Cost of groceries could rise by £1.7bn as CO2 prices soar

The rising cost of carbon dioxide could add £1.7billion to the cost of UK groceries, a new analysis has found.

The rising cost of carbon dioxide could add £1.7billion to the cost of UK groceries, a new analysis has found.

Why is there a spike in carbon dioxide prices?

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

This decision had serious consequences for industries dependent on carbon dioxide, with production also being disrupted due to soaring inflation.

The price of a tonne of liquid CO2 is up to 3,000 per cent higher than a year ago – currently up to £3,000 a tonne – from just £100 a tonne a year ago, says the ECIU.

Soaring prices led CF Fertilizers to propose shutting down production at its ammonia site, where CO2 is created as a by-product, in August.

Carbon dioxide is used in a variety of industries, but most notably in food and beverages, including in the slaughter of pigs and chickens, the addition of fizz to beer and soft drinks, and the packaging of food safely.

There are renewed fears that gas prices could rise further or even supply be interrupted, leading to further increases in the price of liquid CO2 or a repeat of last year’s shortage.

Food and beverage companies are already paying significantly more for energy than just a few months ago. In the first quarter of 2022, businesses like pubs, farms and supermarkets paid 71% more for petrol than in the first three months of 2021.

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

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

Matt Williams, Climate and Land Program Manager at the Energy and Climate Intelligence Unit (ECIU), added: “The UK’s reliance on fossil fuels affects more than family energy bills. This could bring the food and drink system to its knees.

“Rising energy costs create an additional cost of hundreds of millions of pounds in the food industry that customers may find difficult to avoid.

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

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