Farmers and climate body united in concern over the EU's Carbon Border Adjustment Mechanism
For the Irish Co-operative Organisation Society, an added tax on fertiliser imports into the EU makes food production more expensive.
The EU's Carbon Border Adjustment Mechanism (CBAM) has achieved a rare distinction by uniting farmers and the Climate Change Advisory Council in their concerns about it in Ireland.
For farmers represented by the Irish Co-operative Organisation Society (ICOS), it is simple: according to ICOS president Edward Carr, the CBAM “is essentially a tax on food production".
After leading a delegation to discuss the ICOS pre-budget submission with agriculture minister Martin Heydon, Mr Carr said the minister strongly indicated his support for the removal of fertiliser from the CBAM tax when it commences next January.
CBAM is the EU's tax on carbon emitted during the production of goods which are then imported into the EU. It is designed to create a level playing field, to prevent a competitive advantage in the EU for non-EU products that are cheaper because they come from countries without carbon pricing.
Without CBAM, EU companies could profitably leave Europe and relocate to countries without a carbon pricing scheme.
So next year, CBAM will be levied on imports into the EU of iron and steel, cement, fertiliser, aluminium, hydrogen, and electricity.
For ICOS, an added tax on fertiliser imports into the EU makes food production more expensive, and its demand of the minister was: "No CBAM tax on fertiliser."
For the Climate Change Advisory Council, the fear is CBAM could make Ireland's Climate Action Plan 2025 target of replacing 80-90% of calcium ammonia nitrate fertiliser with protected urea harder to achieve.
Specifically, the council says: "It is imperative that the Government considers contingency measures, to counter any unintended consequences related to the CBAM, and the cost differential between CAN [calcium ammonium nitrate] and protected urea."
Such consequences could arise because more than 60% of urea coming into Ireland originates in North Africa, and will have a CBAM tax newly added to its price.
In contrast, Ireland sources about 60% of imported CAN products from EU producers, and therefore the price of CAN in Ireland already includes carbon pricing.
It is partly due to increased use of protected urea that emissions in Irish agriculture are estimated to have decreased by 4.6%, from 2018 to 2024.
The council has advised the government to use taxation, regulation and incentives to overcome technical and behavioural barriers and get more farmers to switch to protected urea. One of these regulations is a recent amendment to the Good Agricultural Practice Regulations, which has banned the use of granular unprotected urea from next September.
The council says rapid and widespread use of protected urea, instead of CAN, could reduce emissions by 0.42 to 0.55 Mt of CO2 equivalent per year by 2030. Already in 2024, 52.8% of CAN was estimated to have been displaced by different types of protected urea.
"This demonstrates good progress, but an additional push is required to meet the 2025 target".
However, the CBAM, and Ireland's complete dependence on imported chemical fertilisers (production ceased in Ireland in 2002), could make protected urea more expensive, if the CBAM carbon tax is levied on it.
Already, many farmers have reservations about using protected urea, and even more would reject it if the EU's CBAM makes it more expensive.
Of course, this is far from the only obstacle to Irish agriculture reducing emissions by 25% by 2030, to meet the target in the latest Climate Action Plan. To achieve 25%, says the Climate Change Advisory Council, requires urgent acceleration of the roll-out of proven on-farm measures to reduce emissions.
To make matters worse, the separate land use, land use change, and forestry sector remains a significant source of emissions, with forestry likely to have changed from an emissions plus to a minus in 2024. The Darragh and Éowyn storms accelerated this change, with more 26,000 hectares damaged.
The Climate Change Advisory Council said the Government must urgently increase participation in the forestry programme. But trees must not be planted on deep peat soils.
The council said the Government should set annual targets for diversification away from high-emissions activities such as livestock (associated with 93% of agriculture emissions), to bioenergy generation, organic farming, tillage, biodiversity restoration, and afforestation and agroforestry.
The latest Climate Action Plan identified farm diversification actions that could help to deliver a 23% emissions reduction.
However, in bioenergy generation, the Climate Change Advisory Council said biomethane delays have led to a worryingly low level of interest, undermining market confidence and casting doubt over the viability of many funded projects.
The council cited the postponed publication of the Renewable Heat Obligation — however, climate minister Darragh O'Brien has since said it would be in place next year.
Carbon farming is also slow to take shape, and the council said the Government must publish a clear policy position and establish mechanisms for certification, data collection and financial support. It envisages payments to farmers for ecosystem services (including carbon farming actions such as the Suckler Carbon Efficiency Programme, straw incorporation, planting and maintaining hedgerows, and protecting peatlands).
- This article has been updated to clarify that the Climate Change Advisory Council is not opposed to the application of the CBAM on chemical fertiliser trade into Europe. However, the Council has identified possible ‘unintended consequences’ which the government should address.
