Carbon dioxide crisis averted after new price deal agreed

A deal has been struck between leading carbon dioxide supplier CF Fertilisers and users of the critical gas, avoiding another crisis that had threatened to disrupt the whole agri-food trade.

Carbon dioxide is a by-product of ammonium nitrate (AN) fertiliser and last September the company suspended production at its two UK sites in response to the massive hike in global gas prices.

See also: Urgent call for new CO2 deal to ensure food and drink supply

But the sites also produce an estimated 60% of the UK’s carbon dioxide – used in all manner of processes, from stunning animals in slaughterhouses to extending the shelf-life of food – and the sudden shortage created chaos in the food supply chain, exacerbating the build-up of livestock on farms and leading to some food shortages.

Temporary relief was afforded when the government agreed to underwrite the cost of production at CF Fertilisers’ Billingham site in County Durham – but only for three weeks.

This was then followed by a longer-term agreement with carbon dioxide users, who agreed to pay a price that enabled CF Fertilisers to continue production.

That deal ended on Monday 31 January, prompting fears of a return to carbon dioxide shortages.

The Food and Drink Federation, together with a number of other trade bodies, wrote to business secretary Kwasi Kwarteng, urging the government to work with industry to ensure continuity of supply.

But it is now understood that an agreement has been reached between producers and buyers of carbon dioxide to ensure continuity of supply.

“The deal will enable CF Fertilisers’ Billingham plant to continue to operate while global gas prices remain high,” said a statement from the Department for Business, Energy and Industrial Strategy.

“It means key sectors, including food processing and nuclear power, are ensured supplies of carbon dioxide. The government welcomes industry’s agreement, which is in the best interests of businesses.”

In the longer term, the government said it would like to see the market take measures to improve resilience. “We are engaging on ways this could happen,” said the statement.

CF Fertilisers supplies about 60% of the UK’s food-grade carbon dioxide gas. Since the autumn agreement, Farmers Weekly understands that further supplies of carbon dioxide have come online, including at the Ensus biofuel refinery on Teesside, from additional imports, and existing anaerobic digestion plants.

Businesses also have stocks of gas to help protect them from some short-term disruptions.

The Association of Independent Meat Suppliers spokesman Tony Goodger said: “The UK cannot afford to keep having cyclical challenges to carbon dioxide and the government needs to ensure this industry is added to the list of industries that are critical to the country’s infrastructure.”