EU publishes CBAM emergency brake guidance after fertilizer backlash

The European Commission published detailed guidance Jan. 8 on a new emergency brake mechanism for its Carbon Border Adjustment Mechanism, clarifying how it could temporarily suspend CBAM on goods, including fertilizers, if market disruption occurs, following political pressure from agriculture ministers over food price inflation concerns.

Article 27a of the CBAM Regulation explains how the Commission could remove goods from the scope of CBAM through a delegated act if their inclusion causes "severe harm to the [EU] internal market due to serious and unforeseen circumstances related to the impact on the prices of goods."

The mechanism would allow retroactive suspension, potentially back to Jan. 1 when CBAM's definitive phase began.

The clarification comes after Commissioner Maros Sefcovic confirmed Jan. 7 that fertilizers will remain within CBAM scope while noting the Commission will assess temporarily suspending their inclusion should the carbon border tax lead to significant inflationary pressure on food prices.

French and Italian agriculture ministers had pressed for fertilizer exemptions during a Jan. 7 meeting, citing concerns over farmer costs and food security. The Commission also announced a temporary tariff reduction on some fertilizer products, which aims to "broadly compensate the impact of CBAM" on affected sectors, according to Sefcovic .

Price impact

Prices across the European fertilizer complex have been broadly stable since late December, with high inventories dampening any incentive for new transactions. Uncertainty over the status of CBAM, which was dogged by persistent rumors of a potential postponement even before the ministerial meeting on Jan.7, further dulled interest in trading.

A fertilizer distributor in the Benelux area said following the meeting on Jan. 7 that "the news is having an impact on the market... My confidence to trade now has evaporated."

Prices of nitrogen fertilizers in Europe rose during Q4 2025 on higher demand from buyers stockpiling cargoes ahead of the imposition of CBAM charges.

Calcium Ammonium Nitrate 27% prices on a CIF inland Germany basis reached Eur350/mt on Dec. 24, up from Eur300/mt at the beginning of the quarter, according to Platts data.

Under the proposed Article 27a, which requires approval by the European Parliament and Council, the Commission would gain power to temporarily remove any goods listed in CBAM's Annex I through delegated acts.

Legal framework

"If Article 27a is adopted by the co-legislators, the Commission would assess whether there is relevant evidence showing that the impact of the CBAM on the price of certain goods causes severe harm to the [EU] internal market," the guidance says.

Article 27a could apply to any goods covered by CBAM, including aluminum, cement, electricity, fertilizers, iron and steel, and hydrogen.

"Article 27a is an emergency safety valve, not a policy reversal. It allows the Commission to temporarily remove a product from CBAM where there is clear evidence that CBAM is causing severe harm to the EU internal market due to serious and unforeseen price impacts," Dan Maleski, a senior environmental markets consultant and CBAM lead at Redshaw Advisors.

For importers who purchased CBAM certificates during retroactively suspended periods, the Commission would provide full reimbursement. However, this scenario cannot occur in 2026, as CBAM certificates only become purchasable from Feb. 1, 2027, as per Article 20 of the regulation.