The carbon dioxide market in the US is struggling to get back in balance. Disruptions related to the COVID-19 pandemic have scrambled supply, especially of food-grade CO2. But many end users are closed or operating at reduced levels, so demand is down as well. As the economy stumbles back toward normalcy, industry players are cautiously optimistic that supply and demand will eventually line up.
Back in April, a looming CO₂ shortage threatened users in the beverage and meat industries in the US, where a large chunk of food-grade CO2 is a by-product of making fuel ethanol. The broad societal shutdown in response to the novel coronavirus cut demand for gasoline, and ethanol with it, in half.
In a grim mercy, outbreaks of COVID-19 temporarily closed major meatpacking plants, blunting demand for CO2 right when it would normally spike for the summer food and drink season. The closure of bars and stadiums also helped keep the market out of full-on crisis mode.
It was still bad. “As I talked with people in the industry, they said it was the worst shortage that they’ve ever seen,” says Rich Gottwald, CEO of the Compressed Gas Association, a trade group.
Some buyers continue to face higher prices, as suppliers truck the gas in from much further away than normal. Other customers are having to make do with less as their suppliers ration CO2 among contracted customers. To keep existing customers supplied, Shaun Albeck, sales director at Helget Gas Products, says he’s had to decline some large new contracts.
And the trouble isn’t over yet. According to the Renewable Fuels Association, just 106 out of 204 US ethanol plants were running at full capacity as of June 23, up from a low of 46 in late April.
Poultry giant Tyson Foods, for example, is still feeling the pinch. “Cryogenic gases, specifically CO2, are used in the meat industry for a variety of food processing applications and are currently constrained due to source plant outages or curtailments,” the firms says.
Customers on the West Coast and parts of the northern Midwest are the hardest hit, says Josh Pringle, vice president of business development for instrument maker CO2Meter, as are businesses that buy CO2 on the spot market without a contract, such as many small beer breweries.
The Brewers Association, a trade group for independent and craft breweries, published advice in April for its members on coping with tight CO2 supply, such as using nitrogen as an alternative purge gas and investing in CO₂ capture systems.
Pringle is watching the market closely. “The expectation is that these shortages will ease as economies pick up steam,” he says. “But I also know that some forecasts still see shortages into late 2020 if not further.”
Albeck says he expects demand to rise in the coming months. He and other industry insiders hope that driving—and ethanol production—will pick up at the same pace. But it’s hard to predict. “Everything is day to day,” Albeck says. “One thing can lead to another very quickly when the demand is there and the supply is not.”