CO2 industry strikes deal to prevent shortages

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A fresh deal has been struck to keep supplies of vital industrial-grade carbon dioxide (CO2) flowing by keeping a key production site open.

When CF Industries' plant at Billingham shut briefly last year, it caused a crisis, threatening CO2 supplies to the food, medical and nuclear sectors.

At the time, the company said that high natural gas prices made the plant unviable.

A three-month deal allowing it to continue operating expired on Monday.

But the government said major CO2 users have now reached a new agreement with CF Industries.

Details of the deal have not been disclosed, but the BBC understands it will last until at least spring and come at no cost to the taxpayer.

"The carbon dioxide industry has come to an agreement to ensure UK businesses have access to a sustainable supply of CO2 - an essential component of the national economy," the business department said in a statement.

"The deal will enable CF Fertilisers' Billingham plant to continue to operate while global gas prices remain high. It means key sectors, including food processing and nuclear power, are ensured supplies of CO2."

Concerns over food shortages as CO2 deal ends
In September, the government provided financial support to reopen Billingham. A deal was then struck between CF Industries and its customers to keep the plant open for three months without further subsidies.

The Food and Drink Federation had warned that without an extension of that deal, CO2 supplies could be interrupted, leading to food shortages on shelves.

CO2 is used in fizzy drinks, to keep packaged food fresh and to stun livestock before slaughter.

The UK continues to face soaring wholesale gas prices which have driven up costs for businesses and households.

Ammonia prices are currently at a record high, nearly double the level seen in September.

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Trade groups had warned there could food shortages without a fresh deal to ensure supplies to industry.

CO2 is used in food packaging, fizzy drinks and beer, and to stun animals before slaughter.

Last year CF Industries, which provides 60% of the UK's food-grade CO2, briefly stopped production at two plants following a rise in global gas prices.

There were fears another shutdown could occur this month after a three-month deal brokered by the government came to an end on 31 January, with the food industry raising concerns this could lead to issues with food and beer production.

A short government statement today (1 February) said the CO2 industry had reached a new agreement to allow production at CF Industries' Billingham plant to continue while global gas prices remain high.

The Department for Business, Energy and Industrial Strategy (BEIS) said: "[The deal] means key sectors, including food processing and nuclear power, are ensured supplies of CO2.

"In the longer term, the government would like to see the market take measures to improve resilience, and we are engaging on ways this could happen."

A spokesperson for CF Industries said: "The Billingham Complex remains operational and continues to sell CO2 on a contractual and spot basis."