Major UK CO2 supplier subsidised by taxpayer hikes gas prices

11 October 2021, 15:02 | Updated: 11 October 2021, 19:56

The UK’s main carbon dioxide supplier is to increase its prices weeks after a government deal ensured it could restart production.

US-owned fertiliser firm CF industries last month shut down plants that make 60% of the country's CO2 as the cost of natural gas spiralled.

The Government agreed to subsidise the company to ensure the reopening of a plant in Billingham, Teeside, in a deal reportedly worth tens of millions of pounds.

It came as part of an effort to ensure availability of CO2 for industries including the food sector ahead of Christmas, as well as hospitals and nuclear power.

The gas is used in food packaging and as a method of stunning animals prior to slaughter.

That three-week deal has now come to end, with a new deal in place until January.

According to a government statement, companies that buy carbon dioxide from CF have agreed to pay "a price for the CO2 it produces that will enable it to continue operating while global gas prices remain high, drawing on support from industry and delivering value for money for the taxpayer".

The rate at which prices will rise is said to be "commercially sensitive".

Business Secretary Kwasi Kwarteng said: "Today's agreement means that critical industries can have confidence in their supplies of CO2 over the coming months without further taxpayer support."

CF chief executive Tony Will added: "We are pleased to have reached a commercial solution that enables the Billingham complex to continue to operate through January, alleviating near-term CO2 supply concerns in the UK."

The company said "a longer-term solution to CO2 supply and to support sustainable and competitive UK ammonia and fertiliser production" is expected.