade ambitions with green energy strategy as domestic producers sound alarm In removing the tariff without complementary domestic measures, the UK risks hollowing out this strategic capability at precisely the moment when global momentum is shifting towards energy independence and green industrial policy. The government’s ambition to be a leader in net-zero innovation cannot be realised if foundational sectors are left exposed to external price shocks. While US ethanol may appear cost-competitive, its production benefits from structural advantages — including lower grain costs, subsidies, and larger plant sizes — that make direct competition unsustainable without some form of regulatory or financial support. The Case for Targeted, Intelligent Support At Gapuma, we do not advocate for blanket protectionism. Competitive pressure has its place in spurring innovation and efficiency. But a distinction must be made between fair competition and systemic disadvantage. The UK’s producers require a level playing field, supported by clear industrial policy and forward-looking investment frameworks. This could include: Strategic incentives for decarbonisation projects in biofuels and next-generation fuels; Carbon border adjustment mechanisms to account for differences in emissions and regulatory standards; Targeted financial support for facilities investing in innovation, resilience, and diversification; Public-private partnerships to secure long-term supply chain sustainability. “We believe the current situation, while challenging, also presents an opportunity,” Tshitungi continues. “It is a moment to decide whether the UK will be a passive participant in the global green economy — or a serious, sovereign contributor with robust domestic capability.” What Happens Next Will Define the Sector’s Future The government has so far acknowledged industry concerns but has not yet announced any direct support measures. As pressure builds, the fate of key bioethanol producers is becoming a test case for how the UK balances free trade with industrial strategy and climate leadership. At GapumaGroup, we remain committed to investing in sustainable fuels across multiple geographies. However, for domestic UK investment to continue, policymakers must provide a coherent roadmap — one that reflects both the risks and the strategic value of retaining domestic production capacity in clean energy.