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According to UK competitors, global commodity trader Archer Daniel’s Midland is claiming double subsidies on biofuel production as a surge in imports threatens to wipe out the domestic ethanol industry by leveraging loopholes in UK green regulations.
Ethanol suppliers can claim credits of every liter produced in a UK scheme that seeks to reduce harmful emissions from transport and promote greener fuels.
However, ethanol made from waste qualifies for double credit as an incentive for producers to prioritize their production. ADM – The so-called ABCD’s A, an international agribusiness that plays a pivotal role in global food supply, has used this to claim double credit for fuels sold in the UK made from by-products of corn processing.
However, in submissions to the UK government, rivals argue that unrefined liquid dextrose ultra-promoted retention, or by-products known as uldur should not be classified as waste due to several rich uses. They argued that doing so would undermine UK environmental targets by allowing fuel suppliers to meet their renewable fuel obligations using less liters of biofuel.
“This is not about using real waste,” an industry executive told the Financial Times. “It’s about finding a clever way to maximize financial profits through regulatory loopholes.”
Chicago-based ADM expands its biofuel business, including making ethanol from corn, serving the growing market for low carbon fuels. Industry experts estimate that UK double credit may have allowed ADM to generate revenues of up to £100 million last year. ADM declined to comment.
This column comes as the UK’s small domestic ethanol industry is tackling the impact of the recent UK-US trade contract that removed tariffs on US ethanol imports. This allowed US producers to allocate 1.4 billion litres of tariff-free access. This is roughly equivalent to the overall annual demand in the UK.
This year, the UK Transport Agency sent out an appeal for evidence to establish whether the by-product of processing corn into sweeteners such as corn syrup should maintain the double count qualification awarded in 2022.
Rival British biofuel producers noted in submissions where products were seen in ways that were historically returned to ethanol production or were used as animal feed.
Matthew Sharp of Law Firm Brown Radnick said he is advising businesses on environmental regulations issues, saying that “pure supply” is “is it actually a waste that is used?”
According to British government figures, imports of ethanol from Urdur, which is not classified as waste in Germany or the Netherlands, have increased from zero to 377 million liters last year.
Related British foods, which are ethanol producers whose fuels come from wheat, have warned that they could be forced to halt production at the Vivergo factory, one of the UK’s two people, citing the threat from cheaper imported biofuels.
“If the government wants to subsidize imported bioethanol, we can’t oppose it,” CEO George Weston told investors in April.
Adam Bell, director of policy at Stonehaven and former head of energy strategy for the UK Energy, agreed that if byproducts continue to be counted as waste, it cannot match Urdur-derived bioethanol, which currently dominates the market.
“You can always sell cheaply while you’re making cash for double counting,” he said.
Vivergo said Uldur’s double subsidies “had acutely weakened our business,” but the UK-US trade contracts only had “strengthened regulatory issues” that already support overseas producers.
The UK government said all fuels supplied under the renewable transport fuel obligation must meet “strict sustainability standards.” The UK Department of Transport said it is working with producers to understand their concerns and explore support options.
