Carbon Dioxide Supply Shortage Triggered by Iran War Energy Crisis - 2026

The United Kingdom government announced on 26 March 2026 a 100 million GBP (approximately 133 million USD) emergency grant to reopen the Ensus bioethanol plant in Wilton, Teesside. The facility, operated by CropEnergies (a subsidiary of the German Sudzucker Group), had been mothballed in September 2025 after a UK-US trade deal removed a 19% tariff on American bioethanol imports, making the plant economically unviable. The reopening was ordered by Business Secretary Peter Kyle as the first major government intervention to address supply chain disruptions caused by the Iran conflict.

The Ensus plant was the last remaining large-scale industrial manufacturer of biogenic carbon dioxide in the United Kingdom. Its closure, combined with the earlier shutdown of the Vivergo Fuels plant in Hull (owned by Associated British Foods) in August 2025, had already left Britain without any domestic bioethanol-based CO2 production capacity. The government had been in negotiations with Ensus since September 2025 to keep the plant on standby, and the Iran crisis accelerated the decision to bring it back into operation for an initial three-month period.

The Iran conflict, which began on 28 February 2026 when the United States and Israel launched military action against Iran, sent oil and gas prices sharply higher across global markets. The effective blockade of the Strait of Hormuz disrupted energy supply chains worldwide, causing a surge in European natural gas prices. This price shock directly impacted fertilizer manufacturers across Europe, which are among the largest producers of industrial CO2 as a byproduct of ammonia production. Several European fertilizer plants reduced output or closed entirely because the cost of natural gas made ammonia production unprofitable, further cutting into an already strained CO2 supply.

Carbon dioxide is not produced as a standalone industrial product. It is almost entirely a byproduct of other chemical processes, primarily ammonia-based fertilizer manufacturing and bioethanol production. This structural dependency makes the CO2 supply chain uniquely vulnerable to disruptions in seemingly unrelated industries. When fertilizer plants shut down due to high energy costs, or when ethanol facilities close for economic reasons, CO2 production disappears as a collateral consequence.

The impact of a CO2 shortage extends far beyond carbonated beverages. Industrial carbon dioxide is essential across multiple critical sectors. In the food industry, CO2 is used for modified atmosphere packaging to extend the shelf life of fresh meat, salads, and baked goods. In its solid form as dry ice, it provides cold chain logistics for frozen food transport and storage. Abattoirs across the UK and Europe rely on CO2 to humanely stun livestock before slaughter, a practice mandated by animal welfare regulations. Without adequate CO2 supplies, poultry and pork processing facilities face potential shutdowns.

In healthcare, medical-grade CO2 is used as an insufflation gas during minimally invasive surgeries such as laparoscopy, endoscopy, and arthroscopy. The gas is pumped into body cavities to create space and improve surgical visibility. CO2 is also used as a respiratory stimulant before and after anesthesia, in cryotherapy for tissue destruction, and in IVF clinics where it maintains the correct pH levels in embryo culture incubators. Dry ice remains essential for transporting vaccines, organs, and biological samples at ultra-low temperatures.

The nuclear industry uses CO2 as a coolant in certain reactor designs, making supply security a matter of national infrastructure. The UK imports approximately 25% of its CO2 demand, and the disruption to global energy markets has put these import channels under pressure as well.

The North American CO2 market was already facing significant tightness heading into 2026. Industry analysts had warned at the September 2025 gasworld CO2 Summit that scheduled plant closures and the slow pace of new capacity would create shortages. In California alone, four ethanol plants closed in 2025 and two more refineries were scheduled to close, potentially removing 20% of the state's CO2 production capacity. Experts estimated that 1,600 additional tonnes of merchant CO2 per day were needed to close the existing supply gap, equivalent to five new plants of 300 tonnes daily capacity each.

Previous CO2 crises have demonstrated how quickly shortages can cascade through supply chains. In 2018, European fertilizer plant shutdowns forced Coca-Cola to halt production at a UK bottling plant, Wetherspoon pubs to pull carbonated drinks from their menus, and Scottish abattoirs to redirect livestock to England for processing. In 2022, the energy price surge following the Russia-Ukraine conflict caused a similar wave of disruptions across European food and beverage industries. In 2024, Australia and New Zealand experienced acute CO2 shortages that left supermarket shelves empty of certain beverages for weeks.

The UK government described the Ensus intervention as a strategic move to safeguard critical national infrastructure. The plant has an annual CO2 production capacity of 250,000 tonnes and also produces 400 million litres of bioethanol and 350,000 tonnes of high-protein animal feed from more than one million tonnes of wheat per year. The reopening is expected to safeguard around 100 direct jobs and support approximately 3,000 additional positions across the UK supply chain.

Grant Pearson, Chairman of Ensus UK, confirmed that the company hoped to have the plant back in full operation soon. The deal also supports the UK agricultural sector and future expansion of sustainable aviation fuels. However, the broader outlook remains uncertain as the duration of the Iran conflict and the Strait of Hormuz disruption continue to weigh on global energy markets and all downstream industries that depend on affordable natural gas for their operations.