Fertiliser production, particularly ammonia and urea, is one of the most carbon-intensive industrial processes.
Each tonne of ammonia produced via natural gas releases around 1.6–2.0 tonnes of CO₂, with global fertiliser production responsible for ~1.4 Gt CO₂e annually.
The CBAM’s inclusion of fertilisers aims to prevent carbon leakage, but it will significantly increase costs for farmers and agri-businesses across Europe.
For the UK and EU, where fertiliser imports remain vital, higher prices could ripple through food supply chains. Producers will face pressure to adopt low-carbon hydrogen inputs or carbon capture, while buyers must manage rising input costs. The challenge lies in driving cleaner production while protecting food security and affordability.
At CFP Energy, we've been helping businesses comply with CBAM since its inception. We provide insights and expert advice on preparing for full implementation, as well as instant access to CBAM certificates. To see how we can help, contact our carbon team today.
With fertilisers significantly exposed to carbon leakage due to their high trade and emission intensity, the CBAM has included these products as one of its “GHG-intensive goods”.
Companies importing fertiliser into the EU, from January 2026, will have to purchase CBAM certificates to cover embedded emissions, with the cost based on the weekly average EU ETS carbon price.
Why the Fertiliser Sector is a Key Focus for CBAM
The production of CBAM fertilisers is an activity with high emissions, and thus another sector highly affected by these CBAM rules for fertilisers.
Importantly, most emissions are associated with the production of nitrogen-based fertilisers, which usually involves a process involving natural gas as the feedstock. However, the embedded carbon of fertilisers varies from product to product. The main types of fertilisers are:
- Ammonia
- Urea
- Nitric acid
- Sulphuric acid
- Nitrates of potassium
- Mixed fertilisers containing:
- Nitrogen (N)
- Phosphorus (P)
- Potassium (K)123
Out of these fertilisers, some have more significant environmental effects than others.
Ammonia-based fertilisers
Produced through an energy-intensive technique called the Haber-Bosch process that uses significant quantities of natural gas, ammonia-based fertilisers are known to have a particularly high carbon profile.
Urea-based fertilisers
While less energy-intensive than CBAM ammonia, urea releases CO₂ during hydrolysis and can contribute to nitrous oxide (N₂O) emissions – a greenhouse gas that is around 300x more potent than CO₂.
Phosphorus and Potassium Fertilisers
Due to their production process – a process that involves open-pit mining – these fertilisers are considered unsustainable due to their contribution to land degradation, water pollution, and overall ecosystem disruption.
UK CBAM at a Glance: At present, the EU CBAM regulates fertiliser imports into the EU. However, the UK government is also planning its own CBAM. This will place a carbon levy on fertiliser imports into the UK, with implementation expected for 2027. It’s essential, therefore, that any UK businesses that rely on fertilisers, such as farms and landscaping firms, prepare for the UK CBAM introduction.
Navigating the Hurdles of CBAM for Fertiliser Importers
Because the EU’s agricultural sector depends heavily on fertilisers to improve yields and ensure food self-sufficiency, the inclusion of fertilisers in CBAM is likely to have negative repercussions in the short term.
As of 1 January 2026, importers based in the EU will have to comply with several measures to fulfil their CBAM obligations. To ensure compliance, importers should follow these steps:
1. Become an Authorised CBAM Declarant
Only authorised declarants can import CBAM goods (including fertilisers) into the EU from 2026. Therefore, importers must register as a declarant at the earliest possible time.
2. Measure and Report Emissions
Importers must measure and report emissions. These must be based on actual emissions data where possible, although default values may be used in some cases. Data must include scope 1 & scope 2 emissions.
Scope 1: Direct emissions released during production
Scope 2: Indirect emissions from electricity used in production.
3. Provide Verified Emissions Data
Importers must submit emissions data that has been accredited by a third-party CBAM verifier that has assessed the data to ISO 14065 standards.
4. Buy and Surrender CBAM Certificates
Importers must purchase and surrender certificates corresponding to the embedded emissions in the imported fertilisers. In practice, the surrender is done by matching the number of certificates to the reported emissions.
How will exporters of fertilisers to the EU be impacted?
Although exporters of fertilisers outside the EU aren’t obliged to buy CBAM certificates directly, they will still need to provide detailed and verified emissions data to the EU importer to ensure full transparency.
In practice, this will lead to higher costs as, in addition to the financial burden of production, exporters may also have to pay for the monitoring and third-party verification of the emissions embedded in the product.
Again, unlike the importer, the exporter isn’t obligated to provide this information. However, if they choose not to record and verify their emissions, this negatively impacts their competitiveness. This is because, without this data, importers might assume less favourable default emissions, which might raise their CBAM certificate costs in turn.
To ensure that these costs don’t restrict output and harm profitability, exporters should implement the following measures.
Enhance data reporting
Exporters of fertilisers should ensure accurate data reporting wherever possible. In practice, this may include investing in MRV platforms and training staff on CBAM reporting requirements, such as emissions calculation methods.
Encourage research & development
To reduce the amount of embedded carbon in the fertiliser, exporters should also invest in cleaner production. In practice, this may require investment in R&D to establish more energy-efficient production methods or develop low-carbon feedstocks and adopt renewable energy sources.
Reduce Emissions and Decarbonise
A third and final way to remain competitive is to reduce carbon emissions through operations. This could be done through carbon capture, as well as through circular economy principles in production and waste management.
CFP Energy: Understand Your Fertiliser Supply Chain's Risk and Opportunity
The CBAM, from the EU CBAM full regime to begin 1 January 2026, to the UK CBAM scheduled to begin 1 January 2027, once fully implemented, will present many challenges for producers and importers of fertiliser.
To ensure compliance, affected businesses should register as an authorised CBAM declarant to legally import fertilisers into the EU or UK. For producers, obtaining third-party verification of emissions data will also be crucial, and to purchase and surrender CBAM certificates to cover the embedded carbon emissions in the fertilisers they import into the EU or UK.
Making these adjustments will, almost certainly, mean extra administration and further costs. However, by implementing these changes early, businesses operating in this sector can minimise forthcoming compliance risks while avoiding costly disruptions that impact trade.
CBAM presents a unique opportunity to decarbonise and demonstrate a commitment to low-carbon practices to both regulators and stakeholders alike. At CFP Energy, we’re experts in guiding businesses through carbon compliance regulations, from CBAM to the Emissions Trading System (ETS).
To see how we can help you meet your CBAM compliance, contact our carbon team today.
