A shuttered carbon dioxide plant on Teesside is to reopen with £100m of government investment in response to fears that the war in Iran could trigger shortages of the gas that multiple industries rely on.
The business secretary, Peter Kyle, approved the reopening of the Ensus plant to help bolster production of CO2, which has uses ranging from carbonating drinks and keeping food fresh to medical procedures and the sedating of animals for slaughter.
The plant was mothballed in September after Keir Starmer’s trade deal with Donald Trump cut tariffs for imports of bioethanol from the US. CO2 is a byproduct of the production of ethanol, a petrol substitute produced from agricultural products.
An unnamed UK government official told the Financial Times, which first reported the move: “The irony is that the plant was shut because of a deal with Trump and now it’s reopening because of Trump’s war in Iran.”
The Department for Business and Trade announced on Thursday that the site would restart operations. The government is expected to pay about £100m as part of the deal to reopen the plant for an initial three-month period, with hopes that it could then remain open indefinitely.
Grant Pearson, the chair of Ensus UK, said the government support would strengthen “the broader Teesside manufacturing economy and the UK’s resilience in relation to biogenic CO2 supplies”.
He said: “These are vital to food and drinks companies, as well as being important to hospitals, abattoirs and the nuclear industry.”
Kyle said in a statement that the government would “always do what’s needed to ensure resilience and protect British businesses from the worst impacts of global uncertainty. That’s why we intervened last autumn to keep this critical plant on standby for situations like this.
“By restarting this plant we’ve acted swiftly to boost the resilience of our supply chains and protect critical UK sectors like food production, water and healthcare, as well as the jobs and communities that depend on these industries.”
It marks a major intervention by the government to curb shortages that could be triggered by the war in Iran. The energy consultancy Cornwall Insight has predicted that rising energy costs could increase electricity bills by between 10% and 30% for businesses, with gas bills rising by between 25% and 80%.
The Department for Business and Trade said the reopening of the Ensus plant formed part of “wider government work” designed to ensure the UK maintains access to critical industrial resources during global supply shocks.
It acknowledged there was a risk the UK could face a shortfall in the supply of CO2 because of rising gas prices, disruptions in European fertiliser production and unplanned maintenance at several major CO2 plants on the continent.
The UK’s food and drink industry faced a CO2 crisis in 2021, after the easing of pandemic restrictions sent the price of wholesale gas soaring, pushing up the manufacturing costs of fertiliser production, which also produces the gas as a byproduct. The crisis resulted in the government providing a temporary bailout to the American company CF Fertilisers to help restart CO2 production at its Teesside factory.
In 2018, a global shortage of the gas resulted in the baker Warburtons temporarily suspending crumpet production at two of its four bakeries as it was unable to preserve the goods. The brewer Heineken was also forced to temporarily halt production at the time.
The Ensus plant has had operations on Teesside since 2010, using distillation and fermentation to convert wheat into bioethanol. CO2 is a byproduct of this process, as well as high-protein animal feed. The company, which is headquartered in Middlesbrough, employs about 100 people.
