For years, European industry has operated under increasingly ambitious climate rules. Companies have invested heavily in reducing emissions and improving efficiency. But European producers compete with imports that may be manufactured under less stringent environmental standards.
The EU’s Carbon Border Adjustment Mechanism (CBAM) aims to address this imbalance. It puts a carbon price on certain imported goods, including fertilisers, ensuring that their carbon costs are more comparable with products manufactured in Europe under the EU Emissions Trading System (ETS).
For the fertiliser industry as well as fertiliser distributors and farmers and growers, the consequences could be significant. Prices are expected to rise, while carbon intensity will become a more important factor in how fertilisers are produced and purchased.
Conventional nitrogen fertiliser production is highly energy intensive and relies heavily on natural gas as both a feedstock and energy source. The carbon footprint can therefore vary considerably depending on production technology and the energy mix used.
Under CBAM, importers must report the embedded emissions of covered products and increasingly pay for those emissions through CBAM certificates. This makes carbon intensity a more visible cost alongside price, quality and availability.
CBAM is also designed to reduce the risk of carbon leakage, where production shifts to regions with less stringent climate policies without reducing global emissions.
CBAM represents a structural increase in the cost of carbon-intensive fertilisers entering Europe. Rabobank estimates that in 2026 CBAM could increase prices by 10% to 20% for ammonia, 10% to 15% for urea and 2% to 5% for DAP, depending on supplier emissions. By 2030, these increases could reach 50%, 45% and 10%, respectively.
At the same time, geopolitical disruptions are creating additional price pressure. The disruption around the Strait of Hormuz in 2026, for example, affected fertiliser and energy markets, raw-material availability and shipping. Because fertilisers are globally traded commodities, disruptions can affect European prices even when the EU's direct dependence on a region is limited.
The difference is important: geopolitical shocks may be temporary, while CBAM introduces a more predictable and structural carbon cost.
For fertiliser buyers, CBAM goes beyond regulatory compliance. Agricultural businesses, food processors, retailers and investors are under growing pressure to reduce emissions throughout their value chains.
As carbon accounting improves, the footprint of fertiliser production will increasingly influence purchasing decisions. Lower-carbon fertilisers can help organisations reduce exposure to carbon costs while supporting their sustainability targets.
CBAM is therefore more than a regulatory change. It signals where the European fertiliser market is heading. Carbon intensity is becoming a decisive factor in how fertilisers are produced, traded and purchased, while resilient, local and low-carbon production becomes increasingly valuable.
This shift also creates opportunities for new production methods. Technologies powered by renewable electricity can reduce both emissions and dependence on natural gas while enabling more regional production.
Production pathways based on renewable electricity rather than fossil fuels are attracting increasing attention as industries seek to reduce their carbon footprint and in addition want to reduce supply chain vulnerability. When powered by low-carbon electricity sources like solar and wind energy, electricity-based nitrate production offers a route to nitrogen fertilisers with a lower carbon footprint, while reducing dependence on natural gas.
Plasma technology for example enables low-carbon production, by using air, water and electricity to produce nitric acid and nitrate-based fertilisers. Carbon exposure can be reduced while supply chains become more local and flexible. It is a new opportunity for reinventing nitrogen production in a changing world and making it local, resilient and modular.