The primary carbon dioxide producer of the United Kingdom is reportedly set to raise its prices as part of a new government-brokered deal that focuses on keeping supplies to vital industries running without any taxpayer subsidies.
Last month, ministers intervened after a spike in the prices of natural gas forced US-owned CF Industries to close down its fertilizer factories, which also happen to produce 60% of the UK's CO2; a critical feedstock for industries ranging from food and beverage to nuclear power.
CF was persuaded to restart operations at one of the facilities, in Billingham, Teesside, with the help of tens of millions of pounds in incentives. However, that three-week arrangement is now coming to an end.
According to the government, now companies who purchase CO2 from CF have agreed to pay it a price that will allow it to continue functioning while international gas prices remain high, relying on industry backing and providing value for money for the public.
A trade group representing food and beverage producers welcomed the agreement to assure steady supply in the run-up to Christmas but warned that the extra cost was yet another burden on an industry already under enormous strains.
Kwasi Kwarteng, UK's Business Secretary, stated that the deal ensures that essential businesses have confidence in their CO2 supply over the next months without extra government help.
According to a spokesperson, the pace at which prices will grow under the agreement, which is in effect until January, was commercially sensitive.
However, this month, UK's Environment Secretary, George Eustice, stated to the media that the food market will most likely have to deal with a 400% spike in the price of CO2.
The deal arrives at a time where wholesale natural gas costs continue to increase, jumping by 7% to approximately 209p per therm on 11th Oct (Monday).
While that is significantly lower than the 355p record level that was hit last week, it is still several times higher than the 40p to 60p range where gas has been trading over the past years.