Business secretary says business will have a sustainable supply of CO2 even as gas prices rise.
Image source, Getty Images
A key carbon dioxide (CO2) producer in the UK has agreed to continue supplies of the gas which is vital to food and drink production until early next year.
US firm CF Industries said the move should give the government and firms time to find other sources of CO2.
Last month, the government stepped in to subsidise one of the firm’s plants after its shutdown due to high gas prices threatened food supplies.
The move comes amid discussions to help other firms hit by surging gas prices.
“CO2 suppliers have agreed to pay CF Fertilisers a price for the CO2 it produces that will enable it to continue operating while global gas prices remain high, drawing on support from industry and delivering value for money for the taxpayer,” the government said.
The agreement meant industry could have confidence that it would receive future CO2 supplies, without further taxpayer support, the statement said.
Last month, CF Industries suspended production at two sites – Cheshire and Billingham – which make 60% of the UK’s commercial carbon dioxide because of a sharp rise in gas prices. It reopened its Billingham plant in North East England after the government agreed to meet the costs of running it for three weeks.
Billingham produces up to 750 tonnes of CO2 per day as a byproduct of producing ammonia for fertilizer. CF Industries’ plant at Ince in Cheshire remains closed with no date given for a reopening.
The US firm said it now expected the UK government and industrial gas customers to “develop robust alternative sources of CO2 as part of a long-term solution for meeting demand in the country.”
Last month it emerged the British food industry would be forced to pay five times more for carbon dioxide as part of a government deal with CF Industries to restart production in the UK.
Environment Secretary George Eustice said carbon dioxide prices would rise from £200 per tonne to £1,000.
Support for other industries hit by soaring gas prices is also being discussed in government. Asked if talks are underway between the Treasury and business ministers, a Number 10 spokesperson said: “Treasury officials are involved in this – as are officials across government.”
On Sunday, Kwasi Kwarteng told the BBC’s Andrew Marr programme the situation was “critical” and said he was “looking to find a solution”.
“We already have existing support and we’re looking to see whether that’s sufficient to get us through this situation,” he said.
Mr Kwarteng said there were Treasury talks about support measures to ease the impact on firms. However, a Treasury source later said the business secretary had been “mistaken”.
On Monday, industries made another appeal to the government for action.
Talks with business ministers will continue on Monday over a crisis that has sparked warnings about some factories.
Sectors such as ceramics, paper and steel manufacturing have called for a price cap, though talks with government on Friday failed to reach a solution.
Mr Kwarteng will not be involved directly at Monday’s talks with industry representatives, according to BBC political correspondent Adam Fleming.
Business minister Lee Rowley will lead the meeting with industry representatives later this afternoon, and is having another meeting with steel bosses on Tuesday.