UK: Biofuels Drive Confidence

Last Updated: 1 September 2006

With the harvest season upon us, there appears to be growing optimism in the arable sector. The main reason is the increasing interest in bioenergy and the effect this is having on crop values.

The high price of oil and Government incentives has stimulated a rash of new projects to exploit the opportunities available in the arable sector. This, together with other developments, could fundamentally change the dynamics of the UK combinable crop sector. However, this growing enthusiasm needs to be tempered with a dose of realism, as we shall see later.

The bioenergy market can be roughly divided into two categories. The first is where biomass (plant material/energy crops) is combusted to produce electricity or combined heat and power (CHP). There have been some problems with getting this sector up and running, as highlighted by the failure of the ARBRE plant at Selby back in 2002. However, progress is now being made. The Renewables Obligation Order 2006 has led electricity generation companies towards co-firing coal power stations with a proportion of energy crops, such as short-rotation coppice or miscanthus. In time, more biomass power stations are likely to be developed.

There is also interest in small-scale generators, perhaps even at farm or estate level, to reduce energy costs and to save/avoid having to transport the bulky biomass over long distances. However, many growers remain wary of these energy crops because they are unfamiliar, have a limited number of buyers, and require a longterm commitment of land. This is perhaps why biofuels, the second category of bioenergy, has tended to be the focus of farmer interest to date.

Biofuels are produced from biomass and used as liquid fuel replacements for diesel and petrol in vehicles. The Government has targeted this sector with the introduction of the Renewable Transport Fuel Obligation (ReTFO). This requires that by 2010, 5% of all forecourt road transport fuel must come from renewable sources. There are two main types of biofuel that can act as replacements for petrol and diesel: biodiesel, which comes from vegetable oils such as oilseed rape (OSR), and bioethanol, which comes from starch-based products such as wheat or sugarbeet.

The ReTFO has spurred a flurry of activity in setting up production facilities for biofuels, with the following being some of the largest developments planned or already underway.

Biodiesel projects

Biofuels Corporation
A plant at Seal Sands on Teesside began production in February this year. Output is in the process of being increased to the intended full capacity of 250,000 tonnes of fuel produced per year.

A 100,000 tonne plant at Immingham on Humberside is under construction and due to begin production at the end of the year. Phase 2 of the construction is planned to start soon thereafter to bring capacity up to 200,000 tonnes. Greenergy also has plans to build another similar-sized plant on Merseyside next to Cargill’s rape crusher. (Cargill is a shareholder in Greenergy).

INEOS Enterprises
There are plans to build a UK plant that will be in production by 2008. The favoured site is in Grangemouth, Scotland, with preliminary discussions said to be underway about a biodiesel plant at Rosyth.

The INEOS plant may also include an oilseed crushing facility. This would be very beneficial, especially to Scottish OSR growers, as currently the crop has to be transported to Liverpool or Hull for crushing, or exported.

Crushing capacity is a major constraint on the development of the industry and Tees Valley Biofuels is also planning a new 500,000 tonne crushing plant on Teesside. To produce one tonne of biodiesel (equivalent to 1,140 litres of fuel) takes around 2.4-2.6 tonnes of rapeseed (depending on oil content and crush efficiency). Adding to biodiesel production are various plants around the country that convert waste vegetable oil used in catering into fuel.

Bioethanol projects

British Sugar
British Sugar is constructing a bioethanol plant next to its beet factory at Wissington in west Norfolk. Although ethanol production from beet is not the most efficient method, British Sugar needs an outlet for the beet produced outside of quota, which can no longer be exported in the same way that ‘C’ beet used to be. In fact, a recent announcement has seen British Sugar link up with DuPont and BP in this new venture. It has been suggested that DuPont’s technology will result in the Wissington product being biobutanol rather than bioethanol. The advantage of biobutanol is that it more closely resembles petrol as it has similar energy content, can be blended at higher percentages and can be mixed and transported in the existing petrol pipeline infrastructure.

The consortium has announced that, subject to the performance of this first plant, it will be looking to build further facilities using cereals as the main feedstock.

Wessex Grain
Wessex Grain has planning permission to build a plant at Henstridge on the Somerset/Wiltshire borders. Production should reach 100,000 tonnes of fuel and is expected to commence in early 2008. The principal feedstock will be feed wheat, requiring approximately 330,000 tonnes per year.

Green Spirit Fuels (a spin-off from Wessex Grain) has plans for further plants. The first is to be on Humberside and will be twice the size of the Hentsridge facility, taking 650,000 tonnes of grain a year from early 2009. Others may follow, probably in East Anglia initially.

Bioethanol Limited
A plant near Immingham with an annual production cap of 100,000 tonnes of fuel is planned. Centaur Grain has been contracted to provide the 325,000 tonnes of wheat needed when the plant commences operations some time in 2008. Centaur is offering contracts through to 2012, with the base price rising to £89.25 per tonne by the 2012 harvest and excluding energy aid, starch premiums and late-season payments.

This French-owned food group based in Corby, Northamptonshire is looking at installing a 190,000 tonne bioethanol plant.

Many worry that, for example, with climate change and population growth biofuels will take up valuable land that could, and should, be used for growing food. There are also questions about the energy balance of these crops once the fuel used in, for example, cultivations and fertiliser is included in the equation.

Perhaps these current projects are best seen as a way of crops gaining entry to a market that has hitherto been dominated by fossil fuels. The hope is that further down the line, secondgeneration biofuels will answer some of these criticisms. These involve techniques that use enzymes to convert starch materials directly into liquid fuels. Therefore, any starch-based material, including that currently regarded as waste, such as straw or even household rubbish, could be a potential feedstock.

Although all of these developments are welcome, it is worth sounding a note of caution.

  • These investments are being made due to a combination of high oil price and Government support through legislation, neither of which is guaranteed in the long term.
  • The companies investing are commercial operations and not simply there to help farmers. Farmers growing crops for any of these markets are, in effect, still producing commodities. It is essential that UK producers are efficient enough to compete, otherwise the feedstocks for this emerging industry can just as easily be imported from overseas. (It is noteworthy that many plants are being sited at deep-water ports.)

Despite this, all this new demand has to be good news. Combined with the new ‘Cerestar’ starch manufacturing facility opening in Manchester, domestic demand looks set to grow by 1,000s of tonnes. This opens up the possibility that the UK market could move from a situation where prices are set by export parity to one where prices are at import parity. This, in itself, could be worth up to £6-7 per tonne before any, more general commodity price rises are factored in.

Livestock producers may feel that this will work against them – higher grain prices making feed more expensive. But many of these plants will be generating by-products that will be looking for an outlet.

We are grateful to Andersons, the farm business consultants, for their contribution to this bulletin. We have taken great care to ensure the accuracy of this newsletter. However, the newsletter is written in general terms and you are strongly recommended to seek specific advice before taking any action based on the information it contains. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. © Smith & Williamson Limited 2006.

Smith & Williamson Limited Regulated by the Institute of Chartered Accountants in England and Wales for a range of investment business activities. A member of Nexia International.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.