Deal to support US-owned CO2 producer could cost taxpayer ‘tens of millions’

The government could end up giving tens of millions of pounds of taxpayers’ money to an American company to help it restart carbon dioxide production at two plants, a minister has told Sky News.

Speaking to Kay Burley, Environment Secretary George Eustice said that without the “temporary” agreement with CF Fertilisers there would have been food supply problems and the government “needed to act”.

CF produces around 60% of the UK’s CO2 supply, which is why the closure of the sites last week, blamed on a surge in gas prices, had prompted fears that shoppers could start noticing shortages in poultry, pork and bakery products within days.

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PM ‘not worried’ about energy shortages

CO2 is injected into the packaging of perishable foods such as meat and salads to inhibit the growth of bacteria, typically prolonging the shelf life of products such as beef steak by around five days.

The gas is also used to stun animals prior to slaughter, and is deployed as a coolant for medicines and vaccines in the NHS, and likewise in nuclear programmes.

“It’s going to be into many millions, possibly the tens of millions but it’s to underpin some of those fixed costs,” he said, when asked about the cost of the deal.

The agreement will see the government provide “limited financial support” towards the firm’s running costs for three of weeks.

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“They’re big costly plants,” Mr Eustice continued, adding that it will take 48 hours for operations at the plants to get up and running again.

“We need the market to adjust, the food industry knows there’s going to be a sharp rise in the cost of carbon dioxide, probably going from something like £200 a tonne eventually up to closer to £1,000 a tonne, so a big, sharp rise.”

And he defended the deal, saying: “The truth is if we did not act then, by this weekend, or certainly by the early part of next week, some of the poultry processing plants would need to close and then we would have animal welfare issues – because you would have lots of chickens on farms that couldn’t be slaughtered on time and would have to be euthanised on farms, we would have a similar situation with pigs.

“There would have been a real animal welfare challenge here and a big disruption to the food supply chain, so we felt we needed to act.”

The environment secretary said a “perfect storm” had been created by two plants in the UK and Norway shutting down for maintenance at the same time as CF stopped operations of its two factories because of high energy costs.

Ian Wright, chief executive of the Food and Drink Federation, said the intervention was a “temporary solution but it’s a welcome one”.

He added it means “there won’t be many noticeable shortages on the shelves, although there are already some because of staff shortages”.

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