Hydrogen Europe seeks stronger EU measures, certification standards and incentives to accelerate green fertilizer production, investment and industrial competitiveness.
Hydrogen Europe is advocating for more robust measures within the European Union's Fertiliser Action Plan to accelerate the transition to green fertilizer production. The organization generally commends the European Commission's initial steps, particularly the focus on lead markets for fertilizers, blending requirements, and labeling schemes, as well as the assessment of state aid for low-carbon fertilizers. However, Hydrogen Europe believes the plan currently lacks the necessary scale, certainty, and price signals to truly establish green ammonia as a significant industrial success story in Europe.
A critical missing element, according to Hydrogen Europe, is a strong certification mechanism with clear criteria to foster a unified market for green fertilizers across the EU. They emphasize the urgency of rewarding clean fertilizers and agreeing on certification standards for both environmental benefits and European industrial advancement. The organization also welcomes the Commission's reconsideration of altering the Carbon Border Adjustment Mechanism (CBAM) scope for fertilizers, noting that regulatory certainty around CBAM is vital for the viability of clean fertilizer projects within and outside the EU. However, concerns are raised that proposed flexibilities for the EU Emissions Trading System (ETS), even if conditional on increased homegrown low-carbon fertilizer production, might send incorrect price signals to green ammonia producers, potentially slowing the phase-out of free allowances and diluting investment incentives for low-carbon products.
The push for green fertilizers is rooted in several key causes and has significant geopolitical and economic implications. Europe's current fertilizer production is heavily reliant on natural gas, which serves as both a feedstock and a major energy source, making the industry vulnerable to volatile energy prices and dependence on fossil fuel imports, particularly from Russia. This dependence has been starkly highlighted by recent geopolitical crises, exposing the fragility of a fossil fuel-dependent global energy system. The high and volatile energy costs put European producers at a structural disadvantage in global markets and contribute to carbon leakage as production shifts to regions with less stringent environmental regulations.
Transitioning to green hydrogen-based ammonia, produced using renewable energy, offers a viable pathway to reduce this reliance on fossil fuel imports and stabilize supply chains, thereby enhancing Europe's energy independence and food security. The EU has set ambitious targets to produce and import 10 million tonnes of renewable hydrogen each by 2030, recognizing its role in decarbonizing energy-intensive industries like fertilizer production. However, current domestic renewable hydrogen production in Europe is significantly below these targets, necessitating substantial imports and accelerated development of infrastructure and funding.
Economically, the shift to green fertilizers involves additional costs for low-carbon alternatives. Therefore, robust demand-side measures, clear regulatory frameworks, and financial de-risking tools are crucial to make low-carbon industrial production competitive at scale. Hydrogen Europe, along with other organizations, advocates for EU-wide harmonized product standards, mandatory green public procurement, and demand-side mandates to create a durable private demand for green products. Such measures are expected to drive reindustrialization, attract investment, retain jobs, and boost European competitiveness in a decarbonized economy. The goal is to secure a domestic supply of decarbonized fertilizers for decades, aligning with the EU's climate objectives and strategic autonomy.
