The United Kingdom carbon dioxide market share reached a volume of 725.80 KMT in 2024 and is projected to grow at a steady CAGR of 1.50% from 2025 to 2034, reaching approximately 842.32 KMT by 2034. The increasing demand for CO₂ across diverse industries, ranging from food and beverages to healthcare and manufacturing, is driving this growth. As businesses adopt sustainable practices and innovate with CO₂ applications, the market holds substantial growth potential in the coming decade.
In this blog, we will explore the key market drivers, challenges, trends, and future opportunities shaping the UK carbon dioxide market.
Key Market Drivers
1. Rising Demand from the Food and Beverage Industry
The food and beverage sector is a major consumer of CO₂, primarily for carbonating drinks, preserving packaged foods, and as a chilling agent in food transportation. The growing preference for ready-to-eat meals and carbonated beverages is expected to drive demand further in this sector.
2. Expanding Medical Applications
The healthcare industry increasingly relies on CO₂ for procedures such as minimally invasive surgeries, cryotherapy, and medical imaging. The rising prevalence of chronic diseases and advancements in medical technologies are bolstering the demand for medical-grade CO₂.
3. Industrial Utilisation
CO₂ is widely used in various industrial applications, including welding, metalworking, and chemical production. The expanding manufacturing sector in the UK is expected to contribute significantly to the market's growth.
4. Adoption of Sustainable Practices
As industries strive to reduce their carbon footprints, captured CO₂ is being utilised in innovative ways, such as enhancing oil recovery, producing synthetic fuels, and supporting algae-based biofuel production. This aligns with the UK's commitment to achieving net-zero emissions by 2050.
5. Growth in Greenhouse Horticulture
The agricultural sector increasingly uses CO₂ enrichment techniques to boost crop yields in greenhouse horticulture. This trend is expected to continue, driven by the need for sustainable and efficient food production methods.
Challenges in the UK Carbon Dioxide Market
1. CO₂ Supply Chain Disruptions
Frequent disruptions in CO₂ production and supply, often caused by issues in the ammonia production process, create challenges for industries reliant on a consistent CO₂ supply.
2. High Production Costs
Producing food-grade and medical-grade CO₂ requires advanced purification processes, which can be cost-intensive. This factor may limit market growth, particularly for small-scale end-users.
3. Environmental Concerns
Despite its utility, CO₂ is a greenhouse gas that contributes to climate change. Stricter environmental regulations and public scrutiny of industrial emissions could impact the market's growth.
4. Competition from Alternative Technologies
The development of alternative technologies, such as nitrogen-based food preservation and alternative refrigerants, poses a challenge to the demand for CO₂ in certain applications.
Emerging Trends in the UK Carbon Dioxide Market
1. Innovations in Carbon Capture and Utilisation (CCU)
Carbon capture and utilisation technologies are gaining traction, enabling industries to capture CO₂ emissions and repurpose them for various applications, including construction materials and renewable fuels.
2. Growth of Circular Economy Models
Companies are adopting circular economy principles by capturing and recycling CO₂ within their operations. This approach not only reduces emissions but also enhances operational efficiency.
3. Integration of Renewable Energy in Production
The use of renewable energy sources in CO₂ production processes is becoming more common, reducing the environmental impact of CO₂ manufacturing and aligning with sustainability goals.
4. Increasing Investments in Infrastructure
To address supply chain challenges, stakeholders are investing in advanced storage and distribution infrastructure for CO₂, ensuring a reliable supply to end-users.
5. Collaboration with Agriculture
The partnership between CO₂ producers and agricultural stakeholders is strengthening, particularly in the greenhouse horticulture sector. Controlled CO₂ enrichment systems are being adopted to optimise crop yields.
Market Segmentation
1. By Grade
- Food-Grade CO₂: Dominates the market due to its widespread use in the food and beverage industry for carbonation, preservation, and chilling applications.
- Industrial-Grade CO₂: Used extensively in welding, manufacturing, and chemical production.
- Medical-Grade CO₂: Gaining importance with the increasing application in healthcare procedures.
2. By Source
- Natural Sources: Includes volcanic activity and underground reservoirs, offering a steady CO₂ supply for various industries.
- Industrial Sources: Captured as a by-product from ammonia and ethanol production processes, contributing to a sustainable supply chain.
3. By End-Use Industry
- Food and Beverages: Largest segment, driven by high demand for carbonated drinks and food preservation.
- Healthcare: Significant growth due to the increasing use of CO₂ in surgeries and medical imaging.
- Industrial Applications: Includes uses in welding, metal fabrication, and enhanced oil recovery.
- Agriculture: Emerging segment, driven by greenhouse horticulture practices.
4. By Region
- England: The largest market, supported by a strong industrial and food production base.
- Scotland: Focus on sustainability and renewable energy integration in CO₂ production.
- Wales and Northern Ireland: Emerging markets with growing industrial activities and agricultural applications.
Future Outlook
The United Kingdom carbon dioxide market is poised for steady growth over the next decade, underpinned by rising demand across diverse industries and advancements in carbon capture and utilisation technologies. The food and beverage sector will continue to dominate the market, while the healthcare and agricultural sectors present promising growth opportunities.
Addressing supply chain challenges and high production costs will be critical for market players. Innovations in sustainable production methods and partnerships with end-user industries will drive long-term success in this evolving market.
