Yara to rethink U.S. ammonia project if EU suspends carbon levy
Yara International would reconsider a planned low-carbon ammonia project in the U.S. if the European Union (EU) goes ahead with a possible suspension of its carbon border levy on fertilizer imports.
The EU's carbon border levy, which took effect on January 1, imposes CO2 emissions fees on imports of fertilizers, steel and other goods to prevent foreign producers gaining an advantage over companies in Europe that must pay for their emissions.
After France and Italy urged more help for farmers facing high fertilizer prices, the European Commission said last week it would publish guidance on how it could temporarily suspend the carbon border fee for fertilizers, if "unforeseen circumstances" in the market justified doing this.
CEO Svein Tore Holsether said the uncertainty had thrown low-carbon investment plans into disarray - including Yara's intended final investment decision by summer on a project with Air Products to produce low-carbon ammonia in Louisiana for fertiliser producers, including in Europe.
"If there is a suspension or a cancellation of CBAM, we would not be able to go ahead with what we intended to invest in the U.S.," Holsether said in an interview.
The EU carbon border levy, known as CBAM, improves the business case for low-carbon ammonia imports, by subjecting them to lower emissions fees than those paid on traditional fossil fuel-based ammonia. If Brussels suspends the mechanism, Yara may instead consider investing in conventional ammonia production.
"That's something we need to rethink then: is it possible to decarbonise if there is no demand for low-carbon products? ... Likely not," Holsether said.
Yara, one of the world's largest fertilizer producers, will also reassess the viability of low-carbon projects in Europe that were developed on the assumption the border levy would level the playing field for more expensive low-carbon products.
"Everything has to be re-evaluated in light of this," Holsether said.
The Commission has not specified what circumstances could trigger a suspension. Brussels also said last week it would temporarily cut import tariffs on some fertilizers.
EU climate commissioner Wopke Hoekstra said that the temporary measures were needed to address challenges facing farmers.
"But the crystal-clear objective is to continue with this design (of the carbon border levy)," Hoekstra said in an interview this week.
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