BRITAIN will shell out millions of pounds of taxpayers’ cash to a US company to restart carbon dioxide production to prevent devastating beer and meat shortages.
Ministers last night sealed a deal with CF Industries as they scrambled to stop supermarket shelves going empty as energy prices rocket to all-time highs.
CF Industries – run by mega-rich American tycoon Tony Will – shut its two fertiliser plants in Teesside and Cheshire because soaring gas costs made them unprofitable.
But this saw the UK’s CO2 production plummet by a staggering 45 per cent – sparking panicked warnings Britain would run out of beer and fizzy drinks.
While the poultry industry warned the country could run out of chicken and pork in just “ten days”.
After days of frantic talks with the American firm, last night Business Secretary Kwasi Kwarteng agreed to a rescue package to get production back up and running immediately at the Billingham plant.
But the agreement will last for just three weeks – sparking worries of what will happen after then if gas prices haven’t stabilised by then.
The Sun understands the deal will mean the company restarts production and will sell their fertiliser, although because of high energy costs they are expected to make a loss.
The government will cover this loss – the gap between what the fertiliser sells for and how much it costs to run the plants – while the energy crisis continues. Mr Kwarteng said last night: “This agreement will ensure the many critical industries that rely on a stable supply of CO2 have the resources they require to avoid disruption.
“In our ongoing response to manage the impact of global gas price rises, we will continue to protect businesses and consumers.”
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Environment Secretary George Eustice added: “We have acted decisively to ensure that CO2 supplies, which are critical to some of our food sectors, continue to be available following some exceptional events.
“However this is a short term intervention to provide the space and time for market adjustment.”
With gloomy warnings the fuel crisis will last well into next year, it means taxpayers could be stung with a massive bill stretching into many millions.
While the deal to rescue a US firm which is globally profitable sparked fury among some critics, ministers felt they were left with no option given the severity of the CO2 crisis.
Speaking while on a trip to the US yesterday, Boris Johnson said the government will do “what’s necessary” to get carbon dioxide production going again.
He said: “On the carbon dioxide issue, that’s particularly important for some industries, we’re taking direct steps to make sure that that continues to be available.”
Mr Kwarteng admitted the deal will come at “some cost” to taxpayers, but promised it will only be “temporary”.
Carbon dioxide is used to produce fizzy drinks, beer, crumpets and even fruit and veg. It is also used to stun animals before they are slaughtered, and to keep meat cold.
While doctors use it in NHS operations. It is also crucial to cool nuclear power plants – if they overheat it could cause a massive nuclear meltdown.
The crisis had fuelled fears Britain was heading for a bleak winter of food and drink shortages.
Food is a national security issue and must be treated as such.
Last night, relieved food suppliers welcomed the bailout – but warned ministers they urgently need to do more to avoid a repeat of the scare in the future.
Richard Griffiths, chief executive of the British Poultry Council, said: “This episode has demonstrated the importance of CO2 in British poultry production, to avoid both bird welfare and supply issues. Food is a national security issue and must be treated as such.”
Minette Batters, President of the National Farmers Union, said: “The UK food supply chain has so far done a fantastic job keeping our shelves full but these past few days have highlighted starkly the fragility in the supply chain.
“It is something government must not take for granted, and I want us to use this moment to ensure we all understand what’s at stake.”
She added: “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.”
Mr Kwarteng agreed to the deal after three days of talks with CF Industries boss Tony Will – who is worth an estimated £30million and takes home £6.5m a year in pay.
Free-market think-tanks and MPs slammed the government for getting so dependent on a single supplier they ended up bailing out a run by a man worth £30million.
Dr Eamonn Butler, director of the Adam Smith Institute, said: “If you put the government in charge of the Sahara Desert, there would be a shortage of sand within five years. Since we put the government in charge of setting prices on the energy industry, it has taken less than five years for a shortage.
“Only the government could screw up the energy market then use taxpayer funds to bailout companies. The merry-go-round of subsidy and regulation that gives security only to the most powerful and well connected at huge cost to everyone else has got to stop.”
Top Tory and former leader Iain Duncan Smith told The Sun: “This should be a very time-limited operation and must be suspended as soon as they can ship CO2 into the UK from elsewhere.
“The bigger longer term problem is supply of energy – successive governments have taken their eye off the ball of energy security, which we are no longer producing here in this country. We won’t survive if we go on like this.”
PM XMAS PROMISE
BORIS Johnson last night insisted supermarket shortages and sky-high fuel costs are a “short term problem” amid fears of a cost of living crisis.
The PM promised families they will not have to go without this December as he vowed “Christmas is on”. But gloomy experts warned inflation will run hot at 3 per cent next year — the highest rate of the major advanced economies.
Figures last week revealed inflation has hit 3.2 per cent — its highest level in nearly a decade. Speaking in New York yesterday, BoJo said: “We will do whatever we can to address the supply issues, but this is a short-term problem.”
He said it was caused by the “world economy waking up after a long time in this suspended animation caused by Covid”. But Business Secretary Kwasi Kwarteng had earlier admitted some struggling Brits will have to choose between eating and heating this winter.
FIVE million customers are at risk of their energy firms going bust in coming weeks, it is feared.
They are with firms that do not pre-buy energy, but gamble there would not be extreme price rises.
A source said: “These firms are at risk. They are having to buy gas at heavily inflated prices. Many don’t have the cash to do that.”
Green Energy lined up advisors to help shift its 250,000 customers to another supplier. Another with more customers was also thought to have been in touch with Ofgem.
The regulator arranges for bigger firms to take on customers of suppliers that go bust.
Customers will not have gas or electricity cut off but bills will rise if they pay less than the price cap. They also face hefty admin issues.