CO2 production to restart immediately at Teesside plant following Government cash

  • Industry Correspondent Rachel Bullock on the deal

Worries over keeping food on supermarket shelves have been eased after a deal was struck by the Government to restart production at a Teesside fertiliser firm which was halted earlier this week due to the rising gas prices. 

It was confirmed that a deal brokered by Business Secretary Kwasi Kwarteng that the UK Government provide "limited financial support" towards CF Fertilisers' running costs in order to prevent a food supply shortage at Britain's supermarkets.

The agreement will be in place for three weeks while the "CO2 market adapts" to the surge in global gas prices, according to the Department for Business, Energy and Industrial Strategy (Beis).

Mr Kwarteng said the decision would avert "disruption" in the "many critical industries that rely on a stable supply" of carbon dioxide.

Spiralling energy costs have led to the suspension of operations at fertiliser plants which produce CO2 as a by-product, having a knock-on effect on the food industry particularly.

CF Fertilisers produces around 60% of UK's CO2, used primarily by the food sector but also in the health and nuclear industries, but suspended operations at its Teesside and Cheshire plants because of high global gas costs.

Beis officials said the "exceptional short-term arrangement" with the American business would allow the company to immediately restart operations and produce CO2 at its Billingham plant in Teesside.

Why is there a shortage in CO2?

CF Industries closed two of its fertiliser plants due to a surge in gas prices.

This surge in cost is the result of depleted stocks following a cold winter last winter, reduced supply from Russia, and increased demand for liquefied natural gas from the Far East.

OGUK, which represents the nation’s offshore oil and gas industry, said wholesale prices for gas have surged 250% since January with a 70% rise since August alone.

Dermot Nolan, a former Ofgem chief executive, has warned that Britain is likely to face high energy prices for the rest of the year.