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Supply shock - UK carbon dioxide price quadruples

Graham Watson

3rd September 2022

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A classic of the genre, with the quadrupling of carbon dioxide prices having lots of interesting economics implications, largely because of the derived demand for carbon dioxide.

We've been here before - previously, the government stepped in to subsidise fertiliser production - but two of the economy's largest fertiliser producers have temporarily ceased production because of the extent to which energy costs have risen, and as a result CO2 is now £4,500, up from around £1,000 last week and £200 last year.

One of the UK’s biggest chicken producers has warned food security could again be under threat.

More here from the Financial Times - UK’s top chicken producer warns on spiralling CO₂ costs

The article reinforces the importance of carbon dioxide as an essential input into the manufacturing of many different products - it is used in the poultry and pig industries as well as brewing, carbonated drinks production, food packaging and refrigeration.

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Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to tutor2u, reads voraciously and is interested in all aspects of Teaching and Learning.