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25 Jul 2018
3 min read

Catch C if you can

Not enough carbon is straining parts of the UK economy. This seems hard to square with the usual warnings that too much carbon is straining the world economy. A CO2 Catch-22, it seems?

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Our way of life is at risk from an insidious, invisible gas. Every day brings news of threats to pillars of civilisation. First, it was the beer. Then it was the burgers. Next, it was the crumpets. The problem is clear: we are running out of carbon dioxide.

Keeping drinks fizzy and goods chilled, carbon dioxide (CO2) is used widely in industries from agriculture to packaging. As heatwaves in Europe and the World Cup turned thirsty consumers into even thirstier football fans, demand for CO2 grew. At the same time, several of the UK’s main providers of food-grade CO2 closed for routine maintenance. Many food and drink companies, pubs and supermarkets have now taken a hit to their supply chain.

So – not enough carbon is straining parts of the UK economy. This seems hard to square with the usual warnings that too much carbon is straining the world economy. A CO2 Catch-22, it seems.

A CO2 Catch-22

CO2 can be both harmful and useful. At high concentrations near the ground it can be lethal to humans or animals. At high concentrations in the atmosphere, it traps heat and cooks the planet. 

The problem is that our current approach to managing carbon doesn’t maximise its benefits or minimise its damages. Much of this comes from treating CO2 as a by-product whose cost does not reflect its value and impact. 

Exhibit A: Food

Food-grade CO2 comes mostly from fertiliser plants, where it is a cheap side-effect in the production of ammonia. In Europe, demand for CO2 is growing faster than the demand for ammonia, which is increasingly moving towards regions such as Asia, where production is cheaper. And once production shifts, it’s uneconomical to ship carbon over from Asia. This seems a problem that a market could easily fix: a rising price encourages producers to address shortages of supply. But most food-grade CO2 is sold through long-term contracts, with no spot price for producers to respond to. The risk of bottlenecks that threaten to take the fizz out of our bottles is not over yet.

Exhibit B: Power

The power sector is another sector where the price of carbon is of growing importance. In many places, it costs nothing for power plants to emit tremendous quantities of CO2. Yet this is changing, as some of the world’s largest electricity consumers – including the European Union and China – are either raising or introducing a carbon price. Emitters have two options in response:

First, they can move away from high-carbon energy sources. The introduction of a minimum carbon price has seen the UK go from using coal to get 40% of its electricity as recently as in 2012, to 2018 where there have been days with no coal used at all.

Second, they can find ways to prevent the carbon from entering the atmosphere in the first place – what is known as ‘carbon capture and storage’ (CCS).

Deploying CCS could open up a source of CO2 for other uses such as the carbonated drinks industry. CCS could also throw a lifeline to the coal industry. By 2050, every coal power plant in the world must either close or install CCS technologies if we are to contain global warming to the relatively ‘safe’ level of no more than 2°C compared to pre-industrial times (the target of the Paris Agreement on climate change). Little wonder, then, that coal trade groups sing the praises of CCS. Politicians on both sides of the Pacific are also prone to making cavalier mentions to so-called ‘clean coal’.

 In reality, there are as many coal plants in the world capturing and storing carbon as there are words in ‘clean coal’

Coal power infographic

This dichotomy is why carbon shortages and surpluses can coexist. At present, capturing carbon – economically and at scale – is hard. Better use of carbon pricing might create a mechanism to take from the carbon-rich (power generators) and give to the carbon-poor (food and drink manufacturers). It could also help us avoid a scenario that few environmentalists dare consider: legions of angry, thirsty football fans let loose upon the world.

United Kingdom Technology Energy Environment, Social and Governance
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