EU Refuses to Budge on Carbon Border Tax as Fertiliser Prices Spike and Farmers Cry Foul

The European Commission kept its carbon border tax unchanged in a fertiliser plan announced on Tuesday meant to support struggling farmers, despite complaints that carbon pricing is contributing to higher prices amid the ongoing conflict in the Middle East. Fertiliser producers argue that the bloc's carbon pricing rules at the border protect European industry from cheaper imports produced under weaker environmental rules, since the rules oblige EU producers to pay for the pollution linked to their production. But farmers fear they are indirectly paying the bill through higher fertiliser costs.

European Commissioner for Agriculture Christophe Hansen told reporters that scrapping the bloc's Carbon Border Adjustment Mechanism (CBAM), which would apply to roughly 45 percent of EU fertiliser imports, 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.

With the new plan, the European Commission is seeking to defend its flagship carbon border policy while acknowledging that climate costs are increasingly being passed through to farmers and food prices. The EU executive argues that carbon pricing – including revenues from the Emissions Trading System and CBAM – is essential to preventing industries from moving to locations with less strict 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. 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.

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. Irish MEP Billy Kelleher (Renew Europe) told lawmakers in Strasbourg on Tuesday that rising fertiliser prices are putting huge pressure on farmers and on the cost of living through food inflation. He backed the suspension of CBAM and "any policy measures that are putting burdens and costs" on fertilisers in the short term.

Hansen said that the goal is to have a concrete financial instrument before the summer, when farmers need to decide which crops to plant for the next season. Leon de Graaf, from the coalition Business for CBAM, 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," de Graaf said.

Hansen said that €200 million remains in the bloc's agricultural major 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 EU co-legislators, the European Parliament, and the Council.

So the carbon border tax stays. Fertiliser prices are up. Farmers are angry. The Commission is sympathetic but unmoved. It will investigate, subsidise, and promise more money – eventually. The Irish MEP wants a suspension. The industry coalition wants to hold the line. And the farmers? They need to decide what to plant for the next season. Before summer. No pressure. In Brussels, as on the farm, timing is everything. The difference is that in Brussels, the crops are political. In the fields, they are real. And they are not getting any cheaper.

Written by Christiane Hofreiter