Starting in 2026, European farmers will be billed for CO₂ emissions from fertilizers. The new carbon tax will increase the price of ammonia and urea by up to 20%, and even significantly in the long run. This will shift the origin of fertilizers towards countries with lower emissions. Read more about price expectations, import flows, and the rise of blue ammonia.
The reason is the introduction of a carbon tax on, among other things, ammonia and urea imported from outside the EU. This measure is intended to put a price on greenhouse gas emissions and protect European producers from cheaper, more polluting competition.
In the years after 2026, prices will continue to rise, the bank's researchers warn. Import prices could rise by up to 50% for ammonia and 45% for urea by 2030 due to the tariffs. Phosphate fertilizers such as DAP and NPK have lower emissions and will therefore rise less rapidly, although costs could also increase there due to additional import tariffs, especially for Russian products.
Purchasing is shifting
The carbon tax affects not only prices but also the origin of fertilizers. Countries with high emissions, such as Trinidad and Tobago and China, will lose their cost price advantages due to the new tax. Low-emission producers like the United States, on the other hand, could gain market share. North African countries like Egypt and Algeria also offer relatively low emissions, making them attractive to European importers.
Shortly after 2030, the cost of the carbon tax could reach €200 per ton. Ammonia produced with hydrogen from natural gas, capturing carbon dioxide (so-called blue ammonia) from the US and the Middle East, will become increasingly competitive because the tariffs on this product are limited. Green ammonia, produced from hydrogen and renewable energy, is currently more expensive but could become competitive by 2034 if the carbon price rises and the technology becomes cheaper.