Britain warned the food industry on Wednesday that carbon dioxide prices would rise sharply after offering tens of millions of dollars of state support to a fertiliser company to avert a food supply crunch.
Wholesale gas prices have soared this year as economies reopened from Covid-19 lockdowns and high demand for liquefied natural gas in Asia pushed down supplies to Europe, leading to a shortage of carbon dioxide (CO2) in the food industry.
Britain struck a deal with US company CF Industries to restart production of carbon dioxide (CO2) at two plants - one in Billingham and another in Cheshire - which were shut because they were unprofitable due to the spike in their biggest cost: gas prices.
"We need the market to adjust, the food industry knows there's going to be a sharp rise in the cost of carbon dioxide," Environment Secretary George Eustice told Sky News.
He said the food industry would have to accept that the price of carbon dioxide would rise sharply, to around 1,000 pounds ($1,365) a tonne from 200 pounds a tonne. "So a big, sharp rise," Eustice said.