Vivergo, one of two UK bioethanol plants, has ceased production and will start laying off its 160 employees on Tuesday.
After weeks of talks, the government said on Friday it would not be providing financial support for the bioethanol sector, which is facing increased competition from imported US ethanol.
Vivergo, owned by Associated British Foods, said that would have meant continuing as a "heavily loss-making" business. As a result it is closing, with all staff due to be gone and the site ready for demolition by end of the year.
The government said it had decided a rescue would not provide value for taxpayers or solve the industry's long-term problems.
Bioethanol, can be made from waste oil or grains and is used as an additive to fuels, to reduce climate-damaging emissions. For example it is added to E5 and E10 petrol and sustainable aviation fuel.
