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Yara will reconsider US ammonia project if EU stops carbon levy

EU considers suspending carbon border levy on fertilisers

Farmers pressured to move ahead

Yara: Uncertainty puts US plans for low-carbon ammonia in doubt

By Kate Abnett

BRUSSELS - Yara International's CEO said that if the European Union were to suspend its carbon?border levy, it would force the company to reconsider a low-carbon ammonia plant in the U.S.

The EU's Carbon Border Levy, which went into effect on 1 January, imposes CO2 emission fees on imports such as fertilisers and steel to prevent foreign producers from gaining an unfair advantage over European companies that have to pay for their emissions.

The European Commission announced last week that it would publish guidance on how to temporarily suspend the carbon fee for fertilisers if "unforeseen" circumstances in the market justified it.

Svein Holsether, CEO of Yara, said that the uncertainty has thrown investment plans for low-carbon energy into chaos. Yara intends to make a final decision by summer on a joint project with Air Products in Louisiana. The aim is to produce ammonia low in carbon emissions in Louisiana and sell it to fertiliser producers in Europe.

Holsether stated in an interview that "if there is a suspension or cancellation of CBAM we will not be able go forward with what we intend to invest in the U.S."

CBAM (EU carbon border levy) improves the case for low-carbon imports of ammonia by requiring them to pay lower emission fees than on "traditional fossil fuel-based" ammonia. If Brussels suspends this mechanism, Yara could instead invest in conventional ammonia.

"That's a question we should rethink: Is it possible to decarbonise when there is no market for low-carbon goods? Holsether stated that it was unlikely.

Yara will also reassess viability of projects that are low-carbon in Europe. These were developed under the assumption that the border levy would equalize the playing field between more expensive products and those with lower carbon emissions.

Holsether stated that "everything must be reevaluated" in light of the new information.

The Commission did not specify what conditions could lead to a suspension. Brussels announced last week that it would temporarily reduce import tariffs for some fertilisers.

Wopke H. Hoekstra, EU Climate Commissioner, said that temporary measures are needed to deal with the challenges faced by farmers.

Hoekstra stated in an interview last week that the goal was to keep the current design. Reporting by Kate Abnett. Mark Potter (Editing)

(source: Reuters)