EU keeps carbon border rules

The European Commission kept the EU’s carbon border mechanism in place on May 19 as it unveiled a fertiliser action plan aimed at easing a price shock linked to supply disruptions and the closure of the Strait of Hormuz. The decision left intact one of the bloc’s flagship climate-trade tools even as farm groups and some politicians argued it was adding to input costs. In parallel, a separate Commission draft published on May 13 set out how carbon prices paid outside the EU could reduce importers’ obligations under the Carbon Border Adjustment Mechanism, or CBAM, while limiting the use of certain international credits. Together, the two moves show Brussels trying to preserve the structure of CBAM while offering targeted relief elsewhere. ### Why did Brussels refuse to suspend CBAM for fertilisers? European Commissioner for Agriculture Christophe Hansen said on May 19 that scrapping CBAM for fertilisers would be a “false good idea,” arguing that domestic producers would face unfair competition from imports made under weaker environmental rules. Euronews reported that CBAM would apply to roughly 45% of EU fertiliser imports, a figure Hansen cited in defending the policy. (commission.europa.eu) The Commission’s own fertiliser plan instead promised exceptional financial support, a new liquidity scheme, incentives for more efficient nutrient use and steps to support domestic fertiliser production and alternatives such as organic and bio-based products. Commission President Ursula von der Leyen said the plan would back farmers while accelerating “sustainable, home-grown solutions.” (euronews.com) ### What does the new CBAM draft change for importers? A Commission draft published on May 13 sets out how importers can deduct carbon prices effectively paid in third countries from their CBAM bill, according to Fastmarkets. The same draft would allow the use of Article 6 credits under the Paris Agreement, but only up to 10% of embedded emissions, with the rule applying from January 2026, Fastmarkets reported. (commission.europa.eu) The EU’s taxation and customs department says CBAM enters its definitive regime on January 1, 2026. Importers above the 50-tonne threshold must become authorised CBAM declarants, buy CBAM certificates from national authorities and surrender certificates corresponding to the emissions embedded in imported goods. If they can prove a carbon price was already paid during production abroad, that amount can be deducted. (fastmarkets.com) ### Why are farmers pushing back now? The Irish Farmers’ Association said CBAM would cost EU farmers almost 900 million euros in 2026, according to RTÉ. IFA President Francie Gorman said the tax had been imposed on farmers even as fertiliser prices had “more or less” doubled, and he criticized the Commission for refusing to reverse course. (taxation-customs.ec.europa.eu) Irish MEP Billy Kelleher said in Strasbourg on May 19 that rising fertiliser prices were putting pressure on farmers and feeding into food inflation, and backed a short-term suspension of CBAM and other policies he said were adding costs. The Commission has acknowledged those concerns by promising closer monitoring of how ETS and CBAM costs move through the supply chain, Euronews reported. (rte.ie) ### How is Brussels trying to soften the price shock without changing the carbon levy? The Commission said on May 19 that it would strengthen market monitoring, assess stockpiling options and launch an EU fertilisers value-chain partnership bringing together producers, farmers and member states. It also said member states would be encouraged to use existing Common Agricultural Policy envelopes more flexibly and that the fertiliser sector should have equal access to funding for green innovation and modernization. (euronews.com) RTÉ reported that the action plan was launched in Strasbourg by Agriculture Commissioner Christophe Hansen and Commissioner for Cohesion and Reform Raffaele Fitto. The Commission said more information would be provided through its published press materials and questions-and-answers documents tied to the May 19 fertiliser package. (rte.ie) (commission.europa.eu)