Price fixed for CO2 to maintain production

Will Green is news editor of Supply Management
11 October 2021

The UK government has brokered a deal to maintain supplies of CO2 after it stepped in with millions of pounds of support for a key supplier.

Under the deal a price has been agreed, that industry will pay, for the CO2 produced by CF Fertilisers, which will enable it to keep running while global gas prices remain high.

The government did not reveal the price but said it “reflects the vital importance of this material to everything from our nuclear industry to hospitals to the food and beverage industry”.

The government agreed to cover CF’s gas costs in September for a period of three weeks after the food sector warned of imminent shortages.

At the time environment secretary George Eustice said the price of CO2 would rise five-fold from £200 per tonne to £1,000.

CO2 is a by-product of ammonia production, which is used to make fertiliser. CF produces 60% of the UK’s CO2 requirements. It is used to make fizzy drinks, in packaging to keep food fresh, and to stun animals before slaughter.

Business secretary Kwasi Kwarteng temporarily exempted parts of the CO2 industry from competition law to facilitate the agreement, which runs until January 2022.

Kwarteng said: “Today’s agreement means that 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 kick-start production, and give 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.”

Separately, CO2 producer Ensus reopened its plant in Wilton last week following temporary closure for planned maintenance. It can produce up to 40% of UK demand.

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