Sector News

Surging energy prices force C02 shutdowns sparking concerns for F&B industry

August 28, 2022
Food & Drink

Potential carbon dioxide shortages are being closely monitored amid fears that a pause in ammonia production at a large UK-based C02 supplier will cause problems. F&B industry bodies are extremely cautious after CF Fertilisers decided to halt production because of surging energy costs. Any closures could have knock-on effects on the soft drinks sector, brewers and farming.

Meanwhile, other countries are also flagging C02 shortages.

The Billingham plant in the northeast of England accounts for approximately one-third of Britain’s supplies, producing C02 as a byproduct for use in several F&B sectors, including beer brewers, soft drinks, bakery and meat processors.

They all use C02 to produce goods and pack them in inert gas for extended shelf life.

Carbon dioxide is also used to stun animals like pigs and poultry before they are slaughtered for meat.

This means any carbon dioxide halt piles the pressure on the F&B industry as well as farmers.

“We are monitoring this developing situation at Billingham. Longer-term interventions that will help make the CO2 market more resilient and stable are both necessary and overdue,” director general of the British Soft Drinks Association, Gavin Partington British, tells FoodIngredientsFirst.

Animal welfare in spotlight
Speaking with the British Meat Processors Association (BMPA), a spokesperson explains the growing concerns over a C02 shortage and how specifically this impacts animal welfare.

“We have concerns because the main usage of carbon dioxide in the meat industry is in the pork sector in the slaughter process for pigs.

“If there is a disruption in supply, it immediately becomes an animal welfare issue because without the ability to perform slaughter, the pigs back up on the farms.”

“Obviously, there is regular throughflow where pigs come off the farms into the processing plants, and if they can’t take them from the farms and the numbers of pigs rapidly rise on the farms, then this causes a problem.”

The BMPA spokesperson further explains how once pigs go beyond a certain size, and then processors can’t take them because they are deemed too big to go through the system, and the size of the cuts produced will be too large for retail packs.

“Without the ability to process them, the pigs must stay on the farms. We want to make sure our sector is prioritized in any carbon dioxide shortages. BMPA is in regular conversation with the government, but at the moment, we’re waiting to see what the outcome will be.”

FoodIngredientsFirst also spoke with the UK’s Department for Business, Energy and Industrial Strategy.

“We are aware that CF Fertilisers has taken the decision to temporarily halt ammonia production in Billingham. Since last autumn, the CO2 market’s resilience has improved, with additional imports, further production from existing domestic sources and better stockpiles,” a government spokesperson states.

“While the government continues to examine options for the market to improve resilience over the longer term, it is essential industry acts in the interests of the public and business to do everything it can to meet demand.”

“We are engaging with businesses across the food and drinks industry to understand any potential impacts.”

Complex market conditions
CF Fertilisers UK intends to use the Teeside site’s capability to import ammonia to continue running its ammonium nitrate (AN) and nitric acid upgrade plants. The company expects to fulfill all ammonia and nitric acid contracts and all orders of AN contracted for delivery in the coming months.

“At current natural gas and carbon prices, CF Fertilisers UK’s ammonia production is uneconomical, with marginal costs above £2,000 (US$2,365) per ton and global ammonia prices at about half that level. The current cost of natural gas at NBP is more than twice as high as it was one year ago, with the NBP forward strip suggesting that this price will continue to rise in the months ahead,” a company statement reads.

The company has notified customers who purchase carbon dioxide on a contract basis from the Billingham complex about the impending temporary halt of ammonia production.

Once the ammonia plant is safely shut down, CO2 production, which is a byproduct of the ammonia production process, will stop until the plant is restarted.

“The company has not yet determined the exact date when it will begin the temporary shutdown of the ammonia plant,” the statement concludes.

Meanwhile, Norwegian chemical company Yara International is also implementing further curtailments, which will take its total European ammonia capacity utilization to around 35%. With this, Yara will have cut back an annual capacity equivalent of 3.1 million tons of ammonia and 4 million tons of finished products across its production system in Europe.

“Yara will, where possible, use its global sourcing and production system to optimize operations and meet customer demand, including continued nitrate production using imported ammonia when feasible. Yara will continue to monitor the situation and adapt to market conditions going forward,” says a company statement.
The beer industry uses C02 to keep oxygen out of beer.

How does beer use C02?
Carlsberg’s subsidiary in Poland may cut or pause beer production due to a lack of carbon dioxide deliveries in the country.

Poland’s largest chemicals company Grupa Azoty said earlier this week that it is reducing the production of some products because of the rising cost of gas.

Anwil, a chemical subsidiary of Poland’s Orlen’s, is also reportedly temporarily suspending production.

We’ve been here before
Carbon dioxide shortages are not a new phenomenon within the F&B industry.

Known as a US agricultural fertilizer giant, CF Industries, controls 60% of the UK’s CO2 supply through several UK facilities. In 2021, the company shut down two of its major plants after becoming unprofitable – once again due to the rise in natural gas prices.

British policymakers then struck a temporary deal to match the company’s lost costs and keep lines running, fearing farmers would be forced to cull large livestock numbers, causing further economic damage.

In the summer of 2018, the closure of carbon dioxide production sites in Europe led to a shortage of CO2 and concerns over the possibility of low stocks of soft drinks and beer during one of the busiest times of the year.

By Gaynor Selby

Source: foodingredientsfirst.com

comments closed

Related News

February 4, 2023

Unilever names FrieslandCampina’s Hein Schumacher as next CEO

Food & Drink

Schumacher will replace Alan Jope, who announced his decision to retire last September, less than a year after a failed attempt by Unilever to buy GlaxoSmithKline’s consumer healthcare business and just months after activist investor Nelson Peltz joined the company’s board.

February 4, 2023

Tetra Pak execs flag plant-based ice cream development hurdles as indulgent offerings expand

Food & Drink

Globally, plant-based ice creams have doubled their share of the market over the last five years, according to Tetra Pack. Pea protein and coconut milk are leading the way, but Tetra Pak cites data showing that oat-based ice cream launches have doubled in the previous year.

February 4, 2023

Examining the meaning of eco-labels: Is it time for mandated methodology?

Food & Drink

A myriad of so-called eco-labels are being rolled out across various F&B products, but with no gold standard or strict rules governing precisely what the logos mean and what methodology is behind them, concerns are growing that they will confuse consumers and ultimately be counterproductive.

How can we help you?

We're easy to reach