New ‘Ale-ment’ Afflicts America’s​ Small Breweries: CO2 Shortage

ACROSS AMERICA — The nation’s breweries have a new, ahem, “ale-ment” — a shortage of carbon dioxide, a critical ingredient in beer making.

“Not a pretty picture,” Bart Watson, the chief economist for the Brewers Association, said of the CO2 shortage in a mid-September tweet. His tweet included a graph plotting the rising costs faced by the 5,600 small and independent U.S. breweries the trade group represents.

Small brewers have been whipsawed throughout the COVID-19 pandemic by rising costs of paper goods, aluminum, malt (the grains needed to make beer) and freight. None of the costs has risen as sharply as that of CO2, a colorless, odorless and tasteless gas that gives brews their frothy bubbles and blocks oxidization that can make beer taste stale.

U.S. beer sales increased 1 percent from 2020 to 2021, while craft brewer sales grew 8 percent, raising small and independent brewers’ share of the U.S. beer market by volume to 13.1 percent.

Retail dollar sales of craft beer increased 21 percent, to $26.8 billion, and now account for just under 27 percent of the $100 billion U.S. beer market, up from $94 billion in 2020. The primary reason for the larger dollar sales increase was the shift back in beer volume to bars and restaurants from packaged sales at the start of the pandemic, according to the Brewers Association.

Now, the CO2 shortage threatens to wipe out some of those gains. Industry experts expect the shortage to become more severe this fall. CO2 shortages are typical at this time of year as ammonia plants undergo scheduled maintenance that halts production of the gas, according to Gasworld.

CO2 is also a byproduct of ethanol production, and many plants that went offline during the pandemic haven’t resumed production, Paul Pflieger, the communications director for the Compressed Gas Association trade group, told NPR’s “Morning Edition.”

Overall, the beverage industry uses just 14 percent of U.S. carbon dioxide, but demand for a cold one soars with the temperatures during hot summers.

“Every summer, demand for CO2 skyrockets because people want more beverages” and dry ice (the solid form of carbon dioxide) is used more, Pflieger told NPR. “The record heat that we’re seeing in this country and around the world is making this worse.”

Contamination at the Denbury Engergy-owned Jackson Dome carbon dioxide well, an extinct volcano in Mississippi earlier this summer, is also one of the culprits. Denbury Energy attempted to drill new CO2 wells to fulfill its industrial contracts, but the CO2 contained contaminants, according to Gasworld.

Watson of the Brewers Association said the colliding pressures — the CO2 shortage, but also rising costs across the board — could be too much and force some breweries to close.

In a mid-year survey of the association’s membership, some brewers’ sentiments came down to “we’re selling as much beer as we were pre-pandemic, but making far less on that beer, and we’re unsure how long that is sustainable,” Watson told USA Today.

Chuck Aaron, the owner and founder of Jersey Girl Brewing in Hackettstown, New Jersey, told the newspaper he’s not sure breweries would completely shut down production, “but I can understand a scenario where there would be a limited or smaller offering, as beer has a short shelf life.”

Pflieger told NPR he anticipates the situation will persist for several weeks. “We anticipate things to start reaching normalcy in the next 30 to 60 days,” he said.

Though some breweries may feel more pressure than others, Watson doesn’t anticipate a return to Prohibition Era scarcity of beer.

“I’m not sure I’d go so far as to say there will be shortages,” he told USA Today. “Individual producers may have issues, but this isn’t so widespread that you’re going to see empty beer shelves.

“I think the beer brand that consumers want occasionally being out of stock is closer to accurate,” he said. “And brewers might make different or fewer beers.”