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The UK government plans to allocate £100 million to reopen a previously closed carbon dioxide (CO2) production facility as part of a contingency strategy to address potential supply disruptions linked to the ongoing conflict in Iran. This site, located in Teesside and operated by Ensus, had been placed on hold last year but is poised to restart its operations soon.
CO2 plays a critical role in the food and beverage industry: it is used for stunning livestock during slaughter, maintaining food freshness through packaging, and carbonating fizzy drinks. The Teesside plant generates CO2 as a byproduct of bioethanol production. Its closure followed the government’s trade agreement with the United States, which eliminated tariffs on American ethanol imports into the UK, making domestic production less competitive.
The Financial Times first revealed that part of the decision to mothball the plant was influenced by concerns over soaring energy costs impacting European fertilizer manufacturers, who also produce CO2. Neither the Department for Business and Trade nor Ensus have provided comments on the recent government announcement regarding the plant’s reopening.
Geopolitical tensions have exacerbated supply concerns, as oil and gas prices surged following US and Israeli military actions against Iran on 28 February. Iran’s effective blockade of the Strait of Hormuz, a crucial maritime route supplying a fifth of the world’s oil and gas, has further strained energy markets. The UK food and drink industry previously faced CO2 shortages in 2021 due to rising wholesale gas prices and increased production costs for fertilizer companies, conditions that persisted into the following year. Additionally, a trade deal struck last May removed a 19% tariff on ethanol imports up to a quota of 1.4 billion litres—roughly matching the UK’s market size. This deal led to closure of facilities like Vivergo Fuels (owned by Associated British Foods) and the mothballing of Ensus’s plant
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