Jan 27th, 2022
6 mins
** Please note, the information in this article was correct at time of writing. No further official updates have been received as yet. We will be monitoring the situation and will update members as soon as possible.**
At a recent industry roundtable, we were given an update from Defra on the situation with CO2 supply.
To recap, the government provided temporary financial support to CF Fertilisers, to mitigate the threat of a shortage of CO2, after its US owner shut its factories amid the soaring cost of natural gas. CF Fertilisers produce around 60% of the UK’s CO2, which is a by-product of fertiliser production and is used primarily by the food sector.
This agreement is due to expire in less than a week’s time, on Monday 31st January.
We were informed there are ongoing discussions between CF and the gas suppliers to try and negotiate contracts, but Defra are not party to those discussions. However, they feel there is a reasonable chance that the contracts will be extended albeit it may be at the 11th hour.
They therefore stressed that industry should still prepare for the alternative scenario where there is no further agreement extension. They also confirmed that Government stepping in as they did was an exception, and no further support of that type will be given this time round. However, if necessary, they will work to ensure priority demand is met should it be necessary – for the food and drink sector they clarified this meant the pork and poultry processing sector. They are also looking at long term strategic solutions to improve resilience on CO2 supply.
We are aware that many have been taking steps already to mitigate any shortages such as increased storage, exploring alternative gases and sources. This was recognised by Defra, but they would still like to hear more about industry’s longer term resilience plans.
Therefore, if you have any information which you feel would be useful then we would be more than happy to communicate this to Defra on your behalf, anonymously should you so wish. Please send any comments to Deniserion@bfff.co.uk . If you would prefer to discuss in more detail directly with Defra, then please email Helen.Dallas@defra.gov.uk
Defra informed the group that the CF Billingham plant is operating at maximum capacity although it is still 25% down on overall production due to the Ince plant in Cheshire. They also stated that availability in the EU is good (exceeding the output level for last year) although at a higher price.
However, this may not equate to availability in the UK. As pointed out to Government, the UK is not currently seen an ‘attractive’ destination as we can only take small shipments in comparison to other countries and manufacturers are prioritising their home markets.
We will continue to monitor the situation and bring you any updates as soon as we have them but with only days to go and with energy prices still very high, the worry is that once again there will be further CO2 shortages.
