British government has agreed to pay tens of millions of pounds for a US fertilizer firm to reverse its decision to shut two plants that had become uneconomic due to the rising gas prices, CNN reports.
Illinois-based CF Industries (CF) will restart one of its two UK plants and resume CO2 production vital to Britain’s food supplies after deciding last week to halt operations at its unprofitable UK fertilizer plants, sparking warnings of a food supply crisis since they also produce about 60% of Britain’s food-grade carbon dioxide.
According to the British Meat Processors Association’s warnings on Friday, the supply shock could cause food shortages at Britain’s supermarkets within 14 days once current stocks of CO2 gas run out.
The UK Government, according to deal brokered by Business Secretary Kwasi Kwarteng, will provide limited financial support for three weeks for CF Fertilisers to cover running costs while the CO2 market adapts to the surge in global gas prices.
Meanwhile, CF Industries CEO Tony Will underscored that the company will work to develop a longer-term solution to the constrained CO2 supply along with the UK government.
According to the Department for Business, Energy and Industrial Strategy (Beis), the exceptional short-term arrangement would allow the US company to immediately restart operations and produce CO2 at its Billingham plant in Teesside.
Intercontinental Exchange’s data shows that UK natural gas futures have seen nearly fourfold rise since April, having a knock-on effect particularly on the food industry since spiraling energy costs have led to the suspension of fertilizer plants’ operations which produce CO2 as a by-product.
Due to depleted stocks, the low supplies from Russia and competition with Asia for liquified natural gas, gas prices are also rising sharply elsewhere in Europe.