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Cake day: June 24th, 2023
  • kamenlady@lemmy.worldtoWorld News@lemmy.world•Europe bans Russia’s gas exports, but still buys its gas-based fertiliserEnglish
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    1 day ago

    It worked for me

    FOR ALL Europe’s efforts at economic retaliation to punish Vladimir Putin for the war on Ukraine, one type of merchandise unloaded at European ports is still often stamped “Made in Russia”. The EU committed on December 3rd to end all imports of Russian natural gas by September 2027, and the quantities it buys have already been slashed. But it continues to buy Russian fertiliser that is made from natural gas—more of it, for some types, than before the war. Plant food is a much less lucrative export than energy for the Kremlin, but it nonetheless renders Europe’s food security dependent on supplies from its enemy. And rising EU tariffs that are intended to render Russian fertiliser uncompetitive may not do the job.

    Before its full-scale invasion of Ukraine in February 2022, Russia was supplying about 30% of all fertilisers bought by European farmers, nitrogen-based and otherwise. Imports dipped after the invasion, and Europe placed sanctions on a number of executives at Russian fertiliser companies. But it soon made clear that the companies themselves, and the commodities they sell, were exempt. Imports then rebounded: by the second quarter of 2025 Russia’s share of the European market rose to a third. In June the bloc imported a million tonnes, the highest monthly tally in a decade. The trade is most often intermediated by brokers in Switzerland or the Gulf.

    Russian fertilisers are cheap, plentiful and nearby. Nitrogenous fertilisers— the most widely used kind—are produced by turning natural gas into hydrogen, which is combined with nitrogen to make ammonia. This can then be turned into various kinds of plant food. In other words, Europe is ending its imports of the raw stuff but still importing a product made using it. The country also has huge deposits of phosphorus and potassium, which are used in other kinds of fertiliser. Overall Russia churns out a fifth of all the fertiliser in the world.

    Europe’s reluctance to stop buying from Russia was largely down to its beleaguered farmers. Fertilisers constitute 15-30% of their input costs. Those costs rose significantly between 2020 and 2025 due to the covid pandemic and wars in Ukraine and the Middle East. Meanwhile grain and produce prices have fallen. In 2024 protesting farmers drove convoys of tractors into several European capitals, including Brussels. The EU fears that disrupting the fertiliser supply would again expose it to their wrath.

    There are two ways for Europe to stop paying Russia billions for fertiliser while it bombs Ukrainian cities. One is to ramp up domestic production. Before the invasion, the continent had 120 fertiliser factories. These met about 70% of its need for nitrogenous fertilisers in 2020, but they relied on Russia either for natural gas or for ammonia. After the invasion, when Russia’s gas pipelines were shut off and prices spiked, Europe cut its production by 70%. Barely half of that capacity has returned, reckons an industry insider; Europe’s plants supply perhaps half of its fertiliser now. But investors are reluctant to back more European production, in part because of the EU’s costly environmental rules.

    A second solution is to find alternative suppliers. Egypt and Algeria are big exporters of nitrogen-based fertilisers. Morocco exports phosphorus-based ones. Trinidad and Tobago exports ammonia. But these countries are all more expensive than Russia, especially for the nitrogen-based kind: restrictions on buying Russian natural gas have left the country with a surplus of the stuff to convert into fertiliser, pushing prices down.

    Last July, hoping to push importers to find non-Russian sources, Europe imposed punitive tariffs on Russia’s nitrogenous fertilisers. But the measures are very gradual: they started at €40 ($46) for each tonne of nitrogenous fertiliser. That is only a modest levy for products which, in the months before the first tranche of tariffs was imposed last July, cost about $400 to $700 per tonne. The tariff goes up to €60 per tonne next July 1st, and will eventually rise to €315 per tonne after mid-2028. But if fertiliser costs are deemed to be rising too fast, the rate will be dialled back. Imports have dropped significantly since July, but warehouses still have plenty of cheap Russian stock that was imported before the tariffs took effect. Potassium and phosphorus are subject to much lower tariffs: the commission argues, somewhat questionably, that buying them is less likely to fund Russia’s war machine, because they are made from rock salts rather than from natural gas purchased from Gazprom, the state-owned gas monopoly.

    If the tariffs are maintained, they should eventually price Russian nitrogenous fertiliser out of the European market. But prices from other suppliers will increase too as of January 1st, when the EU’s carbon border adjustment mechanism (CBAM) kicks in. The CBAM imposes tariffs on imports of fertilisers that use carbon-intensive production processes to make ammonia for fertilisers. Farmers fear they will end up footing the bill, and are planning a protest in Brussels on December 18th.