Biodiesel manufacturer Greenergy is to begin consultation on a proposal to cease production at its biodiesel plant in Immingham, Lincolnshire, the company announced today (10 July).
The move, which puts 60 jobs at risk, raises the prospect of a biodiesel shortage in the UK since the plant accounts for over 25% of UK biodiesel production. It also comes a year after biodiesel producer Argent Energy closed its plant in Motherwell.
News of the planned closure of Immingham follows Greenery’s recent attempts to shore up production by making “significant cost reductions” aimed at improving the plant’s viability and launching a strategic review of its biodiesel operations at Immingham, announced in May this year.
However despite these efforts, Greenergy said the Immingham plant had continued to be negatively impacted by market factors, including slower increases in the UK’s biofuels blending mandates, compared to European countries, and competition from subsidised US-origin products.
It added that market conditions remain unsupportive and UK policy has fallen behind European countries such as Germany, the Netherlands and Ireland, where higher mandates, which set the maximum amount of biofuels that can be blended with petrol and diesel, are applied.
In the UK this mandate is currently 14%. Greenergy estimates that by 2030 European countries’ mandates will be more than double those of the UK.
The company is now seeking urgent talks with ministers, in the hope the government will increase the amount of biofuel that can be added to diesel and petrol, which could prevent the closure by allowing Greenergy to compete with US and European products.
Another market pressure comes from the current high prices for energy and chemicals, as well as an influx of Hydrotreated Vegetable Oil (HVO) from the US into the UK. Greenergy stated that this has put “severe pressure” on biodiesel production margins, even turning them negative in specific scenarios.
Whilst the Trade Remedies Authority has opened an investigation, a decision could take a further 12 months.
Consultation with affected employees will begin as soon as possible, the company said, adding that it is “committed to supporting staff through this period.”
Adam Traeger, Greenergy chief executive, said, ‘‘It has been an incredibly difficult decision to enter consultation on the proposed closure of our Immingham site, and a decision we have not taken lightly.
“However, in light of continuing market pressures, we unfortunately do not have enough certainty on the outlook for UK biofuels policy to make the substantial investments required to create a competitive operation at Immingham.
“We are seeking urgent talks with ministers about increasing the amount of biofuels used in the UK’s petrol and diesel, a move which will help protect the biofuels sector, as well as cutting the UK’s emissions, particularly from HGVs.
“Today’s decision does not reflect the dedication and hard work of affected staff, and I would like to thank our employees at Immingham for their tremendous efforts to date. Our priority is supporting our employees through this difficult period.’’
Greenergy supplies around a quarter of the UK’s road fuels, and is also a major European manufacturer of biodiesel from wastes, operating two plants in the UK at Immingham and on Teesside, with a third in the Netherlands.
Internationally, Greenergy supplies over 14 billion litres of fuel annually to supermarkets, oil companies, fuel wholesalers and retail and commercial customers.
It manages fuel supply chains from refinery gates to customer sites, importing, storing, blending, and distributing fuel, while also managing stock levels for customers.
Greenergy also markets in Ireland through the Inver Energy and Amber Petroleum brands.
Carol Millett is an award-winning freelance journalist with over 30 years’ of experience writing across a broad range of sectors, including road transport, construction and civil engineering, project management, private finance, technology, HR, and travel and tourism. View full Profile
