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UK: End of CO2 sector bailout sparks talks of food & drinks shortages

UK: End of CO2 sector bailout sparks talks of food & drinks shortages
UK: End of CO2 sector bailout sparks talks of food & drinks shortages

Following the UK government's decision to not renew its support for the CO2 sector, brewers and food suppliers across the nation, have reportedly warned of severe shortages of meat, beer, and fizzy drinks, along with higher product prices.

CO2 is used by meat processors, bakers, and soft drink manufacturers in the production and packaging of their respective goods. The gas is also necessary for humane animal slaughter of pigs and chickens.

Last October, the Department for Business, Energy and Industrial Strategy (BEIS) had stated that it had negotiated a contract with CO2 companies to assure gas supplies to the food and beverage sector, nuclear power plants, and hospitals.

It happened after the British government was obliged to use taxpayer money to back a brief bailout for CF Industries, which produces 60% of Britain's CO2. The bailout was necessary to keep the business going and avoid a supply chain instability.

Due to rising gas prices, CF Fertilisers, which is controlled by a private company in the United States, had ceased production at two of its factories, Ince in Cheshire and Billingham on Teesside.

The three-month arrangement, however, expired on January 31st, and BEIS stated that it was up to the CO2 sector to work together to keep supplies up.

CF Fertilisers' customers agreed to pay a set amount for CO2 until at least the end of January within the three-month contract.

The agreement was designed to give the sector time to find other CO2 sources that are suitable for use in food production.

On Monday, CF Industries stated that it was still in talks with its industrial gas clients about pricing arrangements.

According to industry observers, sustained CO2 availability is contingent on a new agreement involving UK CO2 distributors Air Liquide and Nippon Gases as well as CF Industries.

The Food and Drink Federation (FDF) wrote to Kwasi Kwarteng, UK business secretary, as well as George Eustice, UK environment secretary, on Friday, expressing concern about the implications of additional CO2 constraints in the absence of a new industry agreement.

Source credit: https://www.theguardian.com/business/2022/jan/31/uk-food-and-drink-firms-warn-of-shortages-bailout-c02-industry-ends-meat-beer

About the author

Vinisha Joshi

Vinisha Joshi

Despite graduating with an engineering degree in electronics and communication, Vinisha Joshi chose the road less travelled, and decided to pursue her career in content writing . Currently, she pens down articles for cuereport.com and a few other distinguished news platforms, pertaining to business and finance.