UK Warned Food Industry: Carbon Dioxide Prices will Rise Steadily

Britain already warned the food industry on Wednesday that carbon dioxide prices would increase sharply after offering tens of millions of dollars of state support to a fertilizer company to turn away a food supply crisis.

It was reported by Reuters that the wholesale gas prices have increased this year as economies reopened from COVID-19 lockdowns and high demand for liquefied natural gas in Asia pushed down supplies to Europe, leading to a shortage of carbon dioxide (CO2) in the food industry.

Britain struck a deal with U.S. company CF Industries to restart production of carbon dioxide (CO2) at two plants - one in Billingham and another in Cheshire - which were shut because they were unprofitable due to the spike in their biggest cost: gas prices.

Environment Secretary George Eustice told Sky News that, “We need the market to adjust, the food industry knows there's going to be a sharp rise in the cost of carbon dioxide.”

He said the food industry would have to accept that the price of carbon dioxide would rise sharply, to around 1,000 pounds ($1,365) a tonne from 200 pounds a tonne. "So a big, sharp rise," Eustice added.

The three-week support for CF would cost "many millions, possibly the tens of millions but it's to underpin some of those fixed costs," Eustice told Sky. "These are two big expensive plants."

Some of Britain's meat and poultry processors would have run out of CO2 - also used to put the fizz in beer, cider and soft drinks - within days, forcing them to halt production.
"We know that if we did not act, then by this weekend or certainly by the early part of next week, some of the poultry processing plants would need to close," Eustice said.

He said the impact on food prices would be negligible.

($1 = 0.7328 pounds)