The collapse of Vivergo Fuels, announced last week after the UK government refused to provide emergency financial support, is being viewed on opposite sides of the Atlantic in starkly different terms. For the US ethanol industry and its influential trade body, the Renewable Fuels Association (RFA), the UK-US trade deal signed in May has delivered a long-sought breakthrough: duty-free access to one of Europe’s top five fuel markets. For British producers Vivergo and Ensus, it has triggered an existential crisis, and is a major blow to their trade body, the UK Renewable Energy Association (REA).

The closure of Vivergo Fuels’ bioethanol plant in Hull, confirmed this week, may look like a local industrial story. In reality, it reshapes the landscape for UK motorists, fuel suppliers and carmakers, because ethanol sits at the heart of Britain’s petrol blend strategy.

Vivergo, the UK’s largest producer, said it would wind down operations by year-end, citing a “flagrant act of economic self-harm” after the government refused financial support and signed a trade deal that removed the 19% tariff on US ethanol imports. Production of both ethanol and animal feed will cease by the end of August, with 160 jobs lost.

For UK drivers, the development raises questions over fuel security and future blend rates. For US exporters, it is a commercial windfall.

The trade deal’s automotive angle

When President Trump announced the agreement in May, the White House said it secured new access to the UK market worth $700 million in US ethanol exports. Geoff Cooper, CEO of the Renewable Fuels Association (RFA), said the group “sincerely thank[ed] President Trump and his trade negotiators” for securing ethanol’s place in the deal, adding that it would “help boost our farm economy, while also delivering lower-cost, cleaner fuel to UK drivers.”

That lower-cost promise is real: With tariffs gone and a 1.4 billion litre duty-free quota, effectively the size of the entire UK market, US product is expected to dominate petrol blending, Reuters reported.

According to the Renewable Fuels Association’s 2025 Ethanol Industry Outlook, US ethanol exports “grew 35 percent to an all-time high of 1.9 billion gallons” in 2024, with “shipments exceeding 2023 volumes across 50 countries.”

The UK emerged as a key driver, becoming the “second-largest export market” for US ethanol, with volumes up “65 percent over 2023 levels.” The RFA linked this growth to the UK’s “increasing Renewable Transport Fuel Obligations” and rising demand following the 2021 E10 mandate.

The European Union also posted strong gains, with imports “up 26 percent compared to 2023,” largely due to compliance with “Renewable Energy Directive II requirements.” Overall, the RFA noted that exports to India, the UK, Colombia, and Canada accounted for “65 percent of [US ethanol export] growth” in 2024.

Implications for UK carmakers and motorists

For motorists, the immediate impact may be subtle: ethanol remains capped at 10% of standard petrol (E10). But with imports now cheaper, pump prices could see downward pressure, and carmakers lobbying for higher blends could find political momentum growing for a shift to E15.

The Department for Transport confirmed in June that a move to E15 is under review, though it requires fuel standard alignment and consultation with OEMs. The Renewable Transport Fuel Obligation review, published in August, also highlighted the role of low-carbon fuels and suggested that raising blend limits could help meet decarbonisation goals.

For vehicle manufacturers, that signals a slow but steady policy push towards higher ethanol content, aligning the UK with US practice. While most post-2010 petrol cars are E15-compatible, questions remain over fleet readiness, warranty coverage and public communication.

Winners and losers in the supply chain

The problem is that UK plants like Vivergo and Ensus were supposed to underpin that transition, providing a secure domestic supply for both petrol blending and emerging alcohol-to-jet fuels. Vivergo’s collapse leaves Ensus as the sole large-scale producer, and its future is also uncertain.

The loss of domestic capacity raises concerns for supply security. AB Foods, Vivergo’s owner, told Sky News it was “deeply regrettable that the government has chosen not to support a key national asset,” warning that “jobs in clean energy will now move overseas, principally to the US” The National Farmers’ Union called the closure “terrible news” for agriculture, affecting “thousands of people whose livelihoods depend on this supply chain.”

For oil companies and retailers, US imports will be welcome: plentiful, competitively priced, and supported by a powerful US export lobby. For UK producers, however, the market may already be lost.

A strategic crossroads

For the Starmer government, the optics are awkward. Ministers argue that supporting bioethanol “would not provide value for the taxpayer or solve the long-term problems the industry faces,” Reuters reported.

At the outset of the UK-US trade deal in May, industry leaders warned that government policy, not market fundamentals, was jeopardising Britain’s bioethanol sector. Paul Kenward, Chief Executive of ABF Sugar, and Grant Pearson, Chairman of Ensus, argued that “bioethanol plants are profitable across Europe and in the US – and have been in the UK too,” but said that “delays in mandating the switch from E5 to E10 petrol” had forced UK producers to scale back ahead of the 2021 rollout.

They added that, since last September, “decisions on imports, tariffs and fuel certificates have put that success at very significant risk,” stressing that “it’s not the facilities that are unviable” but rather “how British officials apply rules and regulations that undermine their competitiveness.”

But the trade-off is stark: the UK has secured auto and aerospace export gains from the US, while effectively sacrificing its own ethanol market.

For the automotive sector, the deal is a double-edged sword. On one hand, lower-cost ethanol imports could accelerate the transition to higher blend levels, providing a low-carbon pathway for the existing petrol fleet. On the other hand, the hollowing out of domestic capacity leaves the UK exposed, reliant on US trade policy and commodity markets for a key element of its road-fuel strategy.

As the shift to E15 and sustainable aviation fuels gathers pace, one fact is clear: US ethanol producers and their trade body, the RFA, are now positioned at the heart of Britain’s fuel future.

COMMENT: UK hands bioethanol to the US while luxury cars cash in