CF Fertiliser, which supplies 42% of the UK’s CO2 supply, has announced plans to temporarily halt ammonia production at its Billingham plant in the north-east of England, which will also cause CO2 production to stop.
CO2 plays a vital role in the hospitality industry as it keeps food fresh, helps carbonate beer and soft drinks, extends the life of food and assists in the humane slaughter of animals. Any disruption in supply could pose severe risks to food production and security, and animal welfare.
In light of this news, the EFRA committee chair Robert Goodwill MP has written a letter to the EFRA secretary of state George Eustice MP, asking about the length of the production stoppage and if this will impact the resilience of the UK’s food supply chain.
It has also requested information concerning about whether the Government is considering offering financial support – as it did in September 2021 when there was a similar risk to CO2 supply.
Worrying impact
In addition, the chair has asked what assessment Government has made of the potential effect on fertiliser prices from a halt in ammonia production and the switch to imported ammonia. The letter also requested to know how the secretary would prioritise the use of CO2, should there be a reduction in supply.
Commenting on the correspondence, Goodwill said: “Recent reports that CF Fertiliser will be halting production of ammonia are worrying, given the knock-on impacts this decision will have on CO2 production in the UK.
“Any disruption to CO2 supply could have serious effects on food production, national food security, and animal welfare.”
Production at CF Industries’ Billingham ammonia plant is to be halted because the company says the spiralling cost of gas is making it uneconomical. CO2 is a by-product of the ammonia production process.
The US fertiliser manufacturer said it had not yet decided when the temporary shutdown would occur.
This comes after the British Beer & Pub Association (BBPA) urged Government to intervene about the closure of the plant. BBPA chief executive Emma McClarkin said the news “couldn’t be worse” as pubs and brewers dealt with severe headwinds and supply chain pressures.
CO2 vital for pubs
She continued: “A guaranteed supply is essential for operations across pub and brewing businesses and this announcement comes at a time when they are already facing extreme cost rising that are threatening businesses and people’s livelihoods across the country.
“We urge the Government to urgently convene stakeholders to ensure there is a reliable supply of CO2 to our industry and others that depend on it.”
In a statement, the company said: “At current natural gas and carbon prices, CF Fertilisers UK’s ammonia production is uneconomical, with marginal costs above £2,000 per tonne and global ammonia prices at about half that level.
“The current cost of natural gas at natural balancing point is more than twice as high as it was one year ago, with the natural balancing point forward strip suggesting that this price will continue to rise in the months ahead.”
This will be the second stoppage by for CF in the previous 12 months due to soaring natural gas prices. In September last year, the firm struck an agreement with the Government to support the reopening of the Billingham plant.
However, in 2022, business, energy and industrial strategy secretary of state Kwasi Kwarteng said this was a "short-term intervention" due to soaring gas prices.
