Gas crisis: Taxpayers to pay towards restart of CO2 production

21 September 2021, 22:35 | Updated: 21 September 2021, 23:30

Taxpayers are set to bear the costs of CO2 production to prevent further shortages in coming weeks, it has been announced.

In a deal agreed by Business Secretary Kwasi Kwarteng, "limited financial support" will be provided to American firm CF Fertilisers for three weeks to assist with their operation costs.

It comes as part of an effort to avoid disruptions to food supply across the country as well as the national health service.

The Department for Business, Energy and Industrial Strategy said the "exceptional short-term arrangement" would allow the company to immediately restart operations, producing CO2 at its Billingham plant in Teesside.

CF Fertilisers currently produces around 60 per cent of the UK's CO2. However, it was forced to shut down two plants last week, citing the high cost of natural gas.

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Spiralling energy costs have had a particular knock-on effect on the food industry, with ongoing fears that lack of action could lead to more shortages on supermarket shelves.

Ian Wright, chief executive of the Food and Drink Federation, previously warned that shoppers may notice products missing "in about 10 days" if a solution was not found.

CO2 is injected into the packaging of perishable foods such as meat and salads to inhibit the growth of bacteria, typically prolonging the shelf life of products such as beef steak by around five days.

The gas is also used to stun animals prior to slaughter.

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Following the announcement, Business Secretary Kwasi Kwarteng said: "This agreement will ensure the many critical industries that rely on a stable supply of CO2 have the resources they require to avoid disruption.

"The quick and decisive action we have taken to resolve the issue shows the seriousness with which we have approached it.

"In our ongoing response to manage the impact of global gas price rises, we will continue to protect businesses and consumers."

Meanwhile, Environment Secretary George Eustice said: "We have acted decisively to ensure that CO2 supplies, which are critical to some of our food sectors, continue to be available following some exceptional events.

"However this is a short term intervention to provide the space and time for market adjustment."

Prime Minister Boris Johnson said on Tuesday afternoon that the Government would take "direct steps" to ensure availability of the gas.

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Tony Will - the head of CF Industries - said: "We want to thank The Honourable Kwasi Kwarteng, Secretary of State for Business, Energy and Industrial Strategy, and his entire staff for working tirelessly to bring about this agreement enabling restart of the plant and averting a potential CO2 supply disruption impacting many industries, including food and beverage availability to UK consumers.

"We look forward to working with Secretary Kwarteng and the UK Government on developing a longer-term solution, including the development of alternative suppliers of CO2 for the UK market."