In June 2018, a shortage of CO2 was caused by a combination of higher-than-average temperatures resulting in greater demand; and European fertiliser and bioethanol plants going offline for maintenance at the same time as breakdowns at key UK ammonia producers. The shortage meant that suppliers were unable to provide CO2 to their customers, having a knock-on effect on various food sectors, including the meat, bakery, soft drinks and alcohol industries.
The CO2 supply didn’t return to normal until mid-July, which led to businesses having to adapt to meet demand or having to ration their products to ensure long-term availability.
Although there were several factors involved in the shortage, a new report, produced by Global Counsel and published by the Food & Drink Federation (FDF) warned that if proper measures weren’t taken, the industry would be faced with another shortage.
Wake-up call
“The events in the summer of 2018 showed up a lack of resilience in the CO2 supply chain,” said Food and Drink Federation (FDF) director general Ian Wright. "Effort, ingenuity and extra resources deployed by businesses up and down the country mitigated the impacts of the shortages, but it is important to learn lessons from the crisis for the future.
“Last summer’s events were a wake-up call that we need to make the UK’s CO2 chain more resilient,” he said. “A proper response should have three parts: learning from this summer’s shortage; preventing another such shortage happening in the future; and preparing for if it does.”
Global Counsel energy practice lead Matthew Duhan explained how critical CO2 is to the food and drink industry. “Before last summer’s shortage few people realised how critical secure CO2 supply is for the UK economy, particularly for the food and drink sector. Although mostly unaware, almost every single person is a CO2 consumer – not just those who enjoy a crumpet for breakfast or a pint in the pub.
"The summer of 2018 saw a combination of unusually high demand and outages at key production facilities that left companies scrambling to locate and secure supplies. But as our report shows, this was not simply ‘a perfect storm’ of unfortunate events, but the product of structural weaknesses in the UK CO2 supply chain that need to be addressed if shortages are to be avoided in the future.”
The report outlined a series of proposals for the entire supply chain to help reduce the risk of future CO2 shortages. It urged the Government to get more involved with the CO2 supply chain through consultation; ensure Defra carried out a biennial food chain survey relating to contingency planning; issue guidance on handling and responding to CO2 shortages; and for the Competition and Markets Authority to investigate the concentration of CO2 production and supply.
Supply chain proposals
For CO2 suppliers, the FDF proposed increasing storage capacity, improving communication and proactively search for alternative sources of CO2, while for users, it suggested refocusing relationships with suppliers; contracting with more than one supplier; reviewing contracts; and putting in place a Plan B for future shortages.
Wright said there was a possibility that this could happen again. “Some have labelled last summer’s events as a ‘perfect storm’, highlighting the unusual set of circumstances experienced by the CO2 chain: the coincidence of outages at production facilities; the heatwave that pushed up demand for drinks and frozen products; and the similar shortages experienced in Europe that curtailed availability of imports into the UK.
“But the ‘perfect storm’ description risks giving false assurance that the events were a one-off, and the impression that nothing can be done. In fact, the events were not unique. Disruptions on a lesser scale have taken place several times in the last decade.”