UPDATE 1-UK says CO2 industry strikes deal to maintain supply

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LONDON, Oct 11 (Reuters) - The carbon dioxide industry in Britain has struck an agreement to ensure businesses have a sustainable supply until the end of the year, even as energy prices spike, the government said on Monday.

Britain’s food industry was rocked last month when CF Fertilisers, which produces 60% of the country’s commercial requirement as a byproduct, shut its two main plants due to the jump in natural gas prices.

CO2 is used to put the fizz into beer and sodas and stun poultry and pigs before slaughter. It is also used in packaging to extend the shelf life of meat.

Britain agreed to provide three weeks of emergency state support to the sector in late September. It said on Monday the industry had agreed new terms that would run until Jan. 2022.

“CO2 suppliers have agreed to pay CF Fertilisers a price for the CO2 it produces that will enable it to continue operating while global gas prices remain high, drawing on support from industry and delivering value for money for the taxpayer,” it said.

Business minister Kwasi Kwarteng said in a statement the agreement meant industry could have confidence that it would receive future CO2 supplies, without further taxpayer support.

The government said in September food producers should prepare for a 400% rise in carbon dioxide prices as part of the hit the industry had taken from soaring energy costs.

Reporting by Kate Holton; editing by Guy Faulconbridge and Paul Sandle