Green energy is on the rise, not only in the form of batteries, solar and wind but also in the form of increasingly sophisticated biofuel manufacturing, which typically uses various forms of tanks with pressure relief valves in the production, refinement and storage phases.
There are a lot of reasons for this; the joint concerns of climate change and fossil fuel supplies have led to a push towards net-zero carbon emissions, of which biofuel plays a major role by decarbonising major industries such as shipping and aviation that cannot be wholly electrified.
This means that having a domestic biofuel sector is an important aspect of energy security through ensuring energy independence.
If a vital source of energy used for heating, lighting and transportation was cut off overnight, as can happen during an energy crisis, energy independence is critical to minimise the impact as much as possible.
It is also something that can be put at risk by conflicting priorities, as a recent impasse between the UK’s biofuel industry and international trading partners, with the potential to impact not only long-term energy security but also have several devastating consequences.
What Has Caused The Issues For British Biofuel?
The British biofuel sector supplies over 1.4bn litres of bioethanol for use in biofuels, as part of E10 petrol and for use in sustainable aircraft fuel.
The majority of this production is supplied by two companies, Vivergo Fuels and Ensus, both of which have sounded alarm bells that an international trade deal could potentially wipe the entire sector out, according to a statement by the British Chambers of Commerce.
The deal itself, between the United Kingdom and the United States, would remove a 19 per cent average tariff on imports of ethanol from America for the first 1.4bn litres, roughly equivalent to the entire biofuel sector at this point.
As the American biofuel sector is heavily subsidised and benefits from economies of scale regardless of this intervention, imported products could significantly undercut the competition.
This, alongside a regulatory system claimed to favour imports, could become an existential threat to the entire sector. American corn, for example, uses genetically modified crops, antibiotics and benefits from lower energy costs due to greater energy independence in other areas.
If an intervention is not in place by 18th August, whether it takes the form of a tariff renegotiation, subsidies for the sector or an outright bailout, Vivergo announced that they would begin the process of shutting down production, which would mean a potential end of the sector by September.
However, the impact would stretch beyond decimating a domestic biofuel sector increasingly vital for energy independence and security, but could also severely harm several interconnected businesses.
The Interweaving Bioenergy Sector
The effects of losing Britain’s biofuel sector would hit far more than the refineries and manufacturing plants themselves, but would cascade throughout several other interconnected sectors.
A major part of this is the future development of Teesside and Hull respectively, and a £1.25bn investment into a sustainable aviation fuel plant in Saltend near the latter has been placed on hold until the final decision has been made. This would also affect a green hydrogen production plant on the same site.
Alongside this, as many as 4500 jobs could be lost throughout the supply chain that Vivergo is in alone, which would naturally have an effect on local economies due to a lack of income.
Another direct effect would be seen in the local agricultural sector; feedstock-grade wheat is processed by biofuel manufacturers to produce animal feed, biofuel and carbon monoxide.
Taking that away would force farmers to rapidly seek alternative sellers at a considerable loss due to the lack of demand, which would cause the farms to either switch priorities or shut down entirely in the long term.
Haulage firms contracted to take wheat from the farms to the biofuel plants have already been affected, with several lorries looking for alternative partners to work with, downsizing or closing entirely.
Other aspects of the regional supply chain, such as ports and downstream suppliers of biofuel, would also be significantly affected, either through increased costs, redundant processes or lower confidence, which could itself affect other similar green energy and biofuel projects.
What Happens Next?
What happens next will depend less on the industry and more on wider government decisions surrounding the deal.
Until the trade deal, the biofuel sector was highly profitable, so one option is to renegotiate the trade deal and remove that subsidy, although this is unlikely to happen unless there is a sudden change in priorities between trading partners.
One potential option is a bailout, subsidy or nationalisation; given the importance of biofuels to energy security, it is not unthinkable for a similar approach to that taken to secure the future of British Steel to be employed here, although exactly how expensive and popular this would be is unknown.
Finally, it could be left to collapse, which it is claimed would heavily damage energy security, and because the closure would be irreversible, it would also mean that restarting Britain’s biofuel sector would be significantly more expensive and lacking in incentives for businesses.
