The CO2 crisis that isn’t about climate change

The effects of a nationwide shortage of carbon dioxide will be felt across food and beverage sectors, pushing up prices and adding to inflation and cost-of-living concerns. 

What’s happening

The UK’s largest producer of carbon dioxide – CF Industries accounts for around a third, producing CO2 as a byproduct of fertiliser manufacturing – recently announced a temporary halt to production as a result of the record prices it was having to pay for natural gas, the main feedstock for the process, which has made production uneconomical. Fertiliser producers in Norway and Poland have also cut production, with knock-on effects for CO2 users.

What does it mean

Farmers face rising fertiliser costs and the food and drink sector will have to cope with rising processing costs, all of which will have to be passed on. While marketers can prepare themselves for that they can’t do much about the existential threat some segments face.  

• Higher food prices. The Financial Times reported that the country’s largest chicken producer now faces additional costs of £1m a week for the CO2 used to stun birds ahead of slaughter. The founder of 2 Sisters Food Group said “beleaguered shoppers . . . will ultimately pay the price with further price rises”. CO2 is also used for making products like dry ice, essential for preserving certain foods during transport and storage.
• A drinks shortage. Without CO2, brewers face packaging problems as the gas is used to hermetically seal bottles, cans and kegs. POLITICO reported that many are likely to stop production. Soft drinks manufacturers face similar problems. 
• Pubs shut. There have already been warnings that many pubs may be forced to close this winter, unable to pay rocketing energy bills. A lack of beer could push them over the edge before winter arrives.

Sourced from Financial Times, POLITICO