// The government extends a deal to avert a fresh carbon dioxide crisis but the food industry warns it will inflate prices
// CO2 is needed to stun animals for slaughter, produce fizzy drinks and extend the shelf life of food
Shoppers could face soaring prices for food and beer this Christmas despite the government’s deal to ensure essential supplies of CO2 continue.
The rising price of gas forced CF Fertilisers to close down its two UK plants last month, choking off supplies of carbon dioxide.
The shortage affected numerous industries because CO2 is needed to stun animals for slaughter, extend the shelf life of food, help surgical operations and cool nuclear power plants.
In September, the government agreed to spend millions of pounds on bailing out CF Fertilisers so that it could restart production at the Teesside factory.
Kwasi Kwarteng, the business secretary, announced today that a “more sustainable solution” had been found.
Under the deal, those who buy carbon dioxide from CF Fertilisers will pay a set price with the government sayin that this would enable the company to continue operating while global gas prices remained high.
It is unclear how much more companies will have to pay but food producers could face a possible fivefold spike in the cost of CO2 that could ultimately impact food prices.
It comes as retail industry experts warned that shoppers could face “disruption and frustration” over the festive period amid empty shelves as hundreds of thousands of people have started to stockpile groceries for Christmas.
According to the Telegraph, there is speculation that prices of CO2 could jump from £200 to as much as £1,000 a tonne.
The fixed price will last until January and 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.
“The government acted quickly to provide CF Fertilisers with the support it needed to kick-start production, and give us enough breathing space to agree a longer-term, more sustainable solution.
“I would like to thank all the parties involved in this agreement who have recognised the importance of avoiding supply disruptions and delivering for UK businesses and consumers.”
The food industry welcomed the agreement but warned that it would inflate prices for shoppers further as the news comes a day after the boss of Kraft Heinz – the world’s fifth-largest food and drink company warned people will have to get used to higher food prices.
Supermarket bosses in the UK which faces the dual shock of Brexit and Covid-19 have recently warned of worsening conditions for consumers, such as rising prices and emptier shelves.
Despite the rise in food and energy prices, the government has pushed ahead with scrapping the £20-per-week universal credit uplift introduced during the pandemic.
The government said: “CO2 suppliers have agreed to pay CF Fertilisers a price for the CO2 it produces 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.”