UK government hopeful of deal to resume supply of CO2

UK energy updates

UK business secretary Kwasi Kwarteng has signalled the Treasury could strike a deal to end Britain’s carbon dioxide shortage as early as Tuesday by providing financial support to the country’s main producer.

“I’m very hopeful that we can get progress today,” Kwarteng told the BBC Radio 4’s Today programme.

The closure of two UK fertiliser plants by US company CF Industries because of surging natural gas prices has cut off about 60 per cent of the country’s commercial CO2 production.

The UK government has been in talks with Tony Will, chief executive of CF Industries, about potential solutions for reopening the plants including financial support.

Kwarteng said he had spoken to Will on Sunday and Monday and had also held conversations with chancellor Rishi Sunak. “We are looking at ways to very soon make sure production of CO2 . . . is resumed as quickly as possible,” he said.

“Time is of the essence. We’re hopeful we can get something sorted today and get production up and running in the next few days. It will come at some cost. It may come at some cost. We are still hammering out the details.”

CF Industries suspended production because it was paying more for its raw materials, including energy, than the price of the ammonia and CO2 that it produced.

“If we do provide support it will be on a temporary basis,” said Kwarteng. “What I’m focused on is getting production up and running.”

Kwarteng claimed that some people had demanded the nationalisation of the company. “I’m averse to that, I don’t think that is a good idea,” he said. “Between nationalisation and not doing anything, there are lots of options.”

George Eustice, environment secretary, is hosting a roundtable with representatives of the food retail, processing and manufacturing sectors on Tuesday.

Poultry producers have started taking emergency measures to conserve carbon dioxide used to stun birds for slaughter as a shortage of the gas poses an increasingly grave threat to the meat supply chain. The poultry industry has said plants hold only one to five days’ CO2 supply on site and warned of disruption to the chicken stocks once that runs out.

The shortage of the gas has also affected Britain’s soft drinks manufacturers, with some warning on Monday that they only had enough supplies to last a few days.

Five energy providers have already gone bust in recent weeks with more expected to collapse in the coming days.

Kwarteng said he did not believe that taxpayer money should be used to bail out failing companies.

However, the government is drawing up plans to provide state loans to larger companies that take on the customers from collapsed providers.

Industry experts believe this could lead to a dramatic consolidation in the market in a short space of time.

But Kwarteng denied suggestions that the industry could be left with as few as 10 companies after the crisis. “I don’t believe for a minute there will only be 10 in three months time,” he told the Today programme.

Kwarteng insisted on Monday there was “no question of the lights going out” and that it was “alarmist” to suggest people would struggle to heat their homes in the colder months. He said Britain had “sufficient capacity” to meet household demand.