BRUSSELS, Oct. 22, 2026 – Gas procurement, production technology and emissions verification are central to the competitive position of European fertiliser, ammonia and hydrogen suppliers as the EU’s definitive Carbon Border Adjustment Mechanism (CBAM) period takes effect. Unlike steel or cement, these products are closely tied to feedstock economics, with natural gas serving as both an energy source and a chemical input in conventional ammonia production, while low-carbon hydrogen depends heavily on electricity costs and availability.
CBAM has covered selected fertilisers, ammonia and hydrogen imports since Jan. 1, 2026. The latest published certificate price, €82.32 per tonne of CO₂ equivalent (tCO₂e) for the third quarter of 2026, is relevant to importers’ eventual certificate-surrender obligations. However, the applicable emissions boundaries, product classifications and exemptions differ, meaning the certificate price does not translate into a uniform charge per tonne across fertilisers and hydrogen.
Gas markets remain central to ammonia production costs
Conventional ammonia production typically begins with natural gas reforming to produce hydrogen, which is then combined with nitrogen. Changes in gas markets can therefore increase both feedstock and energy expenditure, while direct emissions from the production facility remain a separate element of the CBAM calculation.
Producers using conventional processes are exposed to gas availability, regional price spreads, carbon costs and international fertiliser prices. Alternative production routes based on renewable electricity or carbon capture can reduce certain emissions-related exposures, but require substantial capital investment and may depend on infrastructure that is not yet readily available.
For importers, assessing the emissions associated with a shipment requires information about the location of the ammonia synthesis facility, the hydrogen production route and the method used to allocate emissions across products. Nitrogen fertiliser imports may also require precursor information and product-specific treatment of relevant indirect emissions.
Electricity-import rules should not be applied indiscriminately to fertiliser shipments. Nor does a renewable electricity certificate, by itself, eliminate emissions arising from chemical processes.
Fertiliser defaults carry a lower initial markup
European Commission implementing rules establish country- and product-specific default values for cases in which verified actual emissions data are unavailable. For fertilisers, the definitive-period default-value markup is 1%, compared with a 10% starting markup in 2026 for many other covered industrial goods.
The difference affects how importers model potential CBAM liabilities. It does not establish that ammonia or fertilisers have lower embedded emissions than steel or aluminium. The outcome depends on the specific product, its manufacturing process and the emissions measured or assigned under the applicable methodology.
European fertiliser producers have argued that overseas nitrogen fertiliser suppliers may benefit from lower gas prices and different industrial cost structures. At the same time, agricultural buyers are highly sensitive to fertiliser prices, meaning higher import costs can feed through to crop-production economics.
Policymakers consequently face competing objectives: limiting carbon leakage, maintaining chemical production in Europe and avoiding additional pressure on agricultural costs. Changes in actual purchasing patterns also depend on crop prices, seasonal stock levels and freight charges.
Hydrogen projects depend on contracted demand and energy supply
For developers of low-carbon hydrogen, the commercial case often hinges on secured industrial offtake, electricity prices, electrolyser utilisation and transport expenses rather than the CBAM certificate price alone.
Electrolysers powered by intermittent renewable electricity may achieve low operating emissions but run at utilisation levels that make capital recovery more difficult. Gas-based hydrogen production incorporating carbon capture faces a different set of constraints, including capture performance and the availability and reliability of CO₂ transport and storage.
The Oct. 20 compromise on the EU Emissions Trading System’s Market Stability Reserve, which would retain a higher allowance buffer, does not resolve these project-level investment questions. Its implications for forward carbon prices remain uncertain.
Separately, the European Commission’s July proposal to extend the phase-out of free allocation for CBAM sectors to 2038 remains a proposal. It should not be treated as an adopted rule or automatically incorporated into investors’ base-case assumptions as if the extension had already entered into force.
Export competitiveness depends on delivered cost and verified emissions
For suppliers in Türkiye, North Africa, the Middle East, Central Asia and the Western Balkans, access to the EU market will depend on delivered prices, measured production emissions and credible verification records.
EU importers need to distinguish the responsibilities of an authorised CBAM declarant from those of the non-EU installation operator supplying monitored emissions data. For trade-finance providers, due diligence may include independently verified emissions documentation, dependable gas or electricity supply contracts and explicit stress testing against alternative certificate-price scenarios.
These requirements link carbon compliance with ordinary procurement and financing risks. A supplier’s ability to provide traceable production data can influence an importer’s assessment of the shipment alongside energy costs, logistics and the reliability of delivery.
Seasonal trade patterns complicate price analysis
Fertiliser trade flows require particular care when assessing the causes of price and volume changes because purchases are tied to agricultural planting cycles. An increase in ammonia or urea imports could reflect pre-season restocking, a temporary gas-cost advantage enjoyed by a particular production facility or disruption at a European plant.
Other potential influences include sanctions, port availability and financial restrictions affecting competing suppliers. A change in monthly import figures, on its own, does not demonstrate a structural effect attributable to CBAM.
Trade assessments should compare matching periods using the same Combined Nomenclature (CN) classification. Import quantities, customs values in euros and unit prices per tonne should be recorded separately to avoid confusing changes in shipment volumes with changes in prices.
Installation-level records determine exposure to default values
Importers can prepare for compliance by agreeing in advance on the operational information that suppliers must provide. Relevant records include gas used as feedstock and fuel, steam and heat balances, the hydrogen production route, nitrogen inputs, emissions factors and the allocation of emissions among fertiliser products.
Verification becomes more complex when intermediates from several production facilities are combined into a single shipment. A reliable, auditable emissions record may nevertheless have commercial value if it limits exposure to default values or supports confidence in predictable deliveries.
That potential value can be assessed as part of an offtake agreement alongside freight charges and gas-price terms, rather than treated solely as an environmental attribute.
For ammonia and hydrogen projects, changes to carbon-market rules or a future decline in gas prices cannot, on their own, establish financial viability. Producers must demonstrate that they can supply a specified product at a contractually acceptable price, provide auditable emissions data and maintain delivery over the investment’s operating life.
