The CO2 Budget Line That's Costing you more than you think

Why procurement teams optimising on unit price are exposing their organisations to costs many times larger

Ask most procurement managers how they evaluate their liquid CO₂ supplier and you’ll get a familiar answer: price per tonne, contract terms, and whether deliveries arrive on time.

It’s a reasonable framework. It’s also dangerously incomplete.

Liquid CO₂ is one of those inputs that sits quietly in the background — manageable, unremarkable, easy to commoditise in a tender — right up until the moment it isn’t there. And when it isn’t there, the costs that land on your organisation don’t show up on any gas invoice. They show up in your production reports, your customer penalty clauses, your logistics overtime budgets, and eventually your P&L.

The gap between what organisations pay for CO₂ and what a CO₂ disruption actually costs them is one of the most consistently underestimated risks in industrial procurement. This piece tries to put some shape around it.

The Unit Price Illusion

Procurement teams rightly focus on getting competitive value on unit price. A well-run tender process that achieves meaningful savings on CO₂ spend is a genuine win — and we’d encourage every organisation to benchmark regularly.

The problem isn’t the focus on price. The problem is when price becomes the primary — or only — lens through which supply risk is evaluated.

Consider the maths in broad terms: the savings achievable through competitive CO₂ procurement are typically measured in percentages of a relatively modest spend line. The costs generated by a multi-day CO₂ supply outage — lost production, labour standing time, perishable input waste, emergency logistics, customer penalty clauses — are typically measured as multiples of that entire annual spend.

One disruption event, in the wrong operational context, can dwarf years of price optimisation. And critically — none of that disruption cost appears anywhere near the CO₂ procurement budget. It gets absorbed across operations, logistics, and commercial, invisibly, and without any link back to the sourcing decision that created the vulnerability.

Where the hidden costs of a CO₂ outage actually land• Lost production output: direct revenue not made while lines are down• Labour standing time: shift workers paid while lines are down• Perishable input waste: raw materials that cannot be held during a shutdown• Emergency logistics premium: spot sourcing, expedited haulage, alternative supplier setup costs• Customer penalty clauses: failure-to-supply penalties from downstream customers• Senior management time: hours spent firefighting rather than running the business• Reputational cost: harder to quantify, but real — especially with key accountsNone of these appear on your CO₂ invoice. All of them are consequences of a CO₂ sourcing decision.

Why CO₂ Is Uniquely Exposed

Most industrial inputs have substitutes, buffers, or lead times long enough to allow contingency planning. CO₂ has almost none of these characteristics.

You cannot stockpile large volumes of liquid CO₂ the way you can stockpile dry goods or packaging. Storage is cryogenic, capital-intensive, and finite. When your on-site vessel runs low, you need a delivery — and in an allocation environment, that delivery may simply not be available.

The UK CO₂ market is also structurally concentrated. A small number of production sources — predominantly ammonia fertiliser plants and bioethanol facilities — supply the vast majority of liquid CO₂ to the market. When one large source goes offline, it doesn’t cause a small price movement. It causes simultaneous allocation across the entire downstream supply chain.

We saw this play out in 2022. CF Fertilisers curtailed production due to energy prices. The effects cascaded through food manufacturing, brewing, meat processing, and horticulture within days. Organisations with diversified supply arrangements fared significantly better than those who had optimised purely on cost.

The Procurement Frameworks That Miss This Entirely

Standard category management frameworks are well-suited to inputs where the primary risk is price movement. They are poorly suited to inputs where the primary risk is availability.

A typical CO₂ procurement exercise will score suppliers on price, delivery reliability under normal conditions, accreditations, and contract flexibility. What it rarely models is:

• What the supplier’s allocation policy is, and where your organisation sits within it

• How many independent production sources feed your supply

• What the force majeure provisions in your contract actually permit the supplier to do

• What the total cost of disruption looks like modelled against realistic outage scenarios

This isn’t a criticism of procurement teams — it’s a structural gap in how CO₂ is typically categorised. It behaves more like a utility than a commodity, but it’s rarely governed that way.

A Better Framework: Four Dimensions, Not One

A more robust approach evaluates CO₂ supply across four dimensions simultaneously:

1. Unit economics: Competitive pricing, delivery costs, tank rental and contract terms. Important — but the starting point, not the whole picture.

2. Availability risk premium: What is the realistic probability of a supply disruption in any given year, given the sources your supplier draws from? What would a disruption cost your operation per day? These numbers belong in your supplier evaluation — even as estimates.

3. Contingency and response capability: How quickly can your supplier activate emergency alternatives? A supplier with diverse sourcing and a credible emergency response protocol may represent better total value even if the headline price is not the lowest in the market.

4. Carbon and compliance cost trajectory: As Scope 3 reporting standards tighten and carbon pricing mechanisms evolve, the provenance of your CO₂ will carry cost implications. Fossil-derived CO₂ may attract a growing compliance burden that biogenic or captured CO₂ does not. This deserves a place in any forward-looking cost model.

The Conversation Worth Having With Your Supplier

The best CO₂ suppliers aren’t simply the ones who win on price in a tender. They’re the ones who help you understand your actual exposure — and build a supply arrangement that genuinely reflects it.

That means being transparent about allocation policy. It means showing you where your CO₂ actually comes from and how diverse that sourcing is. It means being willing to help you model what a disruption scenario looks like for your operation — not to generate anxiety, but to give you the information needed to make a genuinely informed decision.

If your current supplier isn’t willing to have that conversation, that itself tells you something about the relationship you’re in. Contact us today to find out more about our renewable supplies of CO2 here.

Pro Gases UK works with procurement teams across food & beverage, horticulture, manufacturing and specialist industrial sectors to build CO₂ supply arrangements that hold up under pressure — not just in normal conditions. If you’d like to talk through your current setup, contact our commercial team.

If your business relies on a regular supply of liquid CO₂ — whether you’re in food and beverage production, cold chain logistics, or industrial processing — you may already be feeling the pressure of rising costs. And if you haven’t yet, there’s a good chance you will soon.

The reason? Ongoing conflicts can send shockwaves through global energy markets, pushing natural gas prices higher. For most businesses, that might seem like a problem confined to heating bills and electricity costs. But for CO₂ users, the impact runs much deeper — and it comes down to where most industrial CO₂ actually comes from.

The Hidden Link Between Natural Gas and Your CO₂ Supply

Most people don’t realise that the vast majority of industrial CO₂ produced in the UK and across Europe is a byproduct of fossil fuel-based processes — most notably natural gas processing, ammonia production, and fertiliser manufacturing.

This means that when natural gas prices rise — driven by geopolitical tensions, supply disruptions, or market speculation — the cost of producing and supplying CO₂ rises with it. Your CO₂ supplier isn’t immune to the energy market. In many cases, they’re directly exposed to it.

This isn’t a new problem. The UK experienced a stark reminder of this vulnerability back in 2021, when high natural gas prices forced the temporary closure of two major fertiliser plants, triggering a national CO₂ shortage that threatened food supplies across the country. The crisis made headlines, caused panic buying, and exposed just how fragile the UK’s CO₂ supply chain really is.

Fast forward to today, and the geopolitical landscape is once again putting pressure on natural gas markets. For businesses that haven’t diversified their CO₂ sourcing, history could be about to repeat itself.

What Does This Mean for Your Business?

The practical implications for CO₂-dependent businesses are significant:

Price volatility — Expect cost increases from suppliers whose CO₂ is linked to natural gas or fertiliser production
Supply uncertainty — If natural gas prices rise high enough to make certain production processes uneconomical, supply could tighten rapidly
Budget planning challenges — Unpredictable CO₂ pricing makes it extremely difficult to forecast operational costs with any confidence
Reputational risk — For businesses with green commitments and ESG targets, relying on fossil fuel-derived CO₂ is increasingly difficult to justify

For food and beverage businesses in particular — where CO₂ is essential for carbonation, packaging, and preservation — any disruption to supply or a sudden spike in costs can have a serious knock-on effect on operations and margins.

There Is a Better Way: Renewable CO₂ from Anaerobic Digestion

At Pro Gases UK, we take a fundamentally different approach to CO₂ supply — one that insulates our customers from the kind of market volatility we’re seeing right now.

Our liquid CO₂ is captured from anaerobic digestion (AD) plants that are fed entirely by energy crops. Here’s why that matters:

What Is Anaerobic Digestion?

Anaerobic digestion is a natural biological process in which organic materials — in our case, dedicated energy crops — are broken down by microorganisms in the absence of oxygen. This process produces biogas, which is rich in CO₂ and methane. Rather than letting that CO₂ escape into the atmosphere, we capture, purify, and liquefy it for use across a wide range of industries.

The result is a high-quality, food-grade liquid CO₂ that is genuinely renewable, genuinely green, and — crucially — not linked to fossil fuel markets.

The Key Benefits of AD-Sourced CO₂

1. Price Stability Because our CO₂ source has no connection to natural gas or fossil fuel processing, we are not subject to the same price pressures that are currently affecting the majority of the market. While other suppliers may be passing on cost increases driven by Middle East instability, our pricing is far more stable and predictable.

2. Genuine Green Credentials This isn’t greenwashing. Our CO₂ is captured from a renewable biological process, powered by energy crops. It’s CO₂ that would otherwise be released into the atmosphere — we’re intercepting it and putting it to productive use. For businesses with net zero commitments or ESG reporting requirements, switching to AD-sourced CO₂ is a meaningful, verifiable step in the right direction.

3. Food-Grade Quality Our CO₂ meets the rigorous standards required for use in food and beverage applications. You don’t have to compromise on quality to choose a greener, more stable supply.

4. UK-Based Supply Chain Our CO₂ is produced right here in the UK, from UK energy crops. That means shorter supply chains, lower transport emissions, and less exposure to the kind of international disruptions that affect imported or globally traded commodities.

5. Supply Resilience Because our production process is independent of natural gas markets, we are better positioned to maintain consistent supply even when global energy markets are in turmoil. For businesses that can’t afford downtime or supply gaps, that resilience is invaluable.

Is Now the Right Time to Review Your CO₂ Supply?

If the events of recent months have taught us anything, it’s that supply chain resilience isn’t a luxury — it’s a necessity. Businesses that depend on fossil fuel-linked CO₂ are exposed to risks that are largely outside their control: geopolitical events, energy market speculation, and the operational decisions of a small number of large producers.

Switching to a renewable, UK-based CO₂ source won’t just protect you from the next price spike. It will also:

Strengthen your sustainability credentials
Simplify your ESG reporting
Give you greater confidence in your supply continuity
Position your business as a forward-thinking, responsible operator

The question isn’t really whether renewable CO₂ makes sense. The question is how long you can afford to wait.

Talk to Pro Gases UK Today

We supply bulk liquid CO₂ to large businesses across the UK, and we’d love to talk to you about how we can help secure your supply chain against the kind of volatility we’re seeing in today’s market.

Whether you’re looking to switch suppliers, diversify your sourcing, or simply understand your options better, our team is here to help.

📞 Call Mark Dziuba, Head of Bulk Gases on 07307 406732 📩 Email us at mark.dziuba@progasesuk.com 🌐 Visit us at www.progasesuk.com

Don’t wait for the next shortage. Get ahead of it.

When I think about how far Pro Gases UK has come since we started in 2014, I feel an enormous sense of pride. What began as a small family business suppling local businesses with beverage gases in Liverpool, has grown into a company who supports some of the world’s largest household brands, building strong partnerships and expanding into exciting new areas. But through it all, one thing has remained constant: our family culture.

From day one, my family and I have worked hard to create a culture where people matter. We celebrate our wins together, we support each other through challenges (which we certainly have had as a rapidly growing company), and we always put our customers at the heart of what we do. For me, that culture is the foundation of PGUK — it’s what makes us different, and it’s something we’ll never lose, no matter how big we grow.

The journey so far has been full of learning and evolution. We’ve introduced new products, expanded into Europe, strengthened our sustainability focus, invested in our people and our systems, and onboarded new expertise into the team. And the exciting part is — we’re only just getting started and entering a new phase of the business’ story.

I’ll admit the early days weren’t perfect, as with any valuable lesson, you take more from those days, and they’ve helped set my journey. A path to improve both personally and professionally to meet the needs of company that’s growing at such an amazing rate. Pro Gases, its culture and its team is something I’m truly proud to be a part of.

Looking ahead, there are some big changes and opportunities on the horizon. We’re embracing innovation, growing our bulk gases division with a new Head of Bulk Gases, Mark Dziuba, and finding new ways to deliver even greater value for our customers. But we’ll do it the PGUK way: with integrity, care, and that same family spirit that has carried us from the very beginning.

I’m excited about what the future holds, and I’m grateful to lead a team that shares the same passion, drive, and values. Here’s to the next chapter of Pro Gases UK.

— William Donovan, Managing Director

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