Row over claims that Ineos factory in Hull will miss out on £23m in Government subsidies - because it is too eco-friendly
Bosses from chemicals giant Ineos are to hold talks today with Government officials following a public row over whether a plant it operates in Hull will lose millions in subsidies because it has become more environmentally-friendly.
Ineos said it was due to take place in urgent talks with officials from the Environment Agency, the Department for Energy Security and Net Zero and the Department for Business and Trade to resolve the situation.
Ineos said at the weekend it faced being penalised by the amount from losing carbon subsidies after switching the fuel source at a Hull plant from natural gas to low carbon hydrogen, reducing emissions by 75 per cent.
The plant in question employs around 300 people and produces acetic acid, which is the main component in vinegar and a critical building block used in food production, pharmaceuticals, synthetic fibres and specialty chemicals.
But Ineos Acetyls CEO David Brooks claimed the company was facing a “bonkers” situation in which it could lose £23m because of the fuel change. Ineos said the Environment Agency was considering classifying the Hull site as a “new installation” because of the hydrogen change; a move it said would mean it would not receive UK Emissions Trading Scheme (ETS) allowances until 2028.
But the Environment Agency told The Yorkshire Post that Ineos will still be able to access ETS funding, while people with knowledge of the matter said the agency has never planned to reclassify the plant as a new installation and that the £23m figure appeared to be based on an inaccurate calculation that Ineos would be losing all of its allowance for the next two years.
An EA spokesperson said: “The operator will continue to receive free allocations under the UK Emissions Trading Scheme. This has always been the case and they continue to be calculated on activity data for the previous year.
“We continue to work across government to engage with the company and address its concerns.”
Speaking before the meeting, Mr Brooks told The Yorkshire Post that the company stands by its original claims.
He said: “We were told by the Environment Agency that the main installations at our Hull Acetyls site would be reclassified as a ‘new installations’ because we switched from natural gas to hydrogen, a move that cut our CO₂ emissions by 75 per cent. As a result, we were set to lose our ETS allowances until 2028, creating a £23 million cash drain over the next three years.
“The moment we raised this publicly, the EA reversed course, telling the media that no such reclassification had ever been proposed. That directly contradicts what we were previously told.
“We wrote to Defra on June 5 asking for an urgent meeting to clarify this mess. We will now meet officials from the Environment Agency, DESNEZ and DBT on Tuesday.
“To be clear, we’ve invested £30 million to decarbonise our site. Penalising us for doing the right thing is absurd. We’re not asking for special treatment, just not to be worse off for cutting emissions.
“We sincerely hope the Environment Agency hasn’t tried to quietly change its position and leave us holding the bill. But until we get formal clarity, our position stands.”