Food & Climate
The EU carbon tax (the Carbon Border Adjustment Mechanism (CBAM) is confusing the Egyptian fertilizer industry, with expectations that it will be the biggest loser from its implementation, starting in January 2026, as it is expected to negatively impact Cairo’s exports to Brussels.
A conference this week, hosted by the General Authority for Investment in Cairo, titled “Developing Fertilizer Plants, Complying with EU Rules, and Publishing Standards for the Carbon Border Mechanism (CBAM),” revealed the extent of the confusion within the industry.
Many conference participants, both private sector and government representatives, expressed this confusion, as neither the implementation methods nor the precise expected losses are clear.
This comes despite some companies having begun submitting reports to the European Union since the beginning of 2025 regarding the emission levels of their products, as part of the anticipated implementation of the carbon tax (CBAM) and as a condition for export operations this year, according to a company official who spoke to “Food & Climate” platform, whose representative attended the conference.
Fertilizer exports are the most affected by the EU carbon tax
Dr. Dalia El-Hawary, Vice Chairman of the Egyptian General Authority for Investment and Free Zones (GAFI), stated during the conference that the GAFI is organizing conferences related to environmental sustainability, targeting the private sector to address the repercussions of the implementation of the Carbon Border Adjustment Mechanism (CBAM).
The new requirements it imposes on private sector manufacturers and exporters could impact thousands of Egyptian companies in sectors affected by the mechanism, particularly in emission-intensive sectors, most notably fertilizers, iron and steel, aluminum, and cement.
Egypt’s exports to the EU of products covered by the carbon tax represent 6.94% of total exports and 21.8% of Egypt’s exports to the EU.
Fertilizer exports to the EU also account for 46% of the total value of Egyptian fertilizer exports. Dr. Narmin Abu El-Atta, Advisor to the Minister of Industry for Sustainable Development, presented the results of a study on this matter. The study revealed a worst-case scenario in which the cost of the carbon tax on four Egyptian industries would reach $28 billion over 10 years, while a better-case scenario would reach $7.3 billion over the same period.
Abu El-Atta stated that the Egyptian fertilizer industry would be the largest victim, especially after gaining greater market share in Europe following the outbreak of the Russia-Ukraine war in 2022, and the difficulty of Russian products accessing markets due to Western sanctions.
The study indicated that African countries would be more affected than the rest of the world by the European carbon tax, as the continent’s exports to Europe are expected to decline by 7%, GDP by 12%, and fertilizer exports by 7%.
Abu El-Atta emphasized the lack of clarity on how this tax is calculated, noting that Egypt has become a member of the European International Carbon Tax Committee, enabling it to keep abreast of various developments.
An Opportunity to Protect the Environment
Dr. Sherif El-Gebali, Chairman of the Chamber of Chemical Industries, said that Egypt ranks second after Russia in terms of fertilizer exports to the European market.
During the conference, El-Gebali explained that the EU carbon tax poses challenges that require urgent action by all concerned parties to propose practical solutions to address the mechanism’s repercussions.
He added that several analysts expected the cost of implementing the mechanism on Egyptian fertilizer exports to range between 5% and 20%, and that the price of a ton of carbon dioxide emissions would reach 50 euros.
He revealed the lack of clarity regarding measuring carbon emissions, as each exporter will be required to detail the emissions in each shipment, which entails many complex details that could confuse export activity.
El-Gebali called for the need to initiate a comprehensive and accurate technical assessment of each fertilizer plant in Egypt to determine the current status of each facility and its readiness to comply with the requirements of the Carbon Adjustment Mechanism (CBAM) to ensure continued competitive access to foreign markets.
Despite industry concerns and the government’s anticipation of the potential outcomes of the EU carbon tax, Dr. Ahlam Farouk, head of the Central Administration for the Protection and Improvement of Industry and Energy at the Egyptian Environmental Affairs Agency, expressed her happiness with this mechanism and its implementation, as it represents an opportunity for the Egyptian environment to regain its health and vitality after decades of damaging factory pollution.
She said, “Since 2000, we have been trying to push factories, especially fertilizers, to adhere to environmental protection, to no avail. But now this tax will force them to implement environmental protection measures.”