The European Commission is preparing to use carbon taxes collected from industry to subsidise farmers struggling with rising fertiliser costs, according to a leaked draft document seen by Euronews.
Nitrogen fertilisers are produced using natural gas, which accounts for up to 80% of production costs. European fertiliser production came under pressure following Russia’s invasion of Ukraine and ongoing disruption in the Middle East, both of which have driven up costs for farmers and increased inflationary pressure on consumers.
Brussels plans to address the problem by recycling revenues from the bloc’s carbon market, the Emissions Trading System (ETS), back into agriculture in an effort to curb rising prices linked to the closure of the Strait of Hormuz, through which around 30% of the global fertiliser trade passes.
"The Commission will propose a targeted financial support mechanism whereby a share of ETS-related revenues will be channelled to farmers to support their accelerated transition to greater use of bio-based (organic) and low-carbon fertilisers," reads the document.
However, the move could provoke backlash from energy-intensive industries, which are required to pay for the carbon emissions linked to their production. Agriculture, by contrast, has so far been exempt from the ETS and now appears set to benefit from its revenues.
