Beer industry remains concerned over CO2 shortage uncertainties

Fears of an imminent CO2 shortage were averted yesterday after a new deal was struck to keep the supply of CO2 flowing, but industry experts remain concerned by the lack of long-term solution.

Last year, food and drink producers said shortages were looming after fertiliser firm CF Industries, which produces 60% of the UK’s food-grade CO2, said it would stop selling the by-product amid surging costs.

CO2 users agreed a three-month deal in October to keep a key production site open after its owner said high energy prices made it too expensive to run.

A three-month deal allowing it to continue operating expired on Monday. But the government said major CO2 users have now reached a new agreement with CF Industries.

Full details of the deal have not been disclosed, but the BBC reported that the new deal will come at no cost to the taxpayer, and is set to last until the spring.

In response to the renewed deal, James Calder, chief executive of the Society of Independent Brewers (SIBA), said:”It will come as a relief to brewers across the UK that the Government has helped the Co2 industry reach an agreement to ensure continuous supply of Co2, which is essential to beer production for many small breweries.

“During last year’s shortage it was small independent breweries who found themselves at the back of the queue for supply, with many having to halt brewing altogether until Co2 supplies returned.

“With rising costs across the board it remains to be seen what the terms and price of supply will be moving forwards, something which will make all the difference to struggling small businesses. Furthermore we would urge the Government to back small breweries who are seeking to become more efficient, and less reliant on Co2, with Government grants for investment in infrastructure such as Co2 recapture within the breweries.”

Despite the new deal, the beer industry still remains concerned over the lack of long-term solution and the secrecy surrounding the new deal.

In a government update put out on 1 February, it was noted that “in the longer term, the government would like to see the market take measures to improve resilience, and we are engaging on ways this could happen”. No further detail was given.

Questions of the price agreed in the deal, and knock on effect for breweries, as well as concerns about whether total supply will remain the same, and the prioritisation of animal welfare, are all yet to be answered.

Emma McClarkin, Chief Executive of the British Beer and Pub Association, said that while the industry is “encouraged by the agreement made between suppliers and CF industries”, further details about the nature of the agreement are urgently needed “in order to understand the impact on our sector and the longer term sustainability of CO2 supply for the UK drinks sector”.

She added: “Our sector is still reeling from the impact of a devastating winter and face rising cost pressures from all angles. A swift resolution to the CO2 supply issue is crucial in ensuring a strong and sustainable recovery for the beer and pub sector.”

db has been made aware of plans for a session between beer industry bodies and the Department for Environment, Food and Rural Affairs (DEFRA) set to take place “in due course” to discuss “improving the resilience of CO2 supply”. No further information has yet been released.