Following last week’s announcement of insolvency by Prax, owner of the nearby Lindsey oil refinery, putting 420 jobs at risk and potentially impacting many more, a further 60 employees will be impacted by Greenergy’s decision.
The company, which was acquired by Trafigura last year, placed the Immingham plant under review in May of this year, but says that despite “significant cost reductions” aimed at improving viability, market factors such as a lag in UK blending mandates compared with Europe’s, combined with “competition from subsidised US-origin
products” have “negatively impacted” the plant resulting in the decision to cease production.
The decision comes a year after biodiesel producer Argent Energy closed its Motherwell plant.
Market uncertainty
Greenergy CEO, Adam Traeger said: ‘‘It has been an incredibly difficult decision to enter consultation on the proposed closure of our Immingham site, and a decision we have not taken lightly.
“However, in light of continuing market pressures, we unfortunately do not have enough certainty on the outlook for UK biofuels policy to make the substantial investments required to create a competitive operation at Immingham. We are seeking urgent talks with ministers about increasing the amount of biofuels used in the UK’s petrol and diesel, a move which will help protect the biofuels sector, as well as cutting the UK’s emissions, particularly from HGVs.
“Today’s decision does not reflect the dedication and hard work of affected staff and I would like to thank our
employees at Immingham for their tremendous efforts to date. Our priority is supporting our employees
through this difficult period.’’
The Immingham plant supplies around a quarter of the UK’s biodiesel production, and is one of three operated by Greenergy – the others being Teesside and Amsterdam.
Weak policy
Greenergy highlights ‘unsupportive market conditions’ with UK policy falling behind European countries such as Germany, the Netherlands and Ireland, where higher mandates, which set the maximum amount of biofuels that can be blended with petrol and diesel, are applied. In the UK the current mandate is 14%, and Greenergy estimates that by 2030, European countries’ mandates will be more than double those of the UK.
The closure could be prevented if talks with ministers prove effective in persuading the government to increase the amount of biofuel that can be added to diesel and petrol, allowing Greenergy to compete with US and European products.
High prices for energy, chemicals and an influx of Hydrotreated Vegetable Oil (HVO) into the UK has put severe pressure on biodiesel production margins, even turning them negative in certain scenarios. The Trade Remedies Authority has opened an investigation but it could take 12 months to reach a decision.
Consultation with affected employees will begin as soon as possible.
Image supplied by Trafigura