Pressure is building on the government to address the unintended consequences of its move to allow US access to the UK’s bioethanol market, amid warnings it could devastate supplies of CO2 gas critical to the food sector.
The removal of UK tariffs on US ethanol in last week’s trade deal announcement is rumoured to have been added to the transatlantic agreement at the eleventh hour, according to several senior food sector sources.
The move was part of a “historic trade deal that will lower tariffs, remove trade barriers, increase market access, and strengthen co-operation on economic security”, said US agriculture secretary Brooke Rollins this week, and will see the US permitted to export up to 1.4 billion litres of the biofuel into the UK under a new zero-tariff quota.
But with the majority of the UK’s industrial CO2 gas supply now sourced as a byproduct from bioethanol production, the expected competition from US ethanol suppliers also heralded a potential repeat of the gas supply crises of 2021/22 and 2018, the UK’s two leading producers of the biofuel have warned.
Associated British Foods subsidiary Vivergo and chemical giant Ensus this week cautioned the quota allowance matched the combined total annual UK output of the biofuel – adding the deal made their operating environment “unviable”.
Given the situation, they warned CO2 gas production was now also at risk, as was the market for two million tonnes of British wheat, used as a feedstock for the fuel, every year. “Hundreds of growers will lose a dependable market for wheat that cannot be used in breadmaking,” the pair warned. “Instead, they’ll be forced to export it at lower prices, while facing higher costs for imported animal feed.”
The government’s failure to consider the implications of a cut to CO2 supply from the deal was described as “scandalous”, said NFU president Tom Bradshaw. He told The Grocer this week he was “genuinely concerned about the integrity of the CO2 gas supply chain”.
CO2’s critical role
CO2 gas is used widely throughout the food and drink supply chain. It plays a critical role in everything from the carbonation of drinks to the slaughtering of livestock and its deployment in modified atmosphere packaging – used to extend the shelf life of products such as bread, fresh meat and salads.
Given the crises of the recent past, it was “shocking” the commodity had not been included on the government’s National Risk Register, Bradshaw added.
Read more: US now targeting British pork, poultry and seafood markets amid trade talks
And given ethanol’s apparent late addition to the trade deal, it was clear its wider implications “hadn’t been thought through”, said British Meat Processors Association CEO Nick Allen. It was “quite apparent” the issue had been overlooked by negotiators, he suggested.
“This is the danger of doing things in a rush,” he said, warning CO2 was of “strategic importance” to the food sector and echoing Bradshaw in saying it needed to be treated as such.
Vivergo, which does not currently supply CO2 gas to industry, told The Grocer it was “developing capacity for supply at scale and expects this to play a major part in the future of the business”.
Domestic CO2 production was “vital” said MD Ben Hackett, echoing concerns from Ensus chair Grant Pearson, who warned “the commercial CO2 we produce not only keeps the UK’s food and drink sector from falling flat, but it also helps support British farmers, the NHS and the UK’s energy supply, where it is a vital coolant in the nuclear industry”.
The government, which Pearson and Hackett said had given “indications they will respond to this growing crisis”, now needed to “give answers, and fast”, said Commons Efra Committee chair Alistair Carmichael MP.
“This was a rushed trade deal,” said the NFU’s Bradshaw. “I’m not convinced that anyone understood the full consequences of liberating the bioethanol market.”
In response, a government spokesperson told The Grocer it “continued to monitor the CO2 supply chain carefully, as usual, and will directly intervene to maintain it, if needed”.
It was “engaging with both producers and suppliers, and we are assured that there is currently no shortage of CO2”, they insisted.
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