Westminster has agreed on a deal with CO2 producer CF Industries, the UK’s largest supplier, so it can resume production, Sky News reported.
Business Secretary Kwasi Kwarteng met the US company’s boss Tony Will on Sunday, then said on Tuesday financial support was one of the options to tackle the shortage.
CF Industries closed two of its plants in northern England last week due to rocketing energy prices.
CO2 is used to stun animals before slaughter, in chilled food packaging and in the production of fizzy drinks.
Several companies have shut their factories as a result of the rising price of natural gas, causing concerns about empty shelves in supermarkets and a shortage of turkeys for Christmas.
UK wholesaler Booker, owned by Tesco PLC (LSE:TSCO), has been rationing beer and cider because of a shortage of CO2 used in carbonated drinks, while Heineken said supply of its John Smith’s Extra Smooth and Amstel brands has been hit.
Warburtons, the UK crumpet producer, has suspended production at two of its four UK sites because it has run out of CO2 used in its packaging to keep products fresh.
“CO2 is a low value waste stream from ammonia production and Europe sits high on the global ammonia cost curve meaning it is attracting no growth capex,” analysts at Liberum said.
“Carbon capture from power stations or byproduct from bio-ethanol could be longer term alternatives but may require a better European policy bias than hitherto vis-a-vis carbon taxation, biofuel subsidies or blending limits.”
Tesco rose 1% to 257.45p on Tuesday before close.