Food shortages are feared in the coming months after one of the UK’s biggest carbon dioxide suppliers announced it was shutting down production in Britain.
CF Fertilisers, which produces CO2 at its ammonia plant in Billingham, near Middlesbrough, said soaring energy costs meant it was no longer ‘economic’ to operate the site less than a year after a multi-million pound government deal to keep it open.
This has raised fears of a shortage of the chemical, which is made as a by-product of the reaction that produces ammonia and is used in a number of sectors.
It is particularly important in the food industry, where it is used in the slaughter of pigs and chickens, to add fizz to beer and soft drinks, and in food packaging.
It is also essential for cooling nuclear reactors and for keeping certain medicines and vaccines cold, and used throughout the NHS.
Industry figures warned there could be supply shortages if the pause in production leads to carbon dioxide shortages and urged the government to ‘step in’.
CF Fertilizers has announced it is shutting down production at its ammonia plant in Billingham, near Middlesbrough, due to rising energy costs
The plant makes CO2 as a by-product, which is then used in food and beverage refrigeration, and other industries
It comes months after the owner of the Teesside plant – the last fertilizer plant in the UK after its sister site in Ince, Chester closed – received a government grant to stay open.
CF Fertilisers, which is based near Chicago in the US and produces 40% of Britain’s CO2, said the government “has agreed to cover the costs of restarting the Billingham ammonia plant and to compensate for the losses of production for a period of 21 days”. when an agreement with the industry has been reached.
Subsequently, George Eustice, the environment secretary, admitted the cost was likely to be several million pounds and “perhaps tens of millions”.
The Daily Mail reports that the bailout offered by the state was £30m last year and the government will not offer another.
A Whitehall source said some food and drink businesses could suffer shortages, but stressed critical infrastructure demand would be met by a separate CO2 facility in Yorkshire.
The company, which is headed by US millionaire Tony Will, said a spike in gas prices last January meant production would not be profitable.
Since then, prices have only risen, as has the cost of living crisis that threatens to push millions of households into fuel poverty, with warnings that inflation could exceed 13% over the next new Year.
The government said it was “aware” of the decision and was considering options to improve the resilience of CO2 production in the UK.
Brewers and meat producers have warned that the proposed shutdown will threaten suppliers’ operations.
Nick Allen, chief executive of the British Meat Processors Association, said the government “should intervene”.
He said: “Although we are in a much better position now than a year ago, if CF Industries follows through on its threat to close Billingham, the UK meat industry will have serious concerns.”
The carbon dioxide produced at the plant is used to make the “fizz” of beer and different soft drinks
“Without an adequate supply of CO2, the UK will potentially face an animal welfare problem with increasing numbers of pigs and poultry unable to be sent for processing.
“It is for this reason that securing CO2 supplies is of key strategic importance and following this latest development we fail to see how the government can stand aside and insist that it’s up to the companies to sort it out among themselves.”
Emma McClarkin, chief executive of the British Beer and Pub Association, said the timing of the announcement ‘couldn’t be worse’ as she also called on the government to intervene.
“This decision raises serious concerns about the sustainable supply of CO2 to the brewing and pubs industry,” she said.
The company is run by millionaire Tony Wills and last year closed its only other UK factory in Ince, Chester
“A secure supply is essential for operations at the pub and brewing businesses and this announcement comes at a time when they are already facing extreme cost increases which are threatening businesses and the livelihoods of people across the country. .”
CF Fertilizers said it decided to halt production, fearing its costs would continue to rise in the coming months.
“At current natural gas and carbon prices, CF Fertilizers UK’s ammonia production is unprofitable, with marginal costs in excess of £2,000 per tonne and global ammonia prices at around half of this level,” the company added.
A government spokeswoman said: ‘We are aware that CF Fertilizers has made the decision to temporarily halt ammonia production at Billingham.
“Since last fall, the resilience of the CO2 market has improved, with additional imports, additional production from existing domestic sources and better inventories.
“As the government continues to examine options for the market to improve long-term resilience, it is essential that the industry acts in the interests of the public and businesses to do everything in its power to respond to the request.”
Food shortage fears as fertilizer plant that supplies UK CO2 shuts due to rising energy bills