Food shortage fears as Co2 crisis rears its head again: US fertilizer plant that supplies 40% of UK’s carbon dioxide – used in animal slaughter and drinks – will shut due to rising energy bills… after multi-million pound government deal to keep it open
- CF Fertilisers is halting production at its plant in Teesside due to energy costs
- Bosses say the plant has become ‘uneconomical’ to run in the current climate
- The factory produces CO2 which is used in the UK’s food and drink industry
- It has sparked fears there could be a carbon dioxide shortfall and supply issues
There are fears there could food shortages in the coming months after the one of the UK’s largest suppliers of carbon dioxide announced it was halting production in Britain.
CF Fertilisers, which produces CO2 at its ammonia plant in Billingham, near Middlesbrough, said soaring energy costs meant it is now ‘uneconomical’ to run the site less than year after a multi-million pound government deal to keep it open.
This has sparked fears there could be a shortage of the chemical, which is made as a by-product of the reaction which makes the ammonia and is used in a number of sectors
It is particularly important in the food and drink industry, where it is used in the slaughter of pigs and chickens, to add fizz to beer and soft drinks, and in the packaging of foods.
It is also critical for cooling nuclear reactors and as well as keeping certain medicines and vaccines cold, and used across the NHS.
Industry figures have warned there could be supply shortages if the pause in production leads to shortfalls in carbon dioxide and have urged the Government to ‘step in’.
CF Fertilisers has announced it will halt production at its ammonia plant in Billingham, near Middlesbrough, due to rising energy costs
The plant makes CO2 as a by-product, which is then used in the refrigeration of food and drinks, and across other sectors
It comes months after the owner of the factory in Teesside – the last fertiliser plant in the UK after its sister site at Ince, in Chester, was closed – was given a subsidy by the Government to stay open.
CF Fertilisers, which is based near Chicago in the US and produces 40 per cent of Britain’s CO2, said the Government ‘agreed to cover the costs to restart the ammonia plant at Billingham and to offset losses incurred from production for a 21-day period’ while a deal with the industry was reached.
Afterwards, George Eustice, the Environment Secretary, admitted the cost was likely to rise to many millions of pounds and ‘possibly tens of millions’.
The Daily Mail reports the state bailout offered was worth £30million last year, and that the Government will not offer another.
A Whitehall source said some food and drink firms may suffer shortages but stressed that critical infrastructure demand would be met through a separate CO2 facility in Yorkshire.
The firm, which is run by US millionaire Tony Will, had said a surge in gas prices last January meant production would not be profitable.
Since then prices have only got higher, as has a cost of living crisis that threatens to plunge millions of households into fuel poverty, with warnings inflation could top 13 per cent in the new year.
The Government has said it is ‘aware’ of the decision and is examining options to improve the resilience of CO2 production in the UK.
Brewers and meat producers have warned the proposed shutdown will threaten the operations of suppliers.
Nick Allen, chief executive of the British Meat Processors Association, said the Government will ‘need to step in’.
He said: ‘Whilst we are in a much better position now than we were a year ago, if CF Industries follows through on its threat to close Billingham the British meat industry will have serious concerns.
Carbon dioxide produced at the plant is used to make the ‘fizz’ in beer and different soft drinks
‘Without sufficient CO2 supplies the UK will potentially face an animal welfare issue with a mounting number of pigs and poultry unable to be sent for processing.
‘It’s for this reason that securing CO2 supplies is of key strategic importance and, following this latest development, we can’t see how Government can sit on the sidelines and insist that it’s for companies to work it out amongst themselves.’
Emma McClarkin, chief executive of the British Beer and Pub Association, said the timing of the announcement ‘couldn’t be worse’ as she also called for the Government to intervene.
‘This decision raises serious concerns for the sustainable supply of CO2 to the brewing and pub industry,’ she said.
The company is run by millionaire Tony Wills, and last year closed its only other UK plant in Ince, Chester
‘A guaranteed supply is essential for operations across pub and brewing businesses and this announcement comes at a time when they are already facing extreme cost rising that are threatening businesses and people’s livelihoods across the country.’
CF Fertilisers said it has decided to pause production amid concerns its costs will continue to surge in the coming months.
‘At current natural gas and carbon prices, CF Fertilisers UK’s ammonia production is uneconomical, with marginal costs above £2,000 per tonne and global ammonia prices at about half that level,’ the company added.
A Government spokeswoman said: ‘We are aware that CF Fertilisers has taken the decision to temporarily halt ammonia production at Billingham.
‘Since last autumn, the CO2 market’s resilience has improved, with additional imports, further production from existing domestic sources and better stockpiles.
‘While the Government continues to examine options for the market to improve resilience over the longer term, it is essential industry acts in the interests of the public and business to do everything it can to meet demand.’
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