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Sep 23 2025
Sep 23 2025
UK growers face a complex set of challenges from weaknesses in their two most critical inputs: energy and CO₂. Together, these challenges threaten grower profitability and operational stability.
The UK's reliance on imported CO₂ has repeatedly exposed the CEA sector to supply chain weaknesses. Over the last several years, the country has had recurring CO₂ supply crises, with documented shortages in 2018, 2021, and 2022. The main reason for this instability is that most commercial CO₂ is not produced as a primary product, but is a by-product of other industrial processes like ammonia production for fertilizers.
When the fertilizer industry faces economic issues- for example, high natural gas prices that forced plant shutdowns in 2021 and 2022- CO₂ output drops accordingly. This creates uncertainty for growers, making it difficult to budget, plan and maintain profitability. The situation is compounded by seasonal factors: CO₂ sources, like ethanol and fertilizer plants, can often undergo scheduled maintenance during warmer months, which coincides with periods of peak demand from the agricultural sector.
As the UK and the European Union implement increasingly strict climate policies, there is a growing push to capture and store industrial emissions rather than releasing them or selling them as by-products. This creates new competition for CO2: what has long been treated as a non-critical by-product in one sector is an essential input for another. The government's withdrawal of support for ammonia plants in 2022 underscores the trend - fossil-fuel-based CO2 supply chains are increasingly unstable and vulnerable to both market forces and policy decisions.
While the UK is known for having some of the highest average industrial electricity prices in Europe, a closer look at the energy market reveals a strategic opportunity. The UK's rapid and successful decarbonization efforts are transforming the grid from a static, expensive utility into a dynamic, flexible market.
As part of its Net Zero Strategy, the UK has aggressively invested in renewable energy. As of 2024, the grid is 65% low-carbon, a figure driven by growth in offshore wind and nuclear power. For example, offshore wind capacity is projected to grow six-fold from 15 GW in 2023 to 88 GW by 2040. In 2024 alone, six new projects totaling 6.3 GW were under major construction. Nuclear power also remains a key part of the low-carbon mix, providing 14.25% of the UK's electricity in 2024.
The variable nature of these renewable sources - periods of high wind or sun - creates predictable fluctuations in energy supply and, consequently, in electricity prices. This leads to periods of oversupply where prices drop significantly, occasionally even falling into negative territory. For example, in 2024, Great Britain experienced 149 hours of negative pricing, an increase from 107 hours in the previous year. This shift from a fixed price structure to a dynamic one is a direct result of the country's decarbonization journey.
Policies and technologies like dynamic hourly pricing and smart meters are designed to encourage large-scale consumers to shift their energy-intensive operations to these off-peak, high-renewable periods. This represents a fundamental shift in strategy: from managing a fixed, high cost to proactively managing a flexible and dynamic cost.
The increasing importance of renewables and the policies that support them create a clear cause-and-effect narrative: net zero commitments lead to increased renewable generation, which results in grid variability, which in turn leads to dynamic pricing, and ultimately creating a strategic opportunity.
On-site Direct Air Capture (DAC) technology provides a clear solution to the challenges facing UK growers: it solves the problem of CO₂ volatility, while also leveraging a dynamic energy grid.
By capturing CO₂ directly from the ambient air, DAC systems enable growers to become self-sufficient in their CO₂ supply. This ensures a predictable, on-demand supply that is immune to geopolitical events, maintenance shutdowns or fossil fuel price spikes. The operational model of DAC is suited to take advantage of the UK’s dynamic grid. A DAC machine can be turned on or off to align with fluctuating electricity prices. This transforms CO₂ generation from a continuous, fixed cost into a schedulable, cost-optimized function.
DAC technology can also work alongside a grower's existing infrastructure, such as Combined Heat and Power (CHP) systems or boilers. When natural gas prices are low or the CHP system is needed for heat, it can be used for CO₂ generation. However, when grid electricity is abundant and cheap, the DAC system can be activated to provide the necessary CO₂. Some systems can even repurpose heat from buffer tanks to enhance efficiency and generate additional CO₂, which makes the technology a highly efficient and circular solution.
The imported CO₂ market is subject to unpredictable price swings. In 2022, the British Meat Processors Association noted that a hike in natural gas prices triggered a significant increase in CO₂ prices, making it difficult for growers to budget and maintain profitability. This volatility makes accurate financial forecasting impossible and exposes businesses to significant budget risks.
In contrast, on-site DAC technology provides a stable, predictable cost model. The cost is primarily tied to the consumption of electricity. When strategically managed through dynamic tariffs, the technology can be optimized to operate during the lowest-priced periods. This shift from a reactive, volatile cost to a proactive, predictable cost makes a business more financially resilient, allowing for more confident financial planning and better profitability.
Beyond cost savings, on-site CO₂ generation ensures a constant, reliable supply, which prevents production halts and allows businesses to meet their customer’s needs even when external supply chains fail. This makes it a critical part of a resilient supply chain. By generating a clean, fossil-free source of CO₂ and acting as a flexible load that supports the integration of renewables, on-site DAC technology also aligns CEA operations with the UK's national net-zero goals. This is not only good for the environment, but also a smart business decision in a market where sustainability is becoming a key differentiator.
The UK CEA market's defining characteristics - the weakness of old CO₂ supply chains and the dynamism of the new energy grid - can be turned from challenges into competitive advantages.
On-site DAC technology offers a powerful solution that frees UK growers from external market fluctuations, providing a predictable and cost-effective CO₂ source. Growers can therefore secure their supply chains, improve their financial resilience, and build a more profitable and future-proof business.
To learn how a resilient and stable CO₂ supply can support your growing operation, contact our team to start a conversation about what on-site DAC can do for your greenhouse’s CO₂ supply and operational resilience.