A MOTHBALLED North-East refinery, which was forced to halt operations after a poor harvest, could be hit by a fresh setback.

CropEnergies AG, which own the Ensus bioethanol factory, at Wilton, near Redcar, faces being hit by changes to biofuel legislation across Europe that could reduce production.

Campaigners, including Oxfam and Greenpeace, are calling for a curb on the amount of land being used to grow fuel rather than food, saying the process drives up poverty and climate change.

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Last night, Ensus bosses backed calls from a renewable energy group to waive any cap on biofuels, ahead of a European Parliament vote tomorrow (Wednesday, September 11).

The European Union has set a 10 per cent target of transport fuel from biofuels by 2020, but proposals would see food-based biofuels down to to five per cent, which campaigners say would help food production.

North East MEP Fiona Hall, who fought to stop US companies avoiding tariffs on imported ethanol through EU loopholes, said a slightly higher cap would help Ensus.

She said campaigners worries over biofuels creating high levels of greenhouse gases were also not borne out at the Wilton plant.

She said: “Setting a cap at six per cent would give Ensus more room to move.

“The bigger problems are caused by palm oil, soy and bio-diesel, with ethanol less harmful.

“The plant is very important to the region, it is an excellent example of a new chemical industry coming to the North-East and creating valuable jobs.”

The £250m Ensus factory, which opened in February 2010, is seen as a major factor in the UK's renewable fuel drive, and uses wheat to create bioethanol that is added to petrol, with excess protein and grain used to make animal feed.

The firm employs about 100 workers in Wilton and Yarm, but closed for the third time in three years in April, citing a poor harvest and rising energy costs.

It supported 2,000 farming, haulage and engineering jobs in the supply chain, and The Northern Echo understands work could restart later this year.

Ms Hall was backed by Dr Nina Skorupska, chief executive of the Renewable Energy Association, who highlighted the value of plants such as Ensus to the UK.

She said: “Our domestic biofuels industry supports 3,500 jobs across 200 companies and achieves average carbon savings almost double the 35 per cent minimum required by the Government.

“This is why MEPs must support vote against a cap on the use of agricultural biofuels.”