Carbon costs at the gate: Preparing for the CBAM’s impact on EU fertilizer prices in 2026

The definitive phase of the EU's Carbon Border Adjustment Mechanism (CBAM) is set to begin in 2026 with the introduction of a carbon tax on 15 million metric tons of nitrogen-containing fertilizer imports into the EU, which will significantly impact import costs.

The estimated price increase in 2026 will range from 10% to 20% for ammonia, 10% to 15% for urea, and 2% to 5% for DAP, depending on supplier emissions. These increases could rise to 50%, 45%, and 10%, respectively, by 2030 as free allowances (EUAs) under the EU's Emissions Trading System (EU ETS) are phased out and carbon prices climb.

Sourcing strategies will evolve: High-emission suppliers such as Trinidad and Tobago and China will face steep CBAM liabilities, reducing their competitiveness. Meanwhile, lower-emission producers like the US are expected to gain market share. US trade policy and EU tariffs on Russian fertilizers will further accelerate sourcing shifts.

Low-emission ammonia will become more price competitive in the medium term, given available price estimates. Blue ammonia is expected to reach cost parity with conventional ammonia by 2030, supported by CBAM-driven incentives. Green ammonia, with its high capital expenditure requirements, may become more attractive in the longer term, depending on what happens with the EU ETS carbon price.

Importers can manage CBAM costs by engaging with suppliers that provide verified emissions data and have decarbonization plans. They can also hedge against carbon price volatility by using proactive CBAM certificate procurement strategies, such as purchasing certificates early, or by using EUA futures contracts to lock in costs.