Deal struck to secure CO2 supply until January

By Nikkie Thatcher contact

- Last updated on GMT

Agreement made: the deal means the CO2 supply has been confirmed until January 2022 (image: Getty/frentusha)
Agreement made: the deal means the CO2 supply has been confirmed until January 2022 (image: Getty/frentusha)

Related tags: Food, Beer, Government, Gas

The Government has agreed a deal with the CO2 industry to confirm the continued production of the gas until the beginning of next year.

CO2 suppliers have agreed to pay CF Fertilisers a price for the CO2 it produces that will enable it to continue operating while global gas prices remain high.

Business secretary Kwasi Kwarteng said: “The agreement means critical industries can have confidence in their supplies of CO2 over the coming months, without further taxpayer support.

“The Government acted quickly to provide CF Fertilisers with the support it needed to kickstart production and gives us enough breathing space to agree a longer-term, more sustainable solution.

“I would like to thank all the parties involved in this agreement who have recognised the importance of avoiding supply disruptions and delivering for UK businesses and consumers.”

Vital for food and drink

Kwarteng previously exempted parts of the CO2 industry from competition law to help facilitate the agreement temporarily.

Environment secretary George Eustice added: “CO2 is vital for our food and drink sectors. The Government has taken decisive action in these exceptional circumstances to allow a deal to be reached, which will continue the support of CO2 to businesses – including thousands of food and drink businesses – up and down the country.”

However, The Morning Advertiser​’s sister title MCA reported the Food and Drink Federation welcomed the deal​ before warning the deal permitted CF Fertilisers could charge more for the gas, which could result in higher prices for operators.

It was previously predicted UK pubs could be facing a CO2 shortage worse than the 2018 crisis​​ after two UK fertiliser plants, which produce CO2 as a by-product, closed due to rising gas prices.

While trade body the British Beer & Pub Association issued reassurances there would not be a beer drought, the Society of Independent Brewers outlined how the shortage wouldn’t impact cask beer immediately but could be a worry for keg, bottled and canned beer.

Previous agreement

Furthermore, the British Meat Processors Association warned pork and poultry products could be affected.

Yet, the agreement with CF Fertilisers, which produces about two fifths (60%) of the UK’s CO2, used primarily by the food sector, will mean limited financial support for the fertiliser firm’s operating costs for three weeks while the market adapts to global gas prices.

In September the Government announced a temporary three-week agreement, which allowed the company to immediately restart operations and produce CO2 at its plant in Billingham, Stockton-on-Tees.

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