Ensus UK biorefinery remains closed but gains support from MP

13 October 2011 17:09  [Source: ICIS news]

LONDON (ICIS)--Ensus’s 410,000 tonne/year biorefinery at Wilton in the UK remains off line despite original plans to shut for only two-to-four months from the end of May, a company spokesperson said on Thursday.

“The plant is still off line for commercial reasons and Ensus has not announced any date [yet] for restart,” Terry Waldron said.

Despite the temporary closure, all staff at the plant remain on full pay, he added.

Meanwhile, MP (Member of Parliament) Ian Swales gave a speech to the House of Commons on Wednesday, highlighting the struggle that domestic bioethanol producers, and Ensus in particular, face in the UK.

The Liberal Democrat MP for Redcar, in the northeast of England, asked that a motion be put in place requiring the government to carry out a report on methods for supporting the domestic bioethanol production industry.

“The UK bioethanol industry has invested more than £500m ($794m, €568) over the past five years...based on the UK’s commitment to implementing the EU renewable energy directive and having biofuel content in our petrol,” Swales said.

“Ensus has built Europe’s largest bioethanol refinery in my constituency, and it started up in February 2010...However, the Ensus plant came offline at the end of May and remains shut.

"The situation is uncertain. The jobs of 2,000 people at the plant and in the supply chain are at risk. This is not a tale of commercial gross misjudgement; it is mostly a tale of being let down by politicians,” he continued.

Swales blamed the previous UK government for delaying and diluting the renewable transport fuel obligation and said that this had “radically moved the goalposts for an industry that has a long lead time for investments coming on stream.”

Furthermore, Swales believes that UK fiscal policy discriminates against biofuels, hindering their uptake.

“Those fuels are, by their nature, energy products, but they are taxed by volume at the same rate as the fossil fuels that they are intended to replace.”

Another problem facing the UK bioethanol industry is the inflow of imports from the US, particularly E90 fuel (90% ethanol blended gasoline).

E90 is very competitively priced in the European market as it benefits both from the US Volumetric Ethanol Excise Tax Credit (VEETC) and a loophole in EU legislation meaning it is subject to less duty.

However, market sources say there is a possibility that the VEETC could be removed before the end of the year.

Furthermore, sources add that the European Commission’s customs committee will meet during October to discuss implementing changes to E90’s import tariff. These eventualities could diminish E90’s competitive edge in the European market, possibly stimulating demand for domestic product.

“It is clear that tariffs present a major problem for the industry,” Swales said.

The MP also urged the Department of Energy and Climate Change to create more clarity with regard to sustainability criteria, highlighting the need for “joined-up thinking across government when it comes to green technology.”

Swales said: “The Government now have a golden opportunity to show that they are serious about their commitments to being green, to promoting manufacturing and, above all, to growth. We should be supporting our jobs, supporting our growth and supporting our bioethanol industry.”

($1 = €0.72, £0.63)

By: Sarah Trinder
+44 20 8652 3214

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