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CO2 shortage: UK secures deal to ease food supply fears

Carbon dioxide production
The CF Fertilisers site on Teesside where production was halted because of high natural gas prices. Photo: Getty

The UK government is providing financial assistance to the country’s main CO2 supplier, which had to shut down production at its Billingham plants last week due to the soaring prices of natural gas.

At the time, CF Fertilisers said it did not have an estimate for when production would resume.

This led to fears that many industries would be hit — carbon dioxide is used across the food industry in production and packaging to keep products fresh. It's also used to stun pigs and chickens before they are slaughtered.

It is also required to dispense drinks and beers in pubs and is used to promote the growth of plants such as cucumbers in greenhouses

CF Fertilisers produces around 60% of the UK’s CO2, used primarily by the food sector. Around 20% of the UK’s CO2 is produced by other plants in the UK, and the rest of the demand is met by importing the gas from overseas.

Read more: European stock markets push higher as Evergrande fears ease

“The exceptional short-term arrangement with CF Fertilisers will allow the company to immediately restart operations and produce CO2 at its Billingham plant,” the government said in a statement.

It will provide “limited” financial support for CF Fertilisers’ operating costs for three weeks whilst the CO2 market adapts to global gas prices.

The government also said it has held discussions with food producers, trade bodies and major supermarkets who are committed to “doing whatever it takes” to move to a sustainable market-based solution by the end of the three-week period.

“The quick and decisive action we have taken to resolve the issue shows the seriousness with which we have approached it," said UK business secretary Kwasi Kwarteng.

The government also said the UK benefits from having a diverse range of gas supply sources, and that it does not anticipate any increased risk of supply emergencies this winter.

The British Soft Drinks Association said earlier this week that manufacturers have “only a few days” of carbon dioxide left to produce beverages, and they are unable to import supplies from the European Union due to Brexit.

Read more: Gas price crisis: UK government to take action as energy companies warn of collapse

Meanwhile Nippon Gases, one of the world's largest distributors of the gas, has warned that the carbon dioxide shortage could also impact the rest of Europe.

Nippon Gases said "other countries in Europe will also suffer shortages" of CO2, estimating that its supplies had fallen 50% across the region, the Financial Times reported.

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