Greenergy, owned by commodity trading giant Trafigura, said on Thursday it would begin consultation on a proposal to cease production at a biodiesel plant in the UK amid difficult market conditions, dealing another blow to Britain’s fuel industry after the recent collapse of an oil refinery in the same area.
A year ago, Trafigura completed the acquisition of Greenergy, a UK-based supplier of road fuels and a major European biodiesel producer.
Now, Greenergy intends to cease production at its biodiesel plant in Immingham, Lincolnshire.
“Despite significant cost reductions to improve the plant’s viability, the Immingham plant has continued to be negatively impacted by market factors, including slower increases in the UK’s biofuels blending mandates compared to European countries and competition from subsidised US-origin products,” Greenergy said in a statement.
Greenergy CEO Adam Trager commented, “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.”
The announcement came days after the Prax Lindsey Oil Refinery in the same region, Lincolnshire, filed for insolvency.
The biodiesel and biofuels industry has faced existential challenges in Europe in recent months, due to weak market conditions and rising costs.
Oil and gas supermajors have scaled back plans and investments in biofuels over the past year.
In July 2024, Shell said it would pause on-site construction work at a biofuels plant in Rotterdam amid weak market conditions, as international oil firms continue to re-evaluate their low-carbon energy projects.
Weeks prior to Shell’s announcement, the other UK-based supermajor, BP, said that it was scaling back plans for the development of new sustainable aviation fuel (SAF) and renewable diesel biofuels projects at its existing sites, pausing planning for two potential projects while continuing to assess three for progression.
Earlier this year, Bloomberg reported that BP had paused a plan to produce SAF at its Castellon refinery in Spain. The project was put on ice because of weaker-than-expected growth in the SAF market, a source with knowledge of the plan told Bloomberg.
By Tsvetana Paraskova for Oilprice.com
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