Carbon dioxide producer hikes prices under deal to keep supplies going amid gas costs spike

Britain’s main carbon dioxide producer is to hike its prices under a government-brokered deal to keep supplies to key industries going without taxpayer subsidies.

Ministers stepped in last month after a surge in natural gas prices prompted US-owned CF Industries to shut down fertiliser plants that also make 60% of Britain’s CO2 – a key input for sectors from food and drink to nuclear power.

Subsidies said to be worth tens of millions of pounds were used to persuade CF to restart production at one of the plants, at Billingham, Teesside, but that three-week deal is now coming to an end.

Companies that buy CO2 from CF have now agreed to pay it a price “that will enable it to continue operating while global gas prices remain high, drawing on support from industry and delivering value for money for the taxpayer”, the government said.

Business Secretary Kwasi Kwarteng said: “Today’s agreement means that critical industries can have confidence in their supplies of CO2 over the coming months without further taxpayer support.”

A spokesman said the rate at which prices would rise under the deal – which runs until January – was “commercially sensitive”.

It comes as wholesale natural gas prices remain high, climbing by 7% to 209p per therm on Monday.

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That is well below the 355p record level reached last week but several times above the 40p-60p range where gas has traded in recent years.

The government said the deal on CO2 reflected “the vital importance of this material to everything from our nuclear industry to hospitals to the food and beverage industry”.

It also revealed that another producer, Ensus, reopened its Wilton plant last week – which can produce up to 40% of the UK’s CO2 needs – following temporary closure for planned maintenance, further securing supplies.

CF chief executive Tony Will said: “We are pleased to have reached a commercial solution that enables the Billingham complex to continue to operate through January, alleviating near-term CO2 supply concerns in the UK.”

The company said that during the period of the agreement “it is expected that the UK government and industrial gas customers will develop robust alternative sources of CO2 as part of a long-term solution for meeting demand in the country”.

Gas prices have surged across Europe in recent weeks with a series of factors including demand in Asia and a lack of supply from Russia blamed.

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