Carbon dioxide price surge could see cost of UK groceries could go up by £1.7 billion

The surging cost of carbon dioxide could add £1.7 billion to the cost of British groceries, new analysis shows.

Research by the Energy and Climate Intelligence Unit (ECIU) suggests the UK’s food and drink sector could end up footing the extra large bill for liquid CO2 if gas prices remain high.

Why is there a carbon dioxide price surge? 

UK commercial energy prices have soared over the past year, accelerated by the Russian invasion of Ukraine.

The move created heavy ramifications for industries reliant on carbon dioxide, with production also disrupted due to rampant inflation.

The price of a tonne of liquid CO2 is up to 3000% higher than a year ago - currently as much as £3000 per tonne - compared to just £100 per tonne one year ago, the ECIU said.

Rocketing prices resulted in CF Fertilisers proposing to halt production at its ammonia site, where CO2 is created as a by-product, in August.

Carbon dioxide is used in a variety of sectors but particularly in food and drink, including in the slaughter of pigs and chickens, adding fizz to beer and soft drinks, and packaging foods safely.

There are new fears that gas prices could rise further, or even that supplies will be cut off, leading to further increases in the price of liquid CO2 or a repeat of last year’s shortage.

Businesses in the food and drink sector are already paying significantly more for energy than even a few months ago. In the first quarter of 2022, businesses like pubs, farms, and supermarkets paid 71% more for gas than in the first three months of 2021.

Fay Jones, MP for Brecon and Radnorshire and chair of the Farming APPG, said: “The price of gas is adding thousands of pounds to families’ energy bills.

“Now, like last autumn, it could affect supplies of CO2 and of fertilisers, and drive up the price of everything from beer to bacon.”

Matt Williams, climate and land programme lead at the Energy and Climate Intelligence Unit (ECIU), added: “The UK’s reliance on fossil fuels affects more than just families’ energy bills. It could bring the food and drink system to its knees.

“Rising energy costs are creating an extra cost of hundreds of millions of pounds in the food and drink industry that customers may struggle to avoid.

“If high gas prices or even blackouts, force factories to close it could create real problems for farmers and the food and drink industry.”