Everything You Need To Know About New Zealand’s CO2 Shortage

By Emma Gleason
Collage / Julia Gessler

And what it is means for your favourite craft beer.

You might have seen the recent coverage of the country’s unexpected shortage of C02 — it was rather jarring news earlier this year, unfortunately timed for summer imbibing.

But what does it actually mean for our beverage industry, and the consumer? And how does this problem shed a light on wider issues and vulnerabilities that can pose future risks to other important sectors that we rely on, and enjoy, here in Aotearoa?

Okay, why is there a CO2 shortage?

Here in New Zealand, we have a lot of some things (sheep, cows) but a scarcity of others.

We used to have two food-grade CO2 plants, but the last of these — the Todd Energy Kāpuni plant — had to close in December, a temporary shutdown due to a safety issue; a safety valve was releasing ammonia, reported Otago Daily Times’ Hamish MacLean, and with a staged re-start, the plant wouldn’t be operating at full capacity until the end of 2023.

Precariously, Todd Energy Kāpuni plant is now the last on-shore producer we have, following the closure of the oil refinery at Marsden Point in 2022; C02 is produced and captured as a byproduct of the oil-refining process. “Marsden Point oil refinery used to produce a large proportion of New Zealand’s CO2, but that closed in April last year, leaving the country dependent on Kāpuni and imports,” reported Madison Reidy for The New Zealand Herald earlier this year.

What do we use it for anyway?

All those bubbles in your bevvy? That’s from CO2. The local beer industry has been hugely affected, with both manufacturers and bars affected.

CO2 is used to carbonate the beer you buy in a can and bottle, while tap beers — those long, cold draughts pulled at your local — also require CO2. In late January, one Wellington bar revealed it had had to stop serving tap beer altogether.

And with so many small craft breweries in Aotearoa, many of them operating with less cash to draw from than multinationals and much smaller production runs, the impact of the CO2 shortage is significant.

Talking to Viva, Garage Project co-founder Jos Ruffell is frank but pragmatic about the setback — which comes after two years of Covid-impacted operating for retailers, hospitality and the brewing sector itself. “To be honest, of course there’s a CO2 shortage,” he says dryly, but his staff are “very resilient and getting on with it.”

Marsden Point’s closure was a setback for the industry. “70 per cent of C02 came out of Marsden Point, when that went online offline it had huge import,” explains Jos, and following the temporary closure of the Kāpuni plant, their currently completely reliant on imported CO2 — as are most industry peers.

How’s this going to affect my favourite cans of fizz?

Everyone has a favourite craft beer, but is there a risk that yours could be missing from the shelves? It’s not out of the realm of possibility — and many are limited-edition by nature — but the nation’s brewers will do their best to avoid this outcome as much as possible.

Garage Project has been assessing its range to minimise the effects. “We’ve had to make some decisions on delaying certain beers, changing our plans, prioritising.” One of those priorities is Tiny, its non-alcoholic beer. “Tiny is going crazy; we want to make sure that’s in stock.”

Some large breweries are self-sufficient, capturing the C02 produced in the brewing process, but smaller operations aren’t so lucky.

The industry is currently relying on imported CO2, but it’s hot property, and increasingly expensive. And with CO2 vital for the healthcare sector too, and wastewater treatment, those often take priority for securing gas.

The price is, of course, going up — by a lot. As of January, the cost for CO2 was 17 times higher than in April last year, reported The New Zealand Herald.

With inflation and the cost of living also an issue, alongside the already slim margins of producers in the FMCG (fast-moving consumer goods) sector, breweries are sensitive to keeping prices affordable for their customers. “We’re doing everything we can not to pass on costs,” says Jos, adding that it’s not just the CO2 pricing they’re trying to absorb. “Some of our largest cost increases have been excise, which went up seven per cent, and is pegged to CPI.”

What about sparkling water?

Naturally sparkling mineral water gets its bubbles from the mineral spring at its source, so will be unaffected (unless a brand adds carbonation, which some do) but soda water and other fizzy beverages rely on CO2 too.

What’s happening to fix it?

Garage Project is looking to secure and install a capture recovery system, which recovers CO2 from the brewery’s own fermentation process (no small investment) from overseas. For its Te Aro brewery, “we will capture 70 per cent of our needs”.

Though such technology is expensive, the massive increase in the cost of imported CO2 means securing a self-sufficient source makes sense. “The return on investment is compelling,” Jos says. “You either pay a lot more, or you invest in this technology.”

Garage Project isn’t the only operation looking at this solution (some larger breweries already use it) and Ruffell reveals there are now wait lists for this equipment, which is available from the US and Europe — both regions are grappling with their own CO2 shortages, and this is, unfortunately, a global issue.

In good news, there’s more imported CO2 on the way, hopefully arriving around May/June, and at a higher level, the Ministry of Business, Innovation and Employment (MBIE) is believed to be investigating a second plant.

What does all this mean for the future?

With a small population, comparatively large geographic footprint, vulnerable production and manufacturing, shortages like this shine a light on the fragile nature of New Zealand’s supply chains. “It does,” Jos agrees. “We’ve known for a long time that we’re moving away from oil and gas, and because CO2 is a byproduct of that industry, we need to be asking ourselves if we want to be reliant on importing critical resources when we could be doing them locally.”

And with sustainability and circularity points of focus for industries and consumers alike, for the now carbon-neutral Garage Project, being able to produce their own CO2 is a step forward. “We’ve been making changes across the business, minimizing CO2 use where we can,” he explains. “But we still need it, so capture and recover is a big help.”

Is there anything I can do about it?

Not really. Keep showing local breweries and businesses some love by buying what they have — or merch, that’s good too — and keep an eye on the news. “Just supporting independent breweries,” says Jos. “Any support people can do is great.”

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