A group of European clean hydrogen industry associations is calling for the removal of a proposed measure under the EU's Carbon Border Adjustment Mechanism (CBAM) that could temporarily suspend certain products, including fertilizers, from its scope.
The European Commission proposed Article 27a in December. It stipulates a temporary suspension could be issued if CBAM causes "severe harm to the Union internal market due to serious and unforeseen circumstances related to the impact on the prices of goods", but is yet to be accepted by the European Parliament or European Council.
Accepting the clause would undermine "market trust in the CBAM, the EU's carbon pricing system and the overall credibility of the EU energy and climate regulatory framework," the groups said in an 11 February letter to the parliament's environment, climate and food safety committee.
Hydrogen Europe, Renewable Hydrogen Coalition and Hydrogen Council were among the signatories.
CBAM has been an important driver of investment in decarbonisation vectors and products such as clean hydrogen, ammonia and green steel, according to the groups. But they said the suspension measure risks compromising efforts already made because it "lacks any foreseeable, and time-bound conditions" to be administered.
Weakening the scope of CBAM could "further increase long-term exposure to fossil fuel price shocks" and prevent investments in renewable and low-carbon ammonia and fertilizer projects, they said.
The proposed article already "had an immediate, tangible and materially disruptive effect on the fertilizer markets" with industry participants being hesitant to close contracts and negotiations being delayed, the groups said.
The measure could be "even more consequential" for the long-term market prospects of projects under initial development stages. This is because "developers and investors must decide today how to price future CBAM exposure over asset lifetimes of 15 to 30 years," the groups said.
"First movers, both in the EU and globally, are undermined if compliance undertaken in good faith today can be revisited retroactively tomorrow," they concluded.
