Agreement reached with CF Fertilisers to ensure CO2 production continues on Teesside

The carbon dioxide (CO2) industry has come to an agreement to ensure UK businesses have access to a sustainable supply of CO2 - an essential component of the national economy.

CF Fertilisers - which produces CO2 in Billingham, on Teesside, and in Chester - will be paid a set price by CO2 suppliers under the new deal.

It is hoped this will enable the US-owned plants to continue operating - producing the majority of the UK's CO2 supply and employing 190 people in the North East.

A wide range of industries, from fizzy drink production to nuclear power, relies on CO2. The deal, brokered by the UK Government, is expected to run until January 2022.

Why is the CO2 industry struggling?

CF Industries closed two of its fertiliser plants due to a surge in gas prices.

This surge in cost is the result of depleted stocks following a cold winter last winter, reduced supply from Russia, and increased demand for liquefied natural gas from the Far East.

OGUK, which represents the nation’s offshore oil and gas industry, said wholesale prices for gas have surged 250% since January with a 70% rise since August alone.

Dermot Nolan, a former Ofgem chief executive, has warned that Britain is likely to face high energy prices for the rest of the year.

"Today’s agreement means that critical industries can have confidence in their supplies of CO2 over the coming months without further taxpayer support," Business Secretary Kwasi Kwarteng said.

Last week, Mr Kwarteng temporarily exempted parts of the CO2 industry from competition laws to facilitate this agreement and provide further security of CO2 supplies to UK businesses.

"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," he continued.

The move comes under three weeks after the government intervened with a cash injection to restart production at CF Fertilisers.

  • Industry correspondent Rachel Bullock reporting on last month's intervention.

“We are pleased to have reached a commercial solution that enables the Billingham Complex to continue to operate through January, alleviating near-term CO2 supply concerns in the UK,” said Tony Will, president and chief executive officer of CF Industries Holdings, Inc.

“We want to thank The Honorable Kwasi Kwarteng, Secretary of State for Business, Energy and Industrial Strategy, his staff and our industrial gas customers for the speed and spirit of cooperation that have marked our discussions over the past three weeks.