UK reaches new agreement with CO2 industry to ensure continued supplies

The government has reached a deal with the carbon dioxide (CO2) industry to ensure UK businesses maintain access to supplies, despite previously indicating it would not make any fresh arrangements.

CO2 is a key component in sectors such as food processing and nuclear power, and the deal will enable CF Fertilisers’ Billingham plant to continue operating, even as wholesale gas prices remain high.

The government says the deal is in the best interests of businesses, even though it previously stated it had no intention of extending or signing new deals with the CO2 industry.

In September 2021, the government provided limited financial support for CF Fertilisers’ operating costs for three weeks, after production was halted at two of its plants.

The industry then came to a further agreement with Downing Street in October to ensure CF Fertilisers on Teesside could continue to operate for three more months without taxpayer support.

However, this agreement came to an end earlier this week, despite widespread pressure from trade bodies for a new deal to be signed.

Emma McClarkin, chief executive of the British Beer and Pub Association, praised the announcement but pushed for the terms of the deal to be disclosed.

She said: “We are encouraged by the agreement made between suppliers and CF industries, however we urgently need further details on the nature of the arrangement in order to understand the impact on our sector and the longer term sustainability of CO2 supply for the UK drinks sector.”

In the longer term, the government has said it would like to see the market take measures to improve resilience, and it is engaging in ways this could happen.