The Government has announced it will fund CO2 production at the struggling CF Fertiliser factories in the North of England as the global gas prices crisis continues.
Business Secretary Kwasi Kwarteng said last night the "exceptional short-term arrangement" with the US-owned firm will last three weeks.
It will allow the company, which last week stopped production at its Billingham and Cheshire plants, to restart operations and produce CO2 at Billingham once more. It's not yet known when the Cheshire plant will restart.
The BBC reported that the deal could cost tens of millions of pounds.
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It's hoped in three weeks' time, the CO2 market will have adapted to global gas prices. CF Fertilisers produces around 60% of UK’s CO2, used primarily by the food sector, as PA reports.
Mr Kwarteng said: “This agreement will ensure the many critical industries that rely on a stable supply of CO2 have the resources they require to avoid disruption.
“The quick and decisive action we have taken to resolve the issue shows the seriousness with which we have approached it.
“In our ongoing response to manage the impact of global gas price rises, we will continue to protect businesses and consumers.”
News of the deal was announced yesterday following talks between the company and the Department for Business, Energy and Industrial Strategy.
Production at the two plants was suspended last week, with the company blaming rising gas prices for making its operations unviable.
That has led to knock-on problems in the food industry, for which CF is the main UK supplier of carbon dioxide. Warnings of looming shortages in supermarkets led to Mr Kwarteng having talks with CF in recent days and offering support “on a temporary basis”.
Producers have warned that supplies of meat, poultry and fizzy drinks could all be hit by shortages because CF has stopped production of CO2.
The chief executive of the Food and Drink Federation, Ian Wright, said yesterday the potential shortages of CO2 supply is “a real crisis” and said “the just-in-time system which underpins both supermarkets and hospitality industry is under the most strain it has ever been in the 40 years it has been there”.
