The government's deal with CF Fertilisers to restart carbon dioxide production could cost taxpayers "tens of millions" of pounds, a minister has revealed.
Environment Secretary George Eustice told Sky News on Wednesday: “Lawyers are still working on those final details.
“It’s going to be into many millions, possibly the tens of millions, but it is to underpin some of those fixed costs.”
He added: “It’s going to be temporary ... at the end of the day we need the market to adjust.
“The food industry know that there is going to be a sharp rise in the cost of carbon dioxide, probably going from something like £200 a tonne eventually up to closer to £1,000 a tonne, so a big, sharp rise.”
Mr Eustice said there had been a “perfect storm” caused by two plants in the UK and Norway being closed for maintenance at the same time as CF suspended operations of its two factories due to high energy costs.
The government has struck a deal to provide “limited financial support” towards CF Fertilisers' running costs in order to prevent a food supply shortage at UK supermarkets.
The agreement will be in place for three weeks while the “CO2 market adapts” to the surge in global gas prices, according to the Department for Business, Energy and Industrial Strategy (Beis).
Mr Eustice said the government had to act to subsidise CF Fertilisers in order to protect food supplies.
Carbon dioxide is used in the stunning of animals prior to slaughter and in packaging to preserve foods.
Mr Eustice said: “The truth is if we did not act then, by this weekend, or certainly by the early part of next week, some of the poultry processing plants would need to close and then we would have animal welfare issues - because you would have lots of chickens on farms that couldn’t be slaughtered on time and would have to be euthanised on farms, we would have a similar situation with pigs.
“There would have been a real animal welfare challenge here and a big disruption to the food supply chain, so we felt we needed to act.”
On Tuesday, Mr Kwarteng said the deal would avert “disruption” in the “many critical industries that rely on a stable supply” of CO2.
Spiralling energy costs have led to the suspension of operations at fertiliser plants which produce CO2 as a by-product, having a knock-on effect on the food industry particularly.
CF Fertilisers produces around 60 per cent of the UK’s CO2, used primarily by the food sector but also in the health and nuclear industries, but suspended operations at its Teesside and Cheshire plants because of high global gas costs.
Ian Wright, chief executive of the Food and Drink Federation, had warned that shoppers may notice products missing “in about 10 days” if a solution was not found.