One of Europe’s biggest ethanol plants is poised to start production in northern England, part of a surge of biofuel capacity expected to come on line in Britain over the next few years.

The Vivergo plant near Hull is due for launch by the end of this year while another, the mothballed Ensus plant on Teesside, recently resumed operations.

While the UK remains a biofuel minnow compared with world leaders such as the US and Brazil, the extra capacity will narrow the gap with France, Germany and other European countries.

The plants should help Britain get closer to its green energy targets, including legislation stipulating that biofuels should account for 10 per cent of fuel in the transport sector by 2020.

However, while ethanol is cleaner than fossil fuels, its use as an alternative to petroleum has become increasingly controversial because of its heavy use of grain, pushing up global food prices.

The Vivergo and Ensus plants both use low-protein wheat used for animal feed rather than the quality grains that go into British bread and rolls.

However, critics argue this still affects food prices and supply by raising the cost of producing pork and beef and corralling land that could otherwise be used for edible grains.

Ruth Kelly, economic policy adviser at Oxfam in the UK, said there is growing support from the UK government to back away from “food for fuel” given the impact that it has on food prices, and also from the EU.

“So it is disappointing to see the private sector moving in the other direction and choosing to set up refineries,” she said.

Last month, France called for a pause in the development of biofuels competing with food, while the EU is seeking to cap the level of first-generation biofuels in transport at 5 per cent.

However Jack Watts, senior analyst at the Agriculture and Horticulture Development Board, says the wheat market is global and more affected by the likes of Russian export curbs and US droughts than increased UK biofuel production. “The UK is 1.5 per cent of global wheat production. We are a very small player,” he said.

Investors in the plants are adamant they will neither push up prices nor affect food supplies. Vivergo, backed by BP, the global oil and gas company, and Associated British Foods, which owns retailer Primark and also has a sizeable groceries business, will be using wheat that would otherwise be exported.

Mark Carr, chief executive of AB Sugars division of ABF which is one of the backers of Vivergo, adds that almost half the wheat the plant uses will be “replaced” by protein-rich animal feed that is a byproduct of wheat bio ethanol plants.

Once Vigero is up and running, the UK will have capacity to convert 2.2m tonnes of wheat – or roughly 15 per cent of local production – into 820m litres of ethanol fuel every year.

This would remain just a fraction of the 38bn litres of installed capacity in Brazil and the 51.7bn litres in the US. But it would bring Britain within sight of Germany’s 1.2bn litres and France’s 2.1bn litres, with more UK plants in the planning phase.

However, analysts say the capacity surge may still not be enough for Britain to meet its biofuel goals.

Harry Boyle, bioenergy analyst at Bloomberg New Energy Finance, an energy research consultancy, says “very few” of the plants mooted since the biofuel targets were set have proceeded, “mainly because investors decided not to go ahead”.

The two plants are delivering a helpful fillip to their local economy: Vivergo reckons it will employ 80 people and support a further 1,000 indirectly in storage, haulage and maintenance.

Ensus, which reopened following a 15-month shutdown triggered by faltering demand for European ethanol, has about 100 employees and claims to support a further 2,000 jobs.

Additional reporting by Pilita Clark

source: FT

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