Cost of living: Grocery prices could rise by £1.7bn as carbon dioxide price rises | UK News

The price of groceries could rise by £1.7billion due to rising carbon dioxide costs of up to 3,000%, according to new analysis.

According to a study by the Energy and Climate Intelligence Unit (ECIU), the UK food and drink industry could end up paying the colossal extra liquid CO2 bill if gas prices stay high.

Gas is used in many industries, but particularly in the food and beverage industry, including in the slaughter of pigs and chickens, for sparkling beer and soft drinks, and for safely packaging food.

Rampant inflation amid the cost of living crisis has caused a disruption in carbon dioxide production, leaving gas-dependent industries with heavy ramifications.

Commercial energy prices across the country have also soared over the past year, with the war in Ukraine driving up costs.

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, up from just £100 a tonne a year ago, says the ECIU.

As a result, production at a key ammonia site, where CO2 is created as a by-product, was temporarily halted in August.

Its owner, CF Fertilizers, said: “At current natural gas and carbon prices, CF Fertilizers UK’s ammonia production is unprofitable, with marginal costs in excess of £2,000 per tonne and world prices ammonia at about half that level.”

Fay Jones, MP for Brecon and Radnorshire and chair of the Agriculture All Party Parliamentary Group, 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.”

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The prices of the cheapest foods are soaring

“It could bring the food and drink system to its knees”

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

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This comes as 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.

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Matt Williams, climate and land program manager at ECIU, said: “The UK’s reliance on fossil fuels is affecting more than families’ energy bills. It could bring the food and drink system to its knees.

“Rising energy costs are creating hundreds of millions of pounds of additional cost to the food and drink 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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