gasworld first broke the news of the carbon dioxide (CO2) supply shortage, described by those who have worked in the industry for more than 25 years as the “worst supply situation to hit the European CO2 business in decades” on Tuesday.
CO2 is widely used in the food processing and beverage sector – from putting the fizz into soft drinks, beer and cider, to its use in modified atmosphere packaging (MAP) to extend the shelf life of fresh meat and poultry.
Naturally, with the current tight supply there has been growing sensationalist reporting implying shortages of beer, cider and soft drinks and even impacting on the food chain itself. We explain more of how the situation arose and how quickly it will get resolved.
The supply chain of CO2 has three stakeholders involved – the original source providers of the CO2, the recovery/liquefaction and distribution of the product, and then the end-users.
Traditionally, one of the largest sources of food grade CO2 in Europe has been from ammonia plants (around 45% of the installed capacity) that then feed through to fertiliser production. Simply put, CO2 is a by-product of the ammonia production process.
Other sources of CO2 range from chemical plants, natural wells and bio-ethanol plants, as well as from traditional fermentation and distillery processes.
It is generally well understood that fertiliser plants close down for routine maintenance in the March to May period and that the industry prepares additional storage to cater for this downturn in capacity as the April to August period is the peak demand period from the beverage and food sector.
This year, with higher natural gas pricing, and also the availability of lower cost ammonia from other regions outside of Western Europe, some of the European fertiliser producers have prolonged the downtime of the ammonia plants, based on economic grounds. Thus, impacting on availability of CO2.
This, alongside additional shutdowns in bi-ethanol plants, has caused a pinch in supply across northern Europe. Compounding this, the heatwave Europe experienced throughout May, caused an unprecedented demand from the beverage sector.
gasworld broke the story on Tuesday as the week started with unexpected technical issues. Some of the plants that had already restarted had to close down again for repair.
When interviewed by the BBC yesterday, gasword’s CEO and Founder John Raquet said he did not expect the critical supply pinch to last too long and while soft drink and alcoholic beverage companies were facing very challenging times.
“I do not expect to see any severe shortages of beer or fizzy drinks. Some of the big branded breweries have their own CO2 recovery and production so they can keep on producing beers and lagers. That also applies to some of the larger cider manufacturers.”
Several countries have been hard hit – especially in North West Europe. It is worth noting that normally, the supply/demand balance for CO2 is very much stable in that there is normally enough capacity to meet the peak in demand in the summer months. It’s just that market dynamics, outside of the control of the main suppliers, have worked against the industry causing this crisis. Compounding the situation was the unseasonable weather in later April/May.
“There have been, and are, reported outages in beverage production but we know the suppliers are working overtime to provide the structure and service to keep all end-users supplied with some product while they work out the pinch,” Raquet added. “We have been talking to some of the CO2 suppliers, this week is a crunch week but plants that have been offline for either routine maintenance or for sudden technical reasons are very likely to be up and running over the next 10 days. This applies to plants located across Europe.”
gasworld aims to keep you updated as and when the situation changes.