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| Gas price crisis: Government to pay millions to restart CO2 supplies | Gas price crisis: Government to pay millions to restart CO2 supplies |
| (32 minutes later) | |
| The government is set to pay out tens of millions of pounds to restart production of carbon dioxide at a key plant in the UK amid fears over food supplies and the nuclear industry. | The government is set to pay out tens of millions of pounds to restart production of carbon dioxide at a key plant in the UK amid fears over food supplies and the nuclear industry. |
| The government will meet the full operating costs to run CF Industries' Teesside plant for three weeks. | The government will meet the full operating costs to run CF Industries' Teesside plant for three weeks. |
| US-owned CF Industries recently shut two sites that produce 60% of the UK's commercial carbon dioxide supplies. | US-owned CF Industries recently shut two sites that produce 60% of the UK's commercial carbon dioxide supplies. |
| The plant in Billingham will need up to three days to start producing new CO2. | The plant in Billingham will need up to three days to start producing new CO2. |
| Environment Secretary George Eustice told the BBC that the deal with CF Industries "will be not a loan, it will be a payment to underwrite some of their fixed costs". | Environment Secretary George Eustice told the BBC that the deal with CF Industries "will be not a loan, it will be a payment to underwrite some of their fixed costs". |
| CF Industries had halted two of its fertiliser factories - which produce carbon dioxide as a by-product - because of soaring gas prices. | CF Industries had halted two of its fertiliser factories - which produce carbon dioxide as a by-product - because of soaring gas prices. |
| Farms, food producers and supermarkets have warned that a shortage of carbon dioxide will lead to significant disruption to the manufacturer and supply of fresh produce. | Farms, food producers and supermarkets have warned that a shortage of carbon dioxide will lead to significant disruption to the manufacturer and supply of fresh produce. |
| The Times also reported that ministers were concerned that the UK may have to close its six advanced gas-cooled nuclear reactors which also use CO2. | The Times also reported that ministers were concerned that the UK may have to close its six advanced gas-cooled nuclear reactors which also use CO2. |
| The government said it would provide support for CF Fertilisers' operating costs for three weeks "whilst the CO2 market adapts to global prices". There will be a cap to the overall cost. | The government said it would provide support for CF Fertilisers' operating costs for three weeks "whilst the CO2 market adapts to global prices". There will be a cap to the overall cost. |
| Unusual move | Unusual move |
| Business Secretary Kwasi Kwarteng said the "exceptional short-term arrangement" would ensure industries that rely on a stable supply of CO2 "have the resources they require to avoid disruption". | Business Secretary Kwasi Kwarteng said the "exceptional short-term arrangement" would ensure industries that rely on a stable supply of CO2 "have the resources they require to avoid disruption". |
| However, only one of CF Industries' plants will reopen - its Cheshire site remains closed - and it will take about three days to restart CO2 production. | However, only one of CF Industries' plants will reopen - its Cheshire site remains closed - and it will take about three days to restart CO2 production. |
| Tony Will, chief executive at CF Industries, who flew from the US to the UK on Sunday to meet Mr Kwarteng, said: "We look forward to working with Secretary Kwarteng and the UK government on developing a longer-term solution, including the development of alternative suppliers of CO2 for the UK market." | Tony Will, chief executive at CF Industries, who flew from the US to the UK on Sunday to meet Mr Kwarteng, said: "We look forward to working with Secretary Kwarteng and the UK government on developing a longer-term solution, including the development of alternative suppliers of CO2 for the UK market." |
| The business secretary previously ruled out nationalising the company, although providing financial support is still seen as an unusual move. | The business secretary previously ruled out nationalising the company, although providing financial support is still seen as an unusual move. |
| Andrew Opie, director of food and sustainability at the British Retail Consortium, welcomed the decision, but said the timetable to restart CF Industries' factory and start producing carbon dioxide "will still be tight". | Andrew Opie, director of food and sustainability at the British Retail Consortium, welcomed the decision, but said the timetable to restart CF Industries' factory and start producing carbon dioxide "will still be tight". |
| He told the BBC's Today programme: "Our understanding is that provided that carbon dioxide starts to get through to food producers by the end of the week, then we can avert major and significant disruption in our stores." | He told the BBC's Today programme: "Our understanding is that provided that carbon dioxide starts to get through to food producers by the end of the week, then we can avert major and significant disruption in our stores." |
| Mr Eustice warned that the food industry would face a sharp rise in carbon dioxide prices. | Mr Eustice warned that the food industry would face a sharp rise in carbon dioxide prices. |
| He said the industry "is recognising...they will need to pay more for that carbon dioxide, but unless we were to take this action this week, we could have had supply chain issues, for poultry in particular, by the beginning of next week and no government could allow that to happen". | He said the industry "is recognising...they will need to pay more for that carbon dioxide, but unless we were to take this action this week, we could have had supply chain issues, for poultry in particular, by the beginning of next week and no government could allow that to happen". |
| Ian Wright, the chief executive of the Food and Drink Federation, said on Tuesday that consumers could start noticing shortages in poultry, pork and bakery products within days. | Ian Wright, the chief executive of the Food and Drink Federation, said on Tuesday that consumers could start noticing shortages in poultry, pork and bakery products within days. |
| "We probably have about 10 days before this gets to the point where consumers, shoppers and diners notice that those products are not available," he said. | "We probably have about 10 days before this gets to the point where consumers, shoppers and diners notice that those products are not available," he said. |
| "It is a real crisis," he added, saying that poultry and pork production would be seriously affected by the end of this week without intervention. | "It is a real crisis," he added, saying that poultry and pork production would be seriously affected by the end of this week without intervention. |
| He also called on the government to support other fertiliser producers and help food producers to look for alternatives to CO2. | He also called on the government to support other fertiliser producers and help food producers to look for alternatives to CO2. |
| Farmers fear gas price crisis may spark pig cull | Farmers fear gas price crisis may spark pig cull |
| How could the CO2 shortage hit food supplies? | How could the CO2 shortage hit food supplies? |
| Gas price crisis: Government poised to step in | Gas price crisis: Government poised to step in |
| The BBC understands that the deal with CF Industries has been drafted so that other companies who stop production due to high commodity prices will not be able to ask the government for similar help. | The BBC understands that the deal with CF Industries has been drafted so that other companies who stop production due to high commodity prices will not be able to ask the government for similar help. |
| Norwegian firm Yara has also cut production at a number of European factories, including one in Hull. | Norwegian firm Yara has also cut production at a number of European factories, including one in Hull. |
| Mr Kwarteng had said previously that "time is of the essence" in organising the deal with CF Industries, acknowledging that "it may come at some cost". | Mr Kwarteng had said previously that "time is of the essence" in organising the deal with CF Industries, acknowledging that "it may come at some cost". |
| Knock-on effects | Knock-on effects |
| A spokesman for the British Meat Processors Association said a "key question" for the industry was "when will the plants be back on stream, as every day of disruption has knock-on effects for the meat processing industry". | A spokesman for the British Meat Processors Association said a "key question" for the industry was "when will the plants be back on stream, as every day of disruption has knock-on effects for the meat processing industry". |
| The president of the National Farmers' Union, Minette Batters, added: "It's important this restart is meaningful and sustained. | The president of the National Farmers' Union, Minette Batters, added: "It's important this restart is meaningful and sustained. |
| "Users of carbon dioxide were given little to no warning that supplies were going to be cut off - an indication of market failure in a sector supporting our critical national infrastructure." | "Users of carbon dioxide were given little to no warning that supplies were going to be cut off - an indication of market failure in a sector supporting our critical national infrastructure." |
| The prime minister says he does “not believe people will be short of food” amid reports of some empty supermarket shelves. | The prime minister says he does “not believe people will be short of food” amid reports of some empty supermarket shelves. |
| Prime Minister Boris Johnson urged people not to worry about putting food on the table this winter, amid rising energy and food bills and a cut to universal credit. | Prime Minister Boris Johnson urged people not to worry about putting food on the table this winter, amid rising energy and food bills and a cut to universal credit. |
| Wholesale prices for gas have surged 250% since January, with a 70% rise since August alone, leading to calls for support from the industry, and the collapse of some smaller energy firms. | Wholesale prices for gas have surged 250% since January, with a 70% rise since August alone, leading to calls for support from the industry, and the collapse of some smaller energy firms. |
| The resulting shortage of carbon dioxide saw warnings about the potential impact on food suppliers, as well as the NHS and the nuclear industry, where it is used as a coolant. | The resulting shortage of carbon dioxide saw warnings about the potential impact on food suppliers, as well as the NHS and the nuclear industry, where it is used as a coolant. |
| Mr Opie added that the government should also take action on other issues affecting food retailers in recent weeks, such as the shortage of HGV drivers, which has been exacerbated by the pandemic and many drivers returning to the European Union after Brexit. | Mr Opie added that the government should also take action on other issues affecting food retailers in recent weeks, such as the shortage of HGV drivers, which has been exacerbated by the pandemic and many drivers returning to the European Union after Brexit. |
| The government has been keen to stress that this is very much an emergency measure, time-limited, and with a cap on the amount it is prepared to pay. | The government has been keen to stress that this is very much an emergency measure, time-limited, and with a cap on the amount it is prepared to pay. |
| It had to do something. Food producers were warning that shortages would become apparent within days, at a time when supply chains have already been disrupted by other issues, such as a lack of lorry drivers. | It had to do something. Food producers were warning that shortages would become apparent within days, at a time when supply chains have already been disrupted by other issues, such as a lack of lorry drivers. |
| But the fact remains that it has agreed to give a large US-owned company tens of millions of pounds of taxpayers' money, just to operate one of its own plants. That isn't a particularly good look - and it has cast a glaring spotlight on the vulnerability of a key part of the economy. | But the fact remains that it has agreed to give a large US-owned company tens of millions of pounds of taxpayers' money, just to operate one of its own plants. That isn't a particularly good look - and it has cast a glaring spotlight on the vulnerability of a key part of the economy. |
| Now there is a three-week window for government, supermarkets and food producers to come up with a "sustainable market-based solution". In practice, that's likely to mean users paying more for their CO2, a cost which will ultimately be borne by consumers. | Now there is a three-week window for government, supermarkets and food producers to come up with a "sustainable market-based solution". In practice, that's likely to mean users paying more for their CO2, a cost which will ultimately be borne by consumers. |