The European Commission unveiled a fertiliser plan on Tuesday that leaves the bloc's carbon border tax unchanged, aiming to support struggling farmers while maintaining climate policy. The decision comes amid rising fertiliser costs linked to Middle East conflict and ongoing tensions in global energy markets.
Fertiliser producers argue that the Carbon Border Adjustment Mechanism (CBAM), which applies to roughly 45% of EU fertiliser imports, protects European industry from cheaper imports produced under weaker environmental rules. The mechanism obliges EU exporters to pay for pollution linked to their production, creating a level playing field. However, farmers fear they are indirectly paying the bill through higher fertiliser costs, which cascade into food prices.
European Commissioner for Agriculture Christophe Hansen told reporters that scrapping CBAM would be a "false good idea," citing competitiveness issues. "We have a domestic industry for fertilisers in several member states which are under pressure because they're dealing with a situation of unfair competition coming from third countries if CBAM is not in place," Hansen said.
Balancing Climate Goals and Farm Economics
The Commission is seeking to defend its flagship carbon border policy while acknowledging that climate costs are increasingly passed through to farmers and consumers. The EU executive argues that carbon pricing—including revenues from the Emissions Trading System (ETS) and CBAM—is essential to preventing industries from relocating to jurisdictions with less stringent environmental rules and maintaining Europe's climate leadership.
But the Commission also concedes that the fertiliser sector occupies a uniquely sensitive position because higher industrial costs ultimately cascade into farm economics and consumer food inflation. This tension mirrors broader debates across Europe about the cost of the green transition, particularly in sectors like agriculture that are both vulnerable and politically powerful.
Rather than abandoning carbon pricing, the EU appears ready to pair it with subsidies, state aid, market protections, and strategic investment to shield politically sensitive sectors such as agriculture. The Commission is now promising a deeper investigation into how ETS and CBAM costs are passed through the supply chain—from fertiliser factories to farmers and ultimately supermarket prices.
Irish MEP Billy Kelleher (Renew Europe) told lawmakers in Strasbourg on Tuesday that rising fertiliser prices are putting huge pressure on farmers and on cost of living through food inflation. He backed the suspension of CBAM and "any policy measures that are putting burdens and costs" on fertiliser in the short-term. This reflects growing unease among some EU lawmakers about the immediate economic impact of climate policies on rural communities.
Leon de Graaf, from the Business for CBAM Coalition, said it was a "relief" to see the EU executive holding the line on CBAM instead of carving out fertilisers. "Farmers' concerns about input costs are real, but the answer is not to weaken the instrument that keeps European fertiliser producers and importers on an equal footing," said De Graaf.
Hansen said that €200 million remains in the bloc's agricultural fund's crisis reserve and expressed intentions to "at least double this amount" to support farmers. In addition, the Commission will provide targeted "exceptional support" to the most affected farmers and more money will be mobilised under the EU budget "to reinforce agriculture research." However, the amount is still under discussion pending political talks between the European Parliament and the Council.
The plan comes as the EU faces broader challenges in maintaining its climate leadership amid rising costs and geopolitical instability. For more on how the bloc is navigating these tensions, see our analysis of the EU Fertiliser Plan Seeks to Avert New Farm Protests Amid Soaring Costs. The outcome of these negotiations will be closely watched by farmers, industry, and environmental groups across the continent.
