From Beers to Biomedical Sciences: Carbon Dioxide Shortage in Europe and North AmericaEverstream Team
- The carbon dioxide shortage that has swept through Europe over the course of the 2018 FIFA World Cup has gained notoriety for its effects on food and beverage processing, as well as resulting consumer goods shortages
- There may be less immediate impact on industrial applications for the pharmaceutical, biomedical, manufacturing, transportation, and energy industries
- The reliance on seasonal cycles for ammonia production as well as a series of mechanical problems at British ammonium manufacturers may exacerbate the shortages
- Short term impacts show a week to month recovery for the most consumer applications, with the potential for long-term impact on industrial applications
- As carbon dioxide is used extensively in the temperature-controlled supply chains, transportation and logistics sectors may feel the impact in the medium to long-term
From Beers to Biomedical Sciences
One of the more notable stories to arise during the course of the 2018 FIFA World Cup was a persistent shortage of beer for fans watching the games, most notably in England, triggered by a shortage of carbon dioxide that gives beer its frothy foams. What garnered attention as time passed, however, was not only the extent of the impact the carbon dioxide shortages had on beer production, but also its breadth in the food processing industry. The attention to the beer shortages became more prominent as rationing of carbon dioxide supply began to take place in not only England, but also in continental Europe. This rationing later began to impact the production of crumpets and meat processing, as well as the availability of ice cream on flights.
For the food industry, this shortage is noteworthy. CO2 gas is used for canning, packaging, carbonation of beverages, and stunning livestock in abattoirs, among other applications in the industry. The impact on the food industry is, however, the most visible due to the high productive turnover that the industry faces. There may be less immediate impact on industrial applications for the pharmaceutical, biomedical, manufacturing, transportation, and energy industries.
Drivers of the CO2 Shortage
The resource and energy investments required for the carbon dioxide production process makes solitary production of either gas or liquefied versions of the compound cost prohibitive. This is primarily due to carbon dioxide comprising less than 0.1% of the air’s chemical content, thus making carbon sequestration costly. A more cost-efficient production method is through the ammonia fertilizer manufacturing process. This involves introducing a hydrocarbon, such as natural gas, to steam to induce the separation of hydrogen from carbon, thus creating the end intended ammonia product with a carbon dioxide byproduct. These two products, NH3 and CO2, then go their separate ways: the ammonia is processed into fertilizer, and the carbon dioxide is captured, cleaned, and condensed, most often in liquefaction for the ease of transportation.
In addition to the chemical-dependent cycles outlined above for carbon dioxide production, the compound is also dependent on seasonal cycles. Due to the overwhelming agricultural demand for ammonia, this often means following the Northern hemisphere’s farming cycle. Since Northern hemisphere farmers typically fertilize in the spring, leaving the summer for cultivation, this leaves ammonia plants with a lull in production during the summer months.
Mindful of the cycles affecting carbon dioxide production, a notable consideration for Europe has been a series of mechanical problems at British ammonium manufacturers. CF Fertilisers’ Cheshire plant in Ince, one of five still operating during the summer in the UK, suffered power outages in early July. This was the most recent incident to befall the plant since an accident in May left the plant emitting orange clouds over Cheshire.
The five aforementioned British plants, in a production belt that encompasses Northern Europe, are capable of food and beverage quality CO2 production. A single plant ordinarily produces 500 tons per day. Summer is also when, during the shutdown, ammonium manufactures opt to conduct necessary repairs and routine maintenance that would ordinarily impede production and supply during the active season. While the market is expected to return to normal in the short term, there are anticipated long term challenges that will affect carbon dioxide production. The British mechanical problems aside, Brexit’s realization will undoubtedly complicate production and export in the event of a continent-wide shortage.
Due to the increase in natural gas prices resulting from low winter inventories, ammonia production is also halted when the hydrocarbon component of the production process makes production prohibitive, amplifying prices. It’s an issue that has also reportedly spread beyond the continent to North America, where a natural gas shortage has hit Mexico, yet not visited upon Canada due to its diversified stock of hydrocarbons.
Far-Reaching Consequences in Supply Chains
Beyond the food processing industry, there are a considerable number of industrial applications for carbon dioxide. In the energy industry, the most notable application is enhanced oil recovery. Gas injection forces subterranean oil to a production wellbore, thus enhancing viscosity and improving flow rate. This method is used for 60% of U.S. oil production. As naturally occurring reservoirs of carbon dioxide decline, the energy industry becomes more and more dependent on manufactured sources.
In addition, carbon dioxide forms the basis for a medium to coarse spray in aerosols, accounting for greater molecular weight, where a stronger application is required. For the industrial safety industry, carbon dioxide fire extinguishers are the extinguishers of choice for electrical and hydrocarbon-based fires, as they leave no residue or liquid, and thus are suitable for such fires.
For industrial-to-consumer applications, carbon dioxide is also used in desalination, wherein the addition of carbon dioxide to the process facilitates the crystallization and eventual separation that is part and parcel of the desalination process. This process is not only intertwined with freshwater-required processes and agriculture, but is also necessary for on-board freshwater supply on maritime vessels.
In manufacturing, the CO2 laser is known as the most versatile and used in a variety of material processing applications including, but not limited to, cutting materials such as plastic, wood, die boards, stainless steel, aluminum, copper, laser marking, ophthalmic laser surgery, or range finding.
Beyond the headline-grabbing story of the carbon dioxide shortage resulting in ice cream shortages on long-haul flights, the manufacturing of dry ice as a refrigerant has similar applications in blast cleaning, biomedical sciences such as medical instrument cleaning, and biomedical transportation, including those for vaccines and organ transplants. Other biomedical applications include the manufacturing of analgesics via the production of salicylic acid which facilitates aspirin production. Finally, most notable for the transportation industry, is the role of carbon dioxide in the production of aviation fuel after combination with waste biomass.
Expected Duration of the Shortage
The primary focus of the CO2 shortage was during the 2018 FIFA World Cup, and whether or not its food industry implications would reverberate beyond the tournament period. Estimates of when the shortage would alleviate have ranged from as optimistic as early July to as far as weeks after the World Cup. These estimates were applicable for the food industry, while those in industrial, biomedical, energy and pharmaceutical applications have yet to be determined.
Due to the centricity of ammonia in the carbon production process, it therefore follows that carbon dioxide production would follow the ammonia production cycle, which in the Northern hemisphere runs from August to March, in the ebb before peak agricultural production. As a result, the completion of the ammonia cycle and commencement of carbon production coincides with the start of summer.
However, a litany of conditions may exacerbate the shortage. These include higher demand and an economic environment favorable to European continental production. Moreover, based on the valuation of carbon dioxide relative to ammonia by European manufacturers, importing pre-manufactured carbon dioxide from Asia is seen as cost-prohibitive. This can be further exacerbated due to current practices where food and industrial grades of carbon dioxide are sourced from the same sources, thus putting pressure on availability.
Impact on the Transportation and Logistics
Aside from the food industry, the most visible and immediate impact of the carbon dioxide shortage is the temperature-controlled supply chain. Any interruption to the chain, of which carbon dioxide cooling is a considerable component, would result in compromises to Good Manufacturing Practices (GMP). Examples of this impact include, but are not limited to, the total loss refrigeration method of cryogenic cooling that is typical for short-haul cargo, where carbon dioxide ice sustains the auto-circulating cooling system, as opposed to the more labor-intensive mechanical refrigeration method. This therefore makes the carbon dioxide supply essential for short-distance, and hence, for European terrestrial reefer transportation. Moreover, this form of refrigeration is also used to sustain intermodal containers on month-long maritime voyages.
For U.S. rail transportation, rising fuel costs make carbon dioxide-fueled reefer rail cars the choice for rail refrigeration. In addition, Chinese manufacturers are opting for the European equivalent of the aforementioned vehicle, the refrigerated van, as a means to climate-control electronics shipments from manufacturing sites to consumers in Europe. Finally, in the absence of mechanical refrigeration, carbon dioxide is the cooling mechanism of choice for non-intermodal refrigerator trucks. As such, any shortage of carbon dioxide in the medium to long-term may impact transportation & logistics options.
An alternative to the cost inefficient sequestration or shipping processes that has been floated is the substitution of nitrogen. If collected as a gas, it has the potential to substitute many of the supply chain and manufacturing applications that carbon dioxide presently occupies. While nitrogen sequestration would be cheaper than that of carbon, the process to facilitate extant sequestration and processing equipment from carbon to nitrogen would require a considerable time investment to realize, as well as compromise ammonia production further due to ammonia’s nitrogen content.
In summation, the food and beverage processing industries are most likely to be impacted with the greatest visibility, and according to speculative estimates, the most likely to recover with relative ease. What has yet to be evaluated, however, is the long-term impact on industrial applications of carbon dioxide, which could suffer in productivity were a shortage to extend beyond seasonality.
A medium term impact in the transportation sector is not unlikely if the shortage affects the availability of carbon dioxide for reefer transportation. Mindful of the alternatives in carbon dioxide import, sequestration, and nitrogen substitution, manufacturers and transporters should develop long-term contingencies for potential extended shortages in the event that immediate effects reverberate.
With post-World Cup restoration of supply an open question, in light of continued summer demand as well as uncertainty in the energy sector, those conducting business in sectors sensitive to carbon dioxide deficits will have to adapt accordingly, as there will not be a one-size-fits-all approach for the diverse industries involved. Such adaptations include the following:
- Understand your supply chain and sourcing processes: Understand the implications for your business of a persistent CO2 shortage, and how this impacts your supply chain bi-directionally. Where possible, map out your sub-tier suppliers to understand where your CO2 supply comes from and create visibilities on potential chokepoints, should a persistent shortage scenario materializes.
- Initiate dialogue with your current suppliers: Begin a dialogue with your suppliers to fully assess the supply shortages and evaluate availability of carbon dioxide in the mid to long-term. In the long-term, secure supplies through trusted partners to the extent possible, and continue to drive a strategic dialogue with key suppliers.
- Develop operational options: Should a less favorable scenario develop, consult sourcing, planning, and purchasing functions in your organization to ascertain the most cost-efficient sources of CO2 to ensure minimal disruption to operation, and develop operational contingencies where appropriate.
Due to the ever malleable nature of the unknown, firms must be open to multiple possible scenarios, regardless of likelihood, and to therefore develop plans as necessary.