Britain warns carbon dioxide prices will rise sharply after state support

Poultry plants would have closed, says Recasts lead and headline LONDON, Sept 22 Reuters - Britain warned the food industry on Wednesday that carbon dioxide prices would rise sharply after offering tens of millions of dollars of state support to a fertiliser company to avert a food supply crunch.

Wholesale Gas Prices have soared this year as economies were reopened from COVID lockdowns and high demand for liquefied natural gas in Europe had pushed down supplies to Asia, leading to a shortage of carbon dioxide CO2 in the food industry.

Britain struck a deal with the U.S. company CF Industries to restart the production of carbon dioxide CO2 at two plants - one in Cheshire and another in Billingham - which were shut because they were unprofitable due to the spike in their biggest cost: gas prices

We need the market to adapt, the food industry knows there's going to be a sharp increase in the cost of carbon dioxide, Environment Secretary George Eustice told Sky News.

He said the food industry would have to accept that the price of carbon dioxide would be increased sharply to around 1,000 pounds $800 a tonne from 200 pounds a tonne. So, a big rise, Eustice said.

The three weeks support for CF would cost many millions, possibly the tens of millions, but it's to underpin some of these fixed costs, Eustice told Sky. These are two enormous expensive plants. Some of Britain's meat and poultry processors would have run out of CO 2 - used also to put the fizz in beer, cider and soft drinks - within days, forcing them to halt production

Eustice said that if we did not act, then some of the poultry processing plants would end by this week, or certainly by the early part of next week.

And then we would have animal welfare issues, because you'd have lots of chickens on farms that can't be slaughtered on time and would have to be probably euthanized on farms. We'd have a similar situation with pigs, so there would have been a real animal welfare challenge and a big disruption to the food supply chain, so we felt we needed to act. He said the impact on food prices would be negligible.