Carbon Dioxide Price Trend and Forecast 2026-2027

Key Takeaways

• Global carbon dioxide prices firmed gradually through 2025, rising from USD 0.48/KG in Q1 2025 to USD 0.51/KG by Q3, then holding at USD 0.51/KG through Q4 2025 and Q1 2026. The cumulative 5.9% gain across five quarters reflected European market tightening on ammonia plant supply constraints and steady North American pricing at elevated levels.
• European merchant carbon dioxide prices rose 24% from USD 0.25/KG in Q1 2025 to USD 0.31/KG in Q4 2025 before easing 7.59% to USD 0.29/KG in Q1 2026. The sustained H1-H2 2025 firming tracked continued consolidation of European ammonia plant capacity (with associated CO2 byproduct supply) and rising food-grade specification premia.
• North American carbon dioxide prices held remarkably stable at USD 0.71 to USD 0.73/KG throughout the observation window, representing a durable roughly 2.5x premium over European pricing. The elevated North American pricing reflects structurally tight merchant supply conditions, persistent food-grade CO2 shortages tied to ammonia producer outage cycles, and strong captive consumption by the beverage, food processing, and industrial sectors.
• The European-to-North American price spread widened slightly through 2025 but remained within a narrow band of USD 0.40 to USD 0.47/KG, with both regions reflecting fundamentally different market structures: Europe featuring more diversified supply sources and moderate demand, North America showing concentrated beverage-food-industrial demand against limited merchant supply.
• Merchant carbon dioxide supply remains tightly linked to ammonia (urea) production, where CO2 is captured as a byproduct of the steam methane reforming hydrogen generation step. Closures and turnarounds at CF Industries, Yara, Koch Fertilizer, and Nutrien operations directly affect merchant CO2 availability globally.
• Beverage carbonation, food-grade modified atmosphere packaging (MAP), medical and welding applications, supercritical CO2 extraction, and enhanced oil recovery drove steady baseline demand through 2025. Linde plc, Air Liquide, Air Products, and Messer Group led global merchant distribution across both tracked regions.

What Is Carbon Dioxide and Why Does It Matter?

Carbon dioxide (chemical formula CO2) is a colourless, odourless gas at standard temperature and pressure, comprising a carbon atom double-bonded to two oxygen atoms with a molecular weight of 44.01 g/mol. At atmospheric concentrations, CO2 is a naturally occurring trace gas (currently around 420 parts per million in the atmosphere per NOAA Mauna Loa measurements), but in industrial and commercial applications it is handled at much higher purities and in three physical states: gaseous CO2 (for most industrial uses), liquid CO2 (for bulk transport and storage, typically at minus 20 C and 20 bar pressure), and solid CO2 (dry ice, sublimes directly to gas at minus 78.5 C). Supercritical CO2 (at temperatures and pressures above 31 C and 74 bar) exhibits unique solvent properties valuable for extraction and specialty processing applications.

Commercial carbon dioxide is produced globally through several feedstock routes, each with distinct economic and supply characteristics. The dominant merchant source is byproduct CO2 from ammonia production, where CO2 is separated from synthesis gas generated by steam methane reforming of natural gas. Major ammonia producers including CF Industries (USA), Yara International (Norway and Europe), Nutrien (formerly Agrium/PotashCorp), Koch Fertilizer, and OCI N.V. operate as the foundational merchant CO2 suppliers globally. Other sources include byproduct CO2 from ethanol fermentation (particularly in US corn-ethanol plants operated by ADM, Valero, Green Plains, and POET), hydrogen production facilities, natural gas processing plants where CO2 is separated from raw gas, and direct extraction from geological wells (particularly the Jackson Dome in Mississippi, USA and several European fields). Major merchant CO2 handling and distribution is concentrated in the global industrial gases companies, led by Linde plc (following the 2018 merger with Praxair), Air Liquide, Air Products, Messer Group, Nippon Sanso Holdings, and regional specialists.

Global merchant CO2 demand is distributed across several key applications. Beverage carbonation represents one of the largest single demand pillars, with beer brewers, carbonated soft drink producers (Coca-Cola, PepsiCo, Keurig Dr Pepper), sparkling water bottlers, and wine producers requiring consistent high-purity food-grade CO2. Food processing applications include modified atmosphere packaging (MAP) for fresh meat, poultry, and produce, dry ice for cold chain logistics, freezing and chilling applications, and supercritical CO2 extraction for coffee decaffeination and hop extracts. Industrial applications span welding shielding gas, fire suppression systems, water treatment pH adjustment, greenhouse CO2 enrichment for horticultural production, and enhanced oil recovery through CO2 injection. Medical gas applications use CO2 in respiration therapy, surgical insufflation for laparoscopic procedures, and specialty medical gas mixtures.

Carbon dioxide pricing is influenced by several interconnected factors. The supply side depends heavily on ammonia plant operating rates (which in turn reflect natural gas prices, nitrogen fertilizer demand, and maintenance turnaround schedules), ethanol plant operations, and the investment cycle for CO2 capture and purification equipment. Food-grade specifications (typically requiring CO2 purity above 99.9% with specific limits on trace contaminants including ammonia, hydrogen sulfide, and aromatics per the International Society of Beverage Technologists standards) command significant premia over industrial grade. Regulatory context includes US FDA GRAS status for food-grade CO2, EU food safety regulations, and increasing policy interest in CO2 utilisation and capture. Transportation economics are critical given liquid CO2's refrigerated transport requirements: bulk CO2 is typically distributed within 300 to 500 km economically, beyond which cost escalates substantially. These combined factors explain the pronounced regional pricing divergence observed between European and North American merchant CO2 markets.

Which Sectors Are Driving Carbon Dioxide Demand?

Beverage industry (carbonation): This represents the largest single merchant CO2 demand pillar globally and the most quality-sensitive. Coca-Cola, PepsiCo, Keurig Dr Pepper, AB InBev, Heineken, Molson Coors, Constellation Brands, Diageo (beer operations), and countless regional craft breweries and bottlers drew food-grade CO2 for carbonated soft drinks, beer, sparkling water, and specialty beverage production through 2025. The International Society of Beverage Technologists (ISBT) food-grade specification dominates this application, with strict limits on trace contaminants. Summer peak demand (typically July-September in Northern Hemisphere) creates annual seasonality, and famous historical shortages in the US and UK have affected beverage industry operations periodically when ammonia plant supply tightens.

Food processing and preservation: Modified atmosphere packaging (MAP) extends shelf life of fresh meat, poultry, fish, dairy, and produce by displacing oxygen with CO2 and nitrogen blends. Tyson Foods, JBS, Cargill, Hormel, Perdue Farms, and European processors including Danish Crown, Vion, and Irish Dawn Meats drove significant volumes. Dry ice applications for cold chain logistics served pharmaceutical cold chain (particularly COVID-19 vaccine distribution historically and ongoing biologics), food delivery, and specialty food transport. Supercritical CO2 extraction served coffee decaffeination (Colombia, Brazil, Vietnam coffee producers), hop extract production (German and Czech hop processors), and nutraceutical ingredient extraction.

Industrial and welding applications: CO2 serves as a shielding gas in gas metal arc welding (GMAW/MIG welding), particularly for carbon steel fabrication in automotive, construction, shipbuilding, and general manufacturing. CO2 fire suppression systems protect server rooms, electrical equipment, and industrial process facilities. Greenhouse CO2 enrichment in horticultural operations (particularly Dutch, Belgian, and Canadian greenhouse operators serving European and North American fresh produce markets) drove steady demand. Cement, steel, and industrial gas consumers drove baseline volumes.

Enhanced oil recovery (EOR) and oil and gas operations: CO2 injection into mature oil fields enhances recovery by reducing crude viscosity and maintaining reservoir pressure. Major Permian Basin (Texas, USA), Kinder Morgan, Denbury Resources (acquired by ExxonMobil), and Occidental Petroleum CO2 EOR operations consumed substantial captive and merchant CO2 volumes through 2025. European and Asian EOR applications are more limited but growing with climate-related CO2 storage interest.

Medical and pharmaceutical: Medical-grade CO2 (USP specification, typically produced and distributed under more stringent contamination controls than industrial or food grade) serves respiratory therapy, laparoscopic surgery insufflation, cryosurgery, and specialty medical gas mixtures. Hospitals, outpatient surgical centres, and medical device manufacturers drew baseline volumes through 2025. Pharmaceutical manufacturing uses CO2 in specialty synthesis and supercritical extraction applications.

Water treatment, environmental, and chemical processing: Municipal water treatment uses CO2 for pH adjustment and remineralisation of reverse osmosis permeate. Wastewater treatment uses CO2 for pH control. Chemical manufacturing uses CO2 as a feedstock for urea production (the largest global use of CO2 but typically captive, not merchant), methanol production, salicylic acid, polycarbonate, and specialty carbonates. Emerging CO2 utilisation applications including mineralisation in concrete curing (CarbonCure, Solidia) and power-to-fuel pathways represent small but growing demand segments.

Global Carbon Dioxide Price Trend in 2025

Global carbon dioxide prices firmed gradually through 2025 before stabilising in early 2026. Prices moved from USD 0.48/KG in Q1 2025 to USD 0.49/KG in Q2 (up 2.37%), USD 0.51/KG in Q3 (up 3.21%), USD 0.51/KG in Q4 (essentially flat at down 0.05%), and USD 0.51/KG in Q1 2026 (up 0.24%). The cumulative five-quarter gain of 5.9% reflected European market tightening and steady North American pricing at elevated levels.

The global figure is computed as a simple two-region average across European and North American quarterly VMP prices. Regional dispersion remained substantial throughout the observation window, with North American pricing persistently USD 0.40 to USD 0.47/KG above European benchmarks. This dispersion reflects fundamentally different regional market structures rather than trade flow imbalances, since CO2's refrigerated bulk transport economics limit long-distance merchant flows to under 500 km typically. North American and European merchant CO2 markets operate largely independently, with pricing reflecting local supply-demand conditions, ammonia plant operating patterns, and food-grade specification premia.

European Carbon Dioxide Price Trend in 2025

European merchant carbon dioxide prices showed a clear upward trajectory through most of 2025 before moderating in Q1 2026. Q1 2025 opened at USD 0.25/KG, rose 8.68% in Q2 to USD 0.27/KG, continued higher 10.09% in Q3 to USD 0.30/KG, firmed a further 3.88% in Q4 to USD 0.31/KG, then eased 7.59% in Q1 2026 to USD 0.29/KG. The Q1 2025 to Q4 2025 cumulative rise of 24% was one of the steeper European industrial gas moves in recent years, reflecting genuine supply-side tightening.

European merchant CO2 supply depends heavily on ammonia plant operations by Yara International (with plants across Belgium, France, Netherlands, Finland, Germany, and Italy), CF Industries (following their acquisition of European ammonia assets), Grupa Azoty (Poland), BASF (captive nitrogen operations), and regional operators. Historical closures and curtailments at European ammonia operations, particularly during periods of high natural gas prices, have repeatedly tightened European merchant CO2 availability. Closures and strategic reviews at CF Industries' Billingham operation in the UK (once one of the UK's largest merchant CO2 sources) during 2024 and 2025 contributed directly to European food-grade CO2 tightness.

European demand pillars include beverage carbonation (AB InBev Europe, Heineken, Carlsberg, Pernod Ricard), food processing (Irish, Dutch, German, French meat processors and MAP applications), supercritical CO2 extraction (particularly German hop processing for the beer industry), greenhouse horticultural operations (the Netherlands is the world's largest greenhouse vegetable exporter with intensive CO2 enrichment), welding and industrial applications, and medical gas. Summer 2025 saw the typical seasonal tightening of beverage-grade CO2 supply, compounded by ammonia plant maintenance outages. The Q1 2026 price easing reflected ammonia production recovery and post-winter industrial demand moderation.

North American Carbon Dioxide Price Trend in 2025

North American merchant carbon dioxide prices held remarkably stable throughout the observation window at elevated levels. Q1 2025 opened at USD 0.72/KG, rose marginally 0.17% in Q2 to USD 0.72/KG, firmed modestly 0.60% in Q3 to USD 0.72/KG, eased 1.68% in Q4 to USD 0.71/KG, and recovered 3.68% in Q1 2026 to USD 0.73/KG. The maximum quarterly variation of 3.68% made North American CO2 the most stable industrial gas market tracked, albeit at persistently elevated absolute pricing compared to European benchmarks.

North American merchant CO2 supply comes from several distinct sources: ammonia producers CF Industries (the largest US ammonia operator with major plants in Oklahoma, Louisiana, Iowa, and Mississippi), Nutrien (Wyoming, Louisiana), Koch Fertilizer (Oklahoma, Enid), and Yara North America; ethanol plants operated by ADM, Valero, Green Plains, POET, and regional cooperative producers (US corn-ethanol capacity is roughly 18 billion gallons annually, generating substantial CO2 byproduct); hydrogen production facilities serving refining and industrial hydrogen demand; and direct extraction from the Jackson Dome in Mississippi, which supplies significant CO2 for enhanced oil recovery in the Permian Basin and Gulf Coast regions. Linde plc, Air Products, Air Liquide North America, and Messer Americas dominate merchant distribution.

The persistent North American price premium over European benchmarks reflects several structural factors. First, North American ammonia plants have experienced periodic closure and turnaround cycles that have repeatedly tightened food-grade CO2 supply, with the summer 2018, 2020, 2021, and 2022 shortages particularly well documented. Second, US beverage carbonation demand is the largest single regional CO2 application globally given the scale of American soft drink, beer, and sparkling water consumption. Third, the Jackson Dome supply is primarily directed to EOR rather than merchant food and beverage markets, limiting supplementary supply. Fourth, US ethanol CO2 capture infrastructure has lagged European equivalents, though 45Q tax credit expansions are driving increasing capture investment. The 2025 pricing stability reflected ongoing balance between these tight supply conditions and steady demand, with the Q1 2026 recovery aligning with seasonal beverage industry restocking and tightening ahead of summer 2026 peak demand.

What Factors Drove Carbon Dioxide Costs in 2025?

• Ammonia plant supply availability: The single most important supply-side driver for merchant CO2 globally. 2025 saw continued consolidation and strategic review at European ammonia operations, particularly CF Industries' Billingham, UK plant operations. Even planned turnarounds at large North American ammonia plants (CF Industries Donaldsonville, Louisiana; Koch Fertilizer Enid, Oklahoma) tightened merchant CO2 availability periodically. Every ammonia plant turnaround or unplanned outage has disproportionate impact on regional CO2 supply given the lack of easily substitutable alternatives.
• Natural gas pricing and ammonia economics: Ammonia production economics depend heavily on natural gas feedstock costs. European natural gas prices remained elevated relative to pre-2022 levels through 2025, making European ammonia production economically challenged and contributing to continued capacity rationalisation. US Henry Hub natural gas prices were more favourable to US ammonia producers, supporting continued operations and a more reliable CO2 byproduct supply in North America compared to Europe.
• Beverage industry seasonal demand: Summer peak beverage demand creates annual CO2 tightness in both tracked regions, typically Q2-Q3 in Northern Hemisphere markets. Food-grade specification requirements (ISBT standard) limit which CO2 sources can serve this market, creating structural supply constraints during peak season. The Q2-Q3 2025 European price firming coincided with this seasonal pattern.
• Ethanol industry CO2 capture and food-grade certification: US ethanol plants produce substantial CO2 byproduct volumes, but only a fraction is captured and food-grade certified. The 45Q tax credit expansion (Inflation Reduction Act provisions) is driving increased investment in CO2 capture, but the scale-up takes time. European ethanol sector CO2 capture is more mature but smaller in absolute scale. This structural gap contributes to North American merchant CO2 tightness.
• Distribution and logistics constraints: Liquid CO2 transport requires refrigerated tanker trucks or railcars, typically operating at minus 20 C and 20 bar pressure. Transport economics limit merchant CO2 distribution to roughly 300-500 km radius from production points. Regional supply-demand imbalances cannot be quickly arbitraged through trade, which is why North American and European merchant markets operate largely independently with persistently different price levels.
• CO2 utilisation and emerging demand: Growing interest in CO2 utilisation for concrete mineralisation (CarbonCure, Solidia), chemical feedstocks (methanol, urea), and power-to-fuel applications represents emerging demand that, while small in absolute terms during 2025, is growing and may tighten future supply-demand balance. Enhanced oil recovery demand in North America remained substantial through 2025.

Carbon Dioxide Market Forecast for 2026

The outlook for the balance of 2026 points to continued North American price stability with European prices likely to firm again through summer 2026 peak season. Full-year 2026 global averages are projected to range USD 0.50 to USD 0.58/KG, with quarterly peaks potentially reaching USD 0.60/KG in Q3 2026 if European beverage season tightness combines with any major ammonia plant disruptions. The persistent North American premium over European pricing is expected to remain, though potentially narrowing slightly if European ammonia operations stabilise and North American ethanol CO2 capture expands.

Expected Carbon Dioxide Price Range (2026)

Regional forecasts point to European prices holding USD 0.28 to USD 0.34/KG through 2026 with summer peak tightness potentially pushing Q3 2026 higher, and North American prices maintaining USD 0.70 to USD 0.85/KG range with continued demand strength supporting premium pricing. Key swing factors include ammonia plant operations in both regions, natural gas pricing, ethanol industry CO2 capture investment pace, beverage industry seasonal demand patterns, and any emergency production disruptions.

Key Analyst Insights for the Carbon Dioxide Market

• The structural 2.5x North American premium over European merchant CO2 pricing is the dominant feature of this market and is unlikely to narrow quickly. Buyers in each region operate in effectively separate markets given the 300-500 km distribution economics of liquid CO2. Regional supply decisions (ammonia plant operations, ethanol capture investment) matter more than cross-regional trade flows.
• European CO2 market tightness driven by ammonia capacity rationalisation is a multi-year structural factor, not a cyclical movement. Expect continued European price firmness through 2026 with seasonal peaks likely exceeding 2025 levels. Buyers in European beverage and food processing should consider long-term contract commitments at current forward pricing rather than spot strategies.
• The 45Q tax credit expansion under the US Inflation Reduction Act is driving significant ethanol industry CO2 capture investment. As this capacity ramps through 2026 and 2027, incremental merchant-grade CO2 supply should emerge in North America. This may moderate the persistent North American premium over time, though the pace of scale-up remains a key uncertainty.
• Beverage industry seasonal demand creates predictable summer tightness in both regions. Buyers should plan Q1 and Q4 inventory builds to manage Q2-Q3 peak demand exposure, particularly in European markets where supply-demand balance is tighter. Food-grade specification limits make standard industrial CO2 non-substitutable for beverage applications.
• Emerging CO2 utilisation applications (concrete mineralisation, power-to-fuel, specialty chemicals) represent a long-term demand pillar that, while small in 2025-2026, could meaningfully tighten supply-demand balance by 2028-2030. Companies investing in CO2 capture infrastructure now position well for this demand evolution.

Key Takeaways for Buyers and Manufacturers

For Buyers

• Commit to long-term supply contracts in merchant CO2 markets given the limited ability to switch suppliers quickly during tight conditions. Linde plc, Air Liquide, Air Products, and Messer Group offer contract structures suitable for various user profiles, from bulk industrial to food-grade beverage customers.
• Regional qualification is limited given distribution economics, but within-region supplier diversification matters. US beverage companies should qualify multiple North American suppliers with geographically diverse production source access (ammonia byproduct, ethanol, Jackson Dome). European food and beverage buyers should similarly qualify multiple sources across both ammonia and ethanol byproduct pools.
• Track ammonia plant turnaround schedules (publicly available through CF Industries, Yara, Nutrien investor communications) as leading indicators for regional CO2 tightness. Major planned turnarounds typically telegraph 6-9 months in advance and enable proactive inventory management.
• Build 4 to 8 weeks of inventory for critical beverage and food-grade applications given the demonstrated capacity for regional CO2 shortages during ammonia plant disruptions. Storage economics favour on-site liquid CO2 tanks for high-volume users.
• Consider on-site CO2 generation for very large users. Some major US beverage operations and European greenhouse consortia have invested in captive CO2 capture from adjacent ammonia or ethanol sources, reducing merchant market exposure and associated pricing volatility.

For Producers and Gas Distributors

• Integrated ammonia-producer-linked CO2 capture and purification operations (CF Industries, Yara, Nutrien with their merchant partnerships) maintain structural advantages through reliable byproduct supply. Preserving these producer partnerships is critical for merchant distributor strategy.
• Ethanol-sourced CO2 capture with food-grade certification represents the most significant capacity growth opportunity in North American markets. ADM, Valero, Green Plains, and POET partnerships with Linde, Air Liquide, and Air Products for capture infrastructure investment position well for 45Q tax credit capture.
• European producers should continue disciplined pricing given genuine supply-side tightness. The 24% H1 2025 to Q4 2025 European price rise reflected genuine cost pass-through and should not be reversed by competitive pressure unless ammonia operations meaningfully recover.
• Plan liquid CO2 fleet maintenance and tank truck capacity around beverage industry seasonal peaks (Q2-Q3). Capital expenditure on distribution infrastructure has been under-invested in some markets, creating opportunities for distributors to differentiate through service reliability.
• Emerging CO2 utilisation applications (CarbonCure concrete, methanol production, specialty chemicals) represent long-term margin opportunities. Strategic partnerships with CO2 utilisation technology developers offer differentiated positioning beyond traditional food-beverage-industrial distribution.