Final CBAM regime in 2026: Italy and France challenge EU climate policy
The European Commission has rejected Italy and France’s requests for an immediate suspension of the Carbon Border Adjustment Mechanism for imported fertilizers. The CBAM in 2026 has entered its definitive regime, which will lead to the first tangible reduction of free allowances for protected sectors.
“This is needed to avoid a strong impact on agricultural production costs; the situation has been aggravated by the war in the Middle East and the consequent increase in gas prices and difficulties in fertilizer imports due to supply chain slowdowns, factors that put pressure on companies already affected by years of difficulties and ideological impositions,” stated MASAF in a note. Instead of CBAM, “Rome and Paris are calling for an immediate compensation mechanism, financed with available resources from the current Multiannual Financial Framework, to neutralize costs for farmers in the short term.”
The Italian and French governments had already requested the exemption for fertilizers in January. The Irish Undersecretary for Agriculture, Timmy Dooley, shares this view and warned that the prospects for farmers would be “bleak.”
Suspending the border carbon levy could worsen import dependence under CBAM
During a meeting of EU Agriculture Ministers in Brussels, Commissioner Christophe Hansen acknowledged that high fertilizer prices are impacting the agricultural sector but rejected the request. Suspending the border carbon levy, according to Hansen, “risks aggravating import dependence.” However, the Commissioner explained that the EU is considering a plan to address critical issues in fertilizer markets and will convene a meeting on April 13 with the industry. The meeting will discuss measures to support European fertilizer production and possible tools to reduce foreign dependence. For Brussels, the best choice would be to use revenues from CBAM to stabilize prices for farmers.
However, EU countries are negotiating a safeguard clause that could allow temporary exemptions in the coming years for CBAM, should amendments to the rule be approved. European producers of low-carbon ammonia are concerned about the possible exemption of fertilizers from the border carbon tax, as they would be negatively impacted. The CBAM mechanism favors imports of “green” ammonia, as these are subject to lower emission taxes compared to those paid for traditional fossil fuel-based ammonia.