Hospitality and food sectors raise alarm as high gas prices shut down CO2 plant

25 August 2022 by
Hospitality and food sectors raise alarm as high gas prices shut down CO2 plant

The food and drink sector has warned there are "serious concerns" that the impending shutdown of a CO2 manufacturing plant could impact supply chains.

US manufacturer CF Industries yesterday said it would temporarily halt ammonia production at its UK plant in Billingham due to the spiralling cost of natural gas.

CO2 is a by-product in the manufacturing of ammonia and is used in food packaging, fizzy drinks, and beer, and to stun animals before slaughter.

In 2018, a shortage of CO2 led to pubs seeing some beer stocks affected while livestock producers and drinks producers saw their supplies dwindle.

Natural gas prices have more than doubled in a year and CF Industries said its marginal costs were now above £2,000 per tonne, while global ammonia prices are around half that level.

The company has not confirmed the date it will begin the shutdown but said all CO2 production would stop until the plant was restarted.

Emma McClarkin, chief executive of the British Beer and Pub Association (BBPA), said the timing of the announcement "couldn't be worse" for pubs and brewers.

"This decision raises serious concerns for the sustainable supply of CO2 to the brewing and pub industry," said McClarkin.

"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.

"We urge the Government to urgently convene stakeholders to ensure there is a reliable supply of CO2 to our industry and others that depend on it."

The British Poultry Council (BPC) said its members were ensuring they had stocks of CO2 to avoid disruption.

Richard Griffiths, chief executive of the BPC, said: "Total poultry production in the UK is about 20m birds a week so a reliable supply of CO2 is essential to our food security.

"We know from previous events that CO2 production can quickly be affected so it is something we are closely monitoring to avoid disruption in this area of our supply chain."

The Food and Drink Federation said it was aware of situation and would be working with companies to understand the impact the shutdown would have on food and drink supply.

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. This prompted warnings over the supply of poultry for Christmas.

In February the government helped broker a deal to ensure supply was maintained.

CF Industries said it expected to fulfil all ammonia and nitric acid contracts in the coming months by importing supplies from abroad.

A Government spokesperson said: "We are aware that CF Fertilisers has taken the decision to temporarily halt ammonia production 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.

"We are engaging with businesses across the food and drinks industry to understand any potential impacts".

Image: Angel L / Shutterstock

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