Gas supply this winter is “not a cause for immediate concern”, the UK’s business secretary has reassured, following reports that a spike in prices could threaten food production and other industries.
Kwasi Kwarteng posted a series of tweets after holding meetings with senior executives from the energy industry to discuss the impact of high global gas prices – blamed on high global demand, maintenance issues and lower solar and wind energy output – on Saturday.
The UK benefits from having a diverse range of gas supply sources, with sufficient capacity to more than meet demand.
The UK’s gas system continues to operate reliably and we do not expect supply emergencies this winter. (2/7)
— Kwasi Kwarteng (@KwasiKwarteng) September 18, 2021
It comes amid concerns over whether some people will be unable to afford the cost of heating their homes over winter, and as some companies which use gas for production have shut down.
Ranjit Singh Boparan, the owner of Bernard Matthews and 2 Sisters Food Group, has warned that Christmas dinners could be “cancelled”, while Nick Allen, chief executive of the British Meat Processors Association, told Sky News that Britons could see pork and poultry “disappear off the shelves in the next couple of weeks” due to the knock-on effects of high prices.
But Mr Kwarteng said he had been “reassured that security of supply was not a cause for immediate concern within the industry”.
He continued: “The UK benefits from having a diverse range of gas supply sources, with sufficient capacity to more than meet demand. The UK’s gas system continues to operate reliably and we do not expect supply emergencies this winter.”
While some energy firms are “facing pressure”, he said, industry regulator Ofgem has “robust measures in place to ensure that customers do not need to worry, their needs are met, and their gas and electricity supply will continue uninterrupted if a supplier fails”.
It is understood that Mr Kwarteng held talks with senior executives from Ofgem, Centrica, National Grid, Energy UK, Octopus, Ovo, SSE, EDF, ScottishPower, Shell Energy, E.ON, Bulb and SGN.
He said that protecting customers from huge price rises was “an absolute priority” and that he would be holding further talks with Ofgem on Sunday and a roundtable meeting with industry leaders on Monday.
What does CO2 have to do with food supplies?
CO2 is essential to the humane slaughter of livestock because it is used to stun animals before they are killed.
It is also used for vacuum-packing and extends the shelf-life of red meat by up to five days and poultry by up to 14 days.
CO2 is also vital to cooling systems for refrigeration purposes.
Mr Kwarteng will “remain in constant contact” with colleagues across government to “manage the wider implications of the global gas price increase”, he said.
He also reassured that the UK’s “largest single source of gas is from domestic production, and the vast majority of imports come from reliable suppliers such as Norway”, and that “we are not dependent on Russian oil and gas”.
The problems for the meat industry are being caused by a shortage of carbon dioxide gas, as the sharp rise in gas prices has meant two large fertiliser plants in Teesside and Cheshire – which produce CO2 as a by-product – have shut.
Mr Boparan says that this, combined with a shortage of workers, will affect the supply of turkeys and other meat. “The supply of Bernard Matthews turkeys this Christmas was already compromised as I need to find 1,000 extra workers to process supplies,” he said. “Now with no CO2 supply, Christmas will be cancelled.
“The CO2 issue is a massive body blow and puts us at breaking point, it really does – that’s poultry, beef, pork, as well as the wider food industry.”
Sky’s economics and data editor Ed Conway says that in the coming months, we can expect many more industrial plants to temporarily cease production.
An Ofgem spokesman said: “Currently wholesale gas prices are at a record high, driven by international supply and demand factors.
“This is undoubtedly putting pressure on companies – with four leaving the market over the last few weeks.
“Ofgem cannot comment on whether further suppliers will fail, but we have the systems and processes in place to ensure that customer needs are always met.
“For those customers who are with energy companies that can no longer trade, a new supplier will be appointed.
“Ofgem is working closely with government to manage the wider implications of the global gas price increase.”
Ed Miliband, Labour’s shadow business secretary, said it was the government’s “basic duty” to ensure “secure, affordable energy supplies for businesses and families” and that it was a “fundamental failure of long-term government planning over the last decade that we are so exposed and vulnerable as a country”.
He added: “If we had been investing at sufficient scale in diverse, secure, zero carbon energy supplies and making energy efficiency a much bigger priority, we would not be in such a precarious position.
“Ministers must recognise the severity of the cost of living crisis now facing families as a result of rising energy prices and their unfair tax rise and cancel the cut to Universal Credit.
“They must also ensure security of supply and take the long-term action to put in place a much more robust, resilient and diverse energy infrastructure.”