The European Commission has once again rejected the appeals from France, Italy, Croatia, and several other countries regarding the temporary suspension of the carbon tax on imported fertilizers. This decision was announced on March 30 during a meeting of EU agriculture ministers in Brussels.
This is reported by Finway
Position of the European Commission and Market Participants
European Commissioner for Agriculture Christoph Hansen emphasized that high fertilizer prices are concerning for the agricultural sector of the European Union. However, according to him, suspending the carbon levy under the CBAM mechanism could further increase the EU’s dependence on imports. Therefore, in Hansen’s opinion, this issue should be approached with particular caution.
“High fertilizer prices are a source of concern for the agricultural sector. However, suspending the tax collection under the CBAM risks worsening dependence on imports. Therefore, in his view, the EU must be very careful on this matter.”
Additionally, Hansen announced the preparation of a special plan to address the situation in the fertilizer market. A meeting with industry representatives is scheduled for April 13 to discuss ways to support European producers and reduce import dependence.
Arguments from France and Market Reaction
French Minister of Agriculture Annick Girardin stressed that supply disruptions caused by the war in Iran complicate the market situation and lead to rising prices for urea—a key ingredient in fertilizer production. According to her, this significantly increases production costs, putting many producers in a difficult economic position. France insists on a “temporary” suspension of the levy to support national farmers.
The French government has made similar requests before; in January, it also asked for fertilizers to be exempted from carbon taxation, but European fertilizer producers opposed this idea.
It is worth noting that the European Commission is considering using the funds generated from the levy to stabilize market prices and support farmers. At the same time, the EU is discussing amendments that could allow for temporary exemptions from the carbon levy in the future.
As a reminder, the Carbon Border Adjustment Mechanism (CBAM), which came into effect on January 1, applies not only to fertilizers but also to steel, cement, and other goods imported into the European Union. Its implementation aims to reduce greenhouse gas emissions and support European industry.