Government Strikes Deal To Reopen Fertiliser Plant Amid CO2 Shortage Crisis
One of the fertiliser plants that closed last week, triggering a sharp fall in CO2 supplies and prompting warnings of some food and drink running out, has resumed production after the government agreed to meet its operating costs for the next three weeks.
Kwasi Kwarteng, the Secretary of State for Business, Energy and Industrial Strategy, confirmed on Tuesday night that the government had reached a deal with CF Industries that would allow its plant in Billingham to get back up-and-running after soaring gas prices forced it to close last week.
The deal, which is set to cost the government tens of millions of pounds, "will ensure the many critical industries that rely on a stable supply of CO2 have the resources they require to avoid disruption," Kwarteng said in a statement.
The government announced it would give CF Industries financial support to cover the operating costs of its Billingham plant for three weeks while the CO2 market adapts to global prices.
Last week the closure of the Billingham plant, plus another owned by CF Industries in Cheshire, triggered a dramatic fall in the CO2 supplies. The two plants combined are thought to produce around 60% of the country's CO2.
The news created panic in the food and drink industry, with manufactuers which rely on CO2 warning that products would disappear from supermarket shelves without urgent action.
PoliticsHome exclusively reported on Friday that the Department for Environment, Food and Rural Affairs had been warned that meat, fizzy drinks and beer could run out within days.
CO2, which is a by-product of fertilisier manufacturing, is vital for meat processors, who use it in slaughterhouses and to chill and package meat before it is sold to supermarkets and restaurants. The gas is also used to produce fizzy drinks and a range of beers.
The closure of the plants forced the government to enter crisis mode over the weekend, with Kwarteng holding an urgent meeting with CF Industries Chief Executive Tony Wills on Sunday before the deal was announced today.
The company's Cheshire fertiliser plant will remain closed, however.
Gavin Partington, Director General of the British Soft Drinks Association, said the industry was encouraged by the "short-term certainty" provided by the agreement but urged ministers to come up with a long-term plan for avoiding similar crises in the future.
The fact that it will likely take a few days for production at the plants a few days means supplies of fizzy drinks "won't be as abundant as usual" over the next week or so, he said.
The Food & Drink Federation's Ian Wright, who welcomed news of the deal, also said there would be shortages over the next few days as a result of the plants temporarily being out of action, but that "these will not be as bad as previously feared."
PoliticsHome provides the most comprehensive coverage of UK politics anywhere on the web, offering high quality original reporting and analysis: Subscribe