Fear of lack of fresh CO2 as rising energy costs forced the factory to close | Business newsletter

New concerns flared about a shortage of carbon dioxide – vital to the food and beverage industry – after a major supplier said it was shutting down production due to rising energy costs.

There were further worries after CF Fertilizers said it was suspending operations at its remaining UK ammonia plant at Billingham near Middlesbrough, as soaring gas prices made the plant “uneconomical”.

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The company supplies 42% of CO2 to the UK, which is a by-product of ammonia production.

CO2 plays an important role in the food supply chain, keeping food fresh and adding fat to beer and soft drinks, as well as being used in the humane slaughter of pigs and chickens.

It has been warned that any disruption in supplies poses a serious risk to food production and security as well as animal welfare.

Minister has forced to intervene nearly two years ago with the financial backing of the plant after the shutdown, which at the time was blamed on soaring gas prices, caused a food supply crisis.

The government said it was “aware” of the latest decision and was looking at options to improve the resilience of CO2 production in the UK.

Whitehall’s assurances on the impact of the shutdown are currently being sought by the chair of the Commons Environment, Food and Rural Affairs Committee.

Sir Robert Goodwill, who wrote to the Environment Secretary to express his concerns, said: “Recent reports that CF Fertilizer will stop producing ammonia are concerning, given the direct impact of this decision on CO2 production in the UK.

“Any disruption to CO2 supplies could have serious effects on food production, national food security and animal welfare.”

Nick Allen, chief executive of the British Meat Processors Association, said the government would “need to step in”.

“While we are in a much better position now than we were a year ago, if CF Industries delivers on its threat to shut down Billingham, the UK meat industry will have serious concerns,” he said. important.

“Without an adequate supply of CO2, the UK is likely to face an animal welfare problem with increasing numbers of pigs and poultry that cannot be disposed of.

“It is for this reason that securing CO2 supplies is of vital strategic importance and in light of this latest development we cannot see how the government can sit on the sidelines and insist that it’s up to the companies to deal with this on their own.”

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Emma McClarkin, chief executive of the British Beer and Pub Association, said the timing of the announcement “could not have been worse” as she also called on the government to intervene.

“This decision raises serious concerns about the sustainable supply of CO2 to the brewing and pub industry,” she said.

“Assured supply is essential to the operation of brewing and pub businesses and this announcement comes at a time when they are faced with a huge cost increase that is threatening their businesses.” businesses and livelihoods of people across the country.”

“Given current natural gas and carbon prices, CF Fertilizers UK ammonia production is uneconomical, with marginal costs above £2,000/ton and global ammonia prices at around one,” CF said. half.”

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A government spokesman said: “We are aware that CF Fertilizers has made the decision to temporarily stop ammonia production at Billingham.

“Since last fall, the resilience of the CO2 market has improved, with additional imports, more production from existing domestic sources and better stockpiling.

“While the government continues to consider options for the market to improve long-term resilience, it is essential for industry to act in the interest of the public and business to do everything possible. to meet the needs.”

The CBI warned earlier this week that many viable companies face “dire situation” unless the government takes urgent action to address the energy cost crisis.