Vivergo Fuels, which converts 1.1m tonnes of feed-grade wheat a year into bioethanol, has said it could face closure if the Government ploughs on with plans to restrict crop-based biofuels in petrol.
The UK must ensure 10 per cent of its transport fuel comes from renewable sources by 2020, but the Department for Transport has planned to limit the volume of crops used to produce biofuels at two per cent, or zero per cent – an effective ban.
The EU allows the cap to be set as high as seven per cent.
John Holtby, a farmer from Skirlaugh who supplies Vivergo Fuels with wheat, said: “If Vivergo closed down it would have a significant effect on us.
“The majority of the crop we grow goes there, so we would have to find other markets and that might involve exporting.
“Vivergo soaks up our exportable surplus. I do not know what the Government thinks it is doing trying to change the goalposts.”
Ensus, another biofuels plant on Teeside, has already shutdown several times because of low demand. Grant Pearson, its commercial director, has admitted the crop cap could close the business altogether.
The NFU has been lobbying for the crop cap to be set at 7 per cent and said UK self-sufficiency, sustainability and food security would be at risk if Ministers make it lower.
Brett Askew, NFU north east crops chairman, added: “Reports Vivergo is now fearing closure are deeply concerning. For arable farmers, access to the biofuel market gives confidence and security there is a home for our crops, and the animal feed co-product is an essential domestic protein source for our livestock farmers.”
Richard Royal, head of government affairs at Vivergo Fuels, said the livelihoods of farmers would be at risk if the Government moves towards a low crop cap.
“The Government needs to act and reconsider its proposals to prove its commitment to the Industrial Strategy and the Northern Powerhouse whilst delivering a significant boost to an important industry which supports agriculture in the UK”, he added.