Recent news has highlighted growing concerns around the UK’s carbon dioxide (CO2) supply. The government has stepped in with up to £100 million to help reopen a major production plant in Teesside, while global tensions linked to the Iran conflict are putting further pressure on energy markets. Together, these developments show how quickly external events can affect essential supplies in the UK.
CO2 is used across many industries. It plays an important role in food packaging, drink carbonation, healthcare, nuclear operations and livestock processing. Because of this, any shortage can have a direct impact on everyday goods and services.
CO2 as a Greenhouse Gas and Industrial Resource
CO2 is widely known as a greenhouse gas, and reducing emissions remains a key priority. When it is released into the atmosphere from burning fossil fuels, it contributes to climate change by trapping heat.
However, CO2 also has an important practical use. In many cases, it is not produced specifically for use but is captured as a by-product from industrial processes such as fertiliser or bioethanol production. Instead of being released into the atmosphere, it is collected and reused in other sectors.
This means the current issue is not about increasing emissions, but about maintaining supply of a gas that is already being produced and used in essential ways across the economy.
Why the Teesside Plant Closed
The Ensus bioethanol plant in Wilton, Teesside, was shut down in 2025 after becoming too expensive to run. One of the main reasons was the high cost of energy, especially natural gas, which is needed to produce bioethanol.
Bioethanol is a type of renewable fuel made from crops such as wheat. During production, sugars are fermented to create ethanol, and CO2 is produced as a natural by-product. This CO2 is normally captured and reused across different industries.
When gas prices increased, the cost of running the plant rose sharply. At the same time, global bioethanol markets became more difficult, with stronger competition and changing demand. This made it harder for the plant to remain profitable. As a result, the facility was closed. This removed a key source of CO2 from the UK supply, making the country more dependent on imports and a small number of other producers.
Government Steps In With Emergency Funding
To avoid a potential shortage, the UK government has agreed to provide up to £100 million to support the restart of the plant. It is expected to run for an initial three months to help stabilise supply.
This decision shows how important CO2 has become in practical terms. It is not usually produced on its own but comes as a by-product from industries like fertiliser and bioethanol production. When those industries slow down or stop, CO2 supply drops as well.
There have already been supply pressures across Europe due to high energy costs, maintenance shutdowns and reduced fertiliser output. The closure of the Teesside plant added to this problem, increasing the risk of shortages.
The Iran Conflict and Global Market Impact
The situation has been made worse by the ongoing conflict involving Iran. This has affected key energy routes, including the Strait of Hormuz, which is used to transport a large share of the world’s oil and gas.
As a result, energy prices have started to rise. Some forecasts suggest oil prices could reach the equivalent of around £120 per barrel if the conflict continues. Higher energy costs affect many industries, including those that produce CO2.
There are also concerns about fuel supply. Reports suggest diesel imports could fall by more than 10%, with prices already increasing. These changes can affect supply chains across multiple sectors, including CO2 production.
A Recurring Weakness in the UK Supply Chain
This is not the first time the UK has faced CO2 supply issues. Similar problems occurred in 2018 and 2021, when fertiliser plants reduced production due to high gas prices.
Each time, the same issue has appeared. The UK relies on a small number of domestic producers, along with imports that can be affected by global events. When one part of the system stops, there are limited alternatives.
The Ensus plant has been an important part of the UK’s CO2 supply in the past. Its closure showed how quickly supply can tighten when a major facility is taken offline.
The £100 million support package is designed to solve the immediate problem, but it is only a short-term solution. The three-month restart gives time to stabilise supply, but it does not fix the wider challenges. However, it does show that CO2 supply is now seen as critical. The government’s decision to step in suggests that keeping these systems running is essential for the wider economy.
Looking ahead, there may be more focus on strengthening UK production and reducing reliance on imports. At the same time, there will continue to be pressure to reduce overall emissions and improve how CO2 is captured and reused.
The current situation is a reminder that energy and industrial supply chains are closely linked, and disruptions in one area can quickly affect others.
