A deal has been reached between the UK government and a major carbon dioxide producer to ensure the supply of this vital ingredient for food production.

The sudden spike in gasoline prices caused some gas producers to stop production, cutting off CO2 supplies.

The Treasury and business are currently in discussions about potential support for other businesses.

This follows briefings by Treasury on Sunday, which denied that such negotiations were in progress.

The CO2 agreement stipulated that the government would negotiate new terms with the industry to run through January 2022.

According to a government statement, “CO2 suppliers agreed to pay CF Fertilisers a cost for the CO2 they produce that will allow them to continue operating while global gasoline prices remain high. This is drawing on industry support and delivering value-for-money for the taxpayer.”

Industry could be certain that they would continue to receive CO2 supplies without any additional support from the government, according to the statement.

Due to a steep rise in gas prices, CF Industries (owned by the US) recently stopped production at two UK sites that produce 60% of UK’s carbon dioxide commercially.

After three weeks of government funding, CF Industries reopened Billingham in North East England.

US-based firm stated that it expected UK governments and customers of industrial gas to develop “robust alternative CO2 sources” as part of long-term solutions for meeting the nation’s demand.

It was revealed last month that the British food sector would have to pay five-times more for carbon dioxide under a deal between the government and CF Industries in order to restart UK production.

September saw the Government agree to give CF Industries tens of million of pounds in order to reopen Billingham.

Environment Secretary George Eustice said carbon dioxide prices would rise from £200 per tonne to £1,000.

Government is discussing support for other industries affected by rising gas prices. When asked if there are talks between Treasury officials and business ministers the spokesperson for Number 10 said that Treasury officials were involved as well as officials from other government agencies.

Kwasi Kwarteng stated that the current situation was “critical” on Sunday’s BBC Andrew Marr program and that he was trying to “find a solution”.

He said, “We have already received support. We’re trying to determine if that’s enough to help us get through this situation.”

Kwarteng claimed that Treasury discussions were ongoing about measures to support firms. Later, however, a Treasury source claimed that Kwarteng had misunderstood the business secretary.

Industries appealed to the government again Monday for assistance.

The talks will resume Monday with the business ministers over a factory crisis.

Although sectors such as steel production, ceramics and paper have called for price caps, talks with government officials on Friday did not result in a resolution.

According to Adam Fleming, BBC political correspondent Adam Fleming, Mr Kwarteng won’t be present at the Monday talks with representatives from industry.

Lee Rowley, the business minister will be leading the meeting with representatives from industry later today. He is also meeting with steel chiefs Tuesday.

Source: BBC.com

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