Isra-Mart srl : Ensus plant on hiatus as biofuels bubble bursts

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Isra-Mart news:

The UK's largest biofuels plant is to shut down production for up to four months, blaming lower than expected demand in a European market flooded with cheaper subsidised bioethanol from the US.

Owners Ensus confirmed in a statement that its £300m plant at Wilton on Teesside will close for between two and four months from the end of May, although the facility's 100 employees will remain on full pay.

The company said that the decision was largely a result of long delays to the implementation of the EU directive specifying that 10 per cent of transport fuel must come from renewable sources by 2020, which it accused of creating uncertainty for European producers.

The directive has been held up because EU member states cannot agree on the sustainability criteria, and many countries, including the UK, have not adopted the targets into domestic legislation.

Ensus warned that the regulatory delay was allowing heavily subsidised US imports to flood the market.

"These imports take advantage of loopholes in EU legislation to avoid established tariffs, bringing bioethanol of uncertain origin and sustainability into the European market," the company said in a statement.

There are also growing concerns that consumer demand for biofuels could be faltering after MWV, the German oil industry association, announced last week that consumers were not keen on a new higher biofuel blend, E10, over half fearing that it would damage their engines.

The market backdrop was much more positive when the Ensus plant began operations in 2009, signing a 10-year deal with Shell to turn over one million tonnes of wheat a year into 400 million litres of ethanol.

The plant also produces 350,000 tonnes of animal feed for Glencore each year, and 350,000 tonnes of CO2 that the drinks industry uses to put bubbles in fizzy drinks.

The plant now indirectly supports around 3,000 jobs in agriculture, haulage and manufacturing, all of which will be hit by the shutdown.

Ensus' decision comes after the plant had been subject to complaints from residents about smells, which forced the installation of a £9m system of oxidisers after the Environment Agency stepped in.

However, the company insisted that the closure was not a result of these complaints and is only temporary.

"Ensus remains committed to operating and growing our European business. However, to ensure the long-term health of the business for our customers and employees we have decided to temporarily shut down our facility whilst market conditions remain depressed," the company said in a statement.

"We fully expect the market to improve in the coming months as implementation of the regulatory framework for biofuels catches up with the agreed EU legislation."