The deal comes after months of uncertainty last year (2021) culminated in a three-month price-fixing agreement put together by the UK CO2 industry and the Government following the closure of two major CO2 production facilities.
Nationwide concerns over CO2 supply were widespread after a spike in natural gas prices caused the UK’s main CO2 supplier, CF Fertilisers (CFF) – subsidiary of CF Industries (CF), to cease operations at two of its Teesside plants.
With the price-fixing agreement scheduled to end yesterday (31st January) industry speculated upon the possibility of further Government intervention.
The ongoing uncertainty sparked fears from CO2-intensive industries such as food and beverage, with a Food and Drink Federation (FDF) spokesperson revealing to gasworld last week that, “we are concerned that with just days now remaining before that agreement comes to an end, and energy prices still very high, there will be further CO2 shortages once again.”
The FDF also stated that the organisation aims to work together with the Government to help build ‘long-term resilience’ into the production of food-grade CO2.
Nick Allen, CEO, British Meat Processor Association (BMPA) expressed concerns when speaking on BBC’s Today Programme on 26th January, saying, “If a deal isn’t struck between CF Industries and the suppliers, then somewhere there’s going to be some problems. Prices will have to go up considerably.”
With a deal now signed, today’s announcement will see CFF’s Billingham plant continuing to operate while global gas prices remain high, ensuring supplies of CO2 for key sectors such as food processing and nuclear power.
As immediate CO2 shortage fears are abated, focus will now shift to building the long-term resilience necessary to ensure protection of the UK’s CO2 supply.
Such measures could include utilising CO2 that is produced as a by-product of biogas, an industry seeing large-scale investment as a low-carbon source of sustainable energy.
Economic opportunities are presented for industrial-grade CO2 from biogas plants for sectors such as welding, blasting services, and chemical feedstock, which makes up around 30% of all demands in many developed CO2 markets.
In times of seasonal or price-induced shortage, biogas has the potential to at least alleviate some of the pressure felt in the CO2-intensive food and drink sector.
The Government also stated that it is currently engaging on ways that the market could take measures to further improve resilience.