Startup Observer.com
  • Home
  • Industries
  • Innovation
  • outsourcing
  • Business
  • Finance
  • Headlines
  • Opinion
  • News
Home News Britain tells its food industry to prepare for CO2 price shock
News

Britain tells its food industry to prepare for CO2 price shock

by jcp September 22, 2021
September 22, 2021
gawdo

By Guy Faulconbridge, Kate Holton and James Davey

LONDON (Reuters) – Britain warned its food producers on Wednesday to prepare for a 400% rise in carbon dioxide prices after extending emergency state support to avert a shortage of poultry and meat triggered by soaring costs of wholesale natural gas.

Natural gas prices have spiked this year as economies reopened from COVID-19 lockdowns and high demand for liquefied natural gas in Asia pushed down supplies to Europe, sending shockwaves through industries reliant on the energy source.

Carbon dioxide (CO2) is a by-product of the fertilizer industry – Britain’s main source of CO2 – where natural gas is the biggest input cost. Industrial gas companies, including Linde, Air Liquide and Air Products and Chemicals, get their CO2 mainly from fertilizer plants.

The natural gas price surge has forced some fertilizer plants to shut in recent weeks, leading to a shortage of CO2 used to put the fizz into beer and sodas and stun poultry and pigs before slaughter.

As CO2 stocks dwindled, Britain struck a deal with U.S. company CF Industries, which supplies some 60% of Britain’s CO2, to restart production at two plants which were shut because they had become unprofitable due to the gas price rise.

“We need the market to adjust, the food industry knows there’s going to be a sharp rise in the cost of carbon dioxide,” Environment Secretary George Eustice told Sky News.

It would have to accept that the price of CO2 would rise sharply, to around 1,000 pounds ($1,365) a tonne from 200 pounds a tonne, Eustice said, adding: “So a big, sharp rise.”

The three-week support for CF would cost “many millions, possibly tens of millions but it’s to underpin some of those fixed costs,” Eustice said.

A spokesperson for Prime Minister Boris Johnson said the government was giving CF the difference between its total production costs and what it receives from the sale of CO2.

Business Secretary Kwasi Kwarteng, who also serves as energy minister, told lawmakers he was confident the country could also secure other sources of the gas.

It was not immediately clear how the state intervention by one of Europe’s most traditionally laissez-faire governments would affect the price of fertilizer – another key cost for food producers – and whether or not it would stoke demands from other energy-heavy industries for similar state support.

CHRISTMAS SHORTAGES?

Ministers, including Johnson, have repeatedly brushed aside suggestions there could be shortages of traditional Christmas fare such as roast turkey, though some suppliers have warned of them.

Kwarteng has said there would be no return to the 1970s when Britain was plagued by power cuts that made the economy the “sick man of Europe”, with three-day working weeks and people unable to heat their homes.

But the boss of supermarket Iceland said the temporary deal to supply CO2 would not solve food industry problems.

“A three week deal won’t save Christmas,” said managing director Richard Walker. “And certainly won’t resolve the issue in the long term.”

Eustice said some of Britain’s meat and poultry processors would have run out of CO2 within days.

“We know that if we did not act, then by this weekend or certainly by the early part of next week, some of the poultry processing plants would need to close,” he added.

He said the impact on food prices would be negligible.

The British Poultry Council welcomed the deal but said the industry was still facing huge pressures from labour shortages. It estimates Christmas turkey production will be down by 20% this year.

Similarly the British Meat Processors Association expressed “huge relief”.

“We are focused on re-establishing (CO2) supplies before Friday this week which is when around 25% of pork production was in danger of shutting down,” it said.

Britain’s Food and Drink Federation said there will still be shortages of some products though they will not be as bad as previously feared, while the British Soft Drinks Association warned it would take up to two weeks before production from CF made any positive impact on market conditions.

Britain’s opposition Labour party said the government needed to explain the contingency plans in place in case the C02 issues are not resolved in three weeks.

($1 = 0.7328 pounds)

 

(Reporting by Guy Faulconbridge, Kate Holton and James Davey; additional reporting by Nigel Hunt and Elizabeth Piper; Editing by Mark Potter, Jane Merriman and Alexander Smith)

www.gawdo.com
Share on FacebookShare on TwitterShare on Linkedin
0 FacebookTwitterPinterestEmail
previous post
Factbox: Europe tries to soften blow of surging power and gas prices
next post
Exxon, Chevron conceal payments to some governments -watchdog

You may also like

Open University to focus on societal challenges that...

June 23, 2022

Aramco and Cognite join forces in new data...

June 22, 2022

Sponsors Announced for Biggest Ever Summer School for...

June 20, 2022
Editorial & Advertiser disclosureEditorial & Advertiser disclosureOur website provides you with information, news, press releases, Opinion and advertorials on various financial products and services. This is not to be considered as financial advice and should be considered only for information purposes. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third party websites, affiliate sales networks, and may link to our advertising partners websites. Though we are tied up with various advertising and affiliate networks, this does not affect our analysis or opinion. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you, or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish sponsored articles or links, you may consider all articles or links hosted on our site as a partner endorsed link.
gawdo.com
https://www.gawdo.com
  • About us
  • Advertising & Terms of Use
  • Contact Us
  • Privacy Policy

@2021 - All Right Reserved.


Back To Top
Startup Observer.com
  • Home
  • Industries
  • Innovation
  • outsourcing
  • Business
  • Finance
  • Headlines
  • Opinion
  • News
We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept All”, you consent to the use of ALL the cookies. However, you may visit "Cookie Settings" to provide a controlled consent.
Cookie SettingsAccept All
Manage consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Non-necessary
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
SAVE & ACCEPT