Food and drink must brace for long-term CO2 costs
13 October 2021
Keeping industrial CO2 production going in the UK amid rising gas prices is expected to cause a huge jump in costs for food and drink manufacturers, prompting some to look at innovative solutions.
In September, two major fertiliser manufacturing plants in the UK shut down due to a massive rise in wholesale gas prices. This was bad news for the many food and drink firms who depend on carbon dioxide as a raw material, which is a byproduct of the fertiliser manufacturing process.
The government has agreed a temporary arrangement with US-owned CF Fertilisers - which supplies around 60 per cent of the UK’s CO2 - to re-start its operations.
The deal is expected to cost the UK tens of millions of taxpayers’ money but is a short-term intervention to provide “space and time for market adjustment”, the government said.
Speaking to Sky News, Environment Secretary George Eustice warned that the cost of food-grade CO2 is likely to increase five-fold:
“We need the market to adjust. The food industry knows that there’s going to be a sharp rise in the cost of carbon dioxide, probably going from something like £200 a tonne, eventually up to closer to £1,000 a tonne.”
This is the second time in recent years that a CO2 shortage has hit the food and drink industry, highlighting the reliance UK producers have on an increasingly small number of suppliers.
Longer-term high prices may be the solution to creating a more sustainable supply, according to the British Meat Processors Association (BMPA), who said in a statement:
“There are a number of companies that produce CO2 as a by product but, as yet, don’t capture and sell it. A significant price rise may make this viable and also dissipate the effect of consolidation in the industry.”
One local company looking for an innovative solution is Seven Brothers Brewing Co. in Salford. The brewery, which now has five sites in Greater Manchester, is planning to supply its own carbon dioxide in future.
Speaking to BBC Breakfast, Keith McAvoy, CEO, said:
“It is likely our CO2 costs will increase because of the government investment, which will have direct impact on our margin. The decision has accelerated our plans to carbon capture our own CO2 to make ourselves more independent and self-reliant in times like this.
“In the brewing process, one of the byproducts of the fermenting is the release of CO2. We are exploring different ways to capture this and add it to our reserve.”