UK industry’s supply of CO2 has been guaranteed said the government after it brokered a deal allowing supplier CF Industries to raise prices instead of more receiving subsidies.

US-owned CF shut down its UK CO2 plants last months after the surge in wholesale gas prices but reopened its site at Billingham near Hull after the government agreed to meet its operating costs.

CF’s UK fertiliser plants produce around 60% of Britain’s CO2, which is used in industries as diverse as meat slaughter, carbonated drinks, refrigeration and packaging.

In a statement, the government said: “CO2 suppliers have agreed to pay CF Fertilisers a price for the CO2 it produces that will enable it to continue operating while global gas prices remain high, drawing on support from industry and delivering value for money for the taxpayer,”

No details were given about how much CF would be allowed to charge but CO2 users had already warned that prices will rise to meet the costs of the original support package.

Food producers were told last month that CO2 would cost five times more than previously with environment secretary George Eustice saying carbon dioxide prices would rise from GBP200 per tonne to GBP1,000.

Business secretary Kwasi Kwarteng added: Today’s agreement means that critical industries can have confidence in their supplies of CO2 over the coming months without further taxpayer support.

“The government acted quickly to provide CF Fertilisers with the support it needed to kick-start production, and give us enough breathing space to agree a longer-term, more sustainable solution.”

CF has told the government that in the long term it has “develop robust alternative sources of CO2” to meet UK demand.

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