After meeting with trade bodies across the food and drink industry, the government has said it will intervene in the current CO2 shortages.
George Eustice, the Secretary of State for Environment, Food and Rural Affairs, told Sky News “tens of millions” could be spent to restart carbon dioxide production at one of CF Industries’ two fertiliser plants, the facility at Billingham.
Eustice said that the intervention would be on a short-term basis, “just for a few weeks”, to give the market time to adjust and time for other suppliers to come on stream.
He said: “We’ve intervened to, basically support this company with some of their fixed costs.” Eustice went on to say that the cost of the plans would cost “many millions, even tens of millions”, but stated that the cost was “to underpin some of the fixed costs” needed to operate the plant.
He explained: “We need the market to adjust, the food industry knows there’s going to be a sharp rise in the cost of carbon dioxide, probably going from something like £200 a tonne eventually up to closer to £1,000 a tonne, so a big, sharp rise.”
This news comes as Ian Wright, chief executive of the Food and Drink Federation (FDF) wrote to the government, warning that the food supply chain is “now seriously compromised by the disruptions in the supply of CO2.”
In his letter to George Eustice, Wright explained that two thirds of the CO2 volume that normally supplies the food and drink industry is now not available following the suspension of manufacturing by key producers – principally fertiliser manufacturers who produce CO2 as a by-product.
Wright warned that the FDF were now aware of some companies who have already had to stop production, and others that “will cease within the week.”