CO2 shortage creates 'untenable situation' for firms as prices rocket

23 January 2023

Prices for CO2 in New Zealand have risen eightfold in some cases as a result of a supply crunch caused by production problems.

Raewyn Bleakley, CEO of the NZ Food and Grocery Council (FCG), said CO2 buyers “were really feeling the pinch” since the country’s only remaining commercial CO2 supplier paused production just before Christmas.

Bleakley told The Platform podcast that C02 prices for FCG members had risen sometimes threefold, fivefold or even eightfold from some distributors.

The closure of the Marsden Point oil refinery in March last year was followed by a “temporary” but indefinite outage at the Todd Energy plant in Kapuni.

Todd Energy was quoted by RNZ as saying an ammonia leak had forced it to suspend production.

The company says liquid CO2 production will restart early next month but will not reach full capacity until later this year.

Bleakley said however that relying on just one food grade CO2 supplier was an unsustainable situation for NZ food producers.

“What we would really like is much more reliable New Zealand supply than when we're relying on one supplier or even two suppliers, as we had previously,” she said.

As well as beer, carbonated drinks and agricultural production within greenhouses, CO2 is used in small but vital amounts in the packaging of some foods to extend shelf life significantly.

“If you don't have it, you've got a shelf life problem, you've got a wastage problem, and that then becomes a logistical transport problem,” she added.

Supermarket groups Countdown and Foodstuffs have said there is no evidence yet that the shortage is translating into higher food prices, Stuff reported.

But the effects of the shortage have been felt by craft brewers, at least one meat processing company, and horticultural firm NZ Gourmet.

The FCG is working with Ministry of Business, Innovation and Employment and other business groups to find solutions, Bleakley said.

“Some CO2 can be captured or recaptured from production processes like brewing and other processes that food production use, but you have to invest in that equipment to do that,” she added.

She said uncertainty of supply was making production planning difficult for food and drinks companies.

“We are trying to put some ideas to put in front of government to… work together on some funding or some initiatives because this untenable situation really needs to be fixed,” she said.

☛ Want to stay up to date with the news? Sign up to our daily bulletin.

CIPS Knowledge
Find out more with CIPS Knowledge:
  • best practice insights
  • guidance
  • tools and templates