EU considers additional free carbon permits for fertilizer producers amid supply shock

The European Commission is considering granting additional free carbon emissions permits to fertilizer producers that increase low-carbon and domestic production, according to a draft policy proposal seen by Reuters. This measure is part of broader efforts to stabilize Europe’s fertilizer sector amid rising costs linked to the Iran conflict and disruptions in the Strait of Hormuz.

The draft proposal, expected to be published on Tuesday, outlines support measures for fertilizer manufacturers and farmers affected by higher input costs. Options include expanding free allocations under the EU carbon market to reduce compliance costs for fertilizer companies. These additional permits would be linked to increased production of bio-based, circular, or low-carbon fertilizers to strengthen Europe’s domestic supply.

The proposal is part of a broader review of the EU Emissions Trading System scheduled for July. The draft also suggests additional subsidies for farmers most affected by higher fertilizer prices. The document is still under discussion and may change before publication. A European Commission spokesperson declined to comment.

Source: Reuters