PRODUCTION at one of Europe's largest biofuel plants will soon be "up and running again" after the Government pledged to come to its rescue, an MP vowed yesterday.

In May Ensus said it was temporarily ceasing production at its £250m plant at Wilton, on Teesside, which only opened in February last year,

after it was hit by delays in implementing new rules to increase the amount of biofuels in petrol.

Now Liberal Democrat Redcar MP Ian Swales has said ministers are poised to unveil help for firms such as Ensus, which produces the bioethanol added to petrol.

Ensus partly blamed a delay in European Union member states implementing the Renewable Energy Directive for its troubles.

The directive will phase in targets so that - by the end of the decade - 20 per cent of all energy used in the EU, including fuel, has to come from renewable sources.

As a result of the delays, demand for the greener form of ethanol is not as anticipated and prices have not risen in line with the cost of animal feed grade wheat, making continued production unprofitable.

Mr Swales, in a speech delivered to a fringe meeting, hosted by the Chemicals Industry Association at the Liberal Democrat's conference in Birmingham, said ministers had told him that a package would be announced before the end of the year to provide desperately-needed certainty to producers such as Ensus.

It is expected to focus on criticism that Britain's own Renewable Transport Fuels Obligation (RTFO) - introduced, by Labour, in 2008 - is voluntary.

Mr Swales said: "I'm confident, having met with transport minister Norman Baker, that the Renewable Transport Fuels Obligation will be made mandatory.

"While it's voluntary, oil companies don't need to put bioethanol in petrol, so the process is stuttering into life, but the Government has now recognised the problem.

"I expect the Ensus plant to be up and running again, this is just a short-term blip."

All 100 workers directly employed by Ensus at the plant have been retained on full pay during the shut-down.

Between 2,000 and 3,000 workers also work in the plant's supply chain, including farmers and hauliers.

Its suspension of operations followed the setbacks that saw two other biofuels producers - D1 Oils and Biofuels Corporation - close refineries on Teesside.

Concern has also focused on the flooding of the European market with cheap imported ethanol from the United States, which takes advantage of loopholes in EU import legislation to avoid tariffs.

In a statement last night Ensus said that slow implementation of the Renewable Energy Directive had been one of the issues which led to the temporary closure of the plant.

It added: "Ensus is still confident in the future of the business longer term.

"It manufactures a highly sustainable product and its bioethanol and protein for animal feed make a major contribution to reducing greenhouse gas emissions and increasing the UK's energy and food security."