Energy crisis today – fertiliser and food crisis tomorrow?

Jacob Hansen is Director General at Fertilizers Europe.

In the past weeks, Europe has been hit by sky-high EU gas prices. For the fertilizer industry where natural gas accounts for up to 80% of production costs, the exceptionally high gas prices meant that EU producers were no longer competitive which again led to significant temporary curtailments and plant closures across Europe. There is a real risk that this situation, if not addressed in the short-term, will lead to permanent closures or relocation of our sector outside Europe.

The European Commission communication “Tackling rising energy prices: a toolbox for action and support” is a step in the right direction, however the proposed measures do not reflect the urgency of the need to assist industry.

The EU fertiliser producers operate on the global market. The EU industry has so far successfully managed to compete against the artificially low state fixed gas / fertilizer economies prevalent in Russia, North Africa and the Gulf Co-operation Council (GCC). However, such is the current enormity of the ‘gas cost gap’ compared to the EU’s market gas prices that European producers are no longer able to compete.

Europe needs a thriving domestic fertilizer industry, supplying Europe’s farmers both in the short and long term. The industry is the basis for sustainable food supply in Europe. The current production shortages will lead to lower European fertilizer production which, in turn, could affect next year’s agricultural yield and impact on food prices.  The industry’s CO2 byproduct is widely used in the meat industry, to package and transport fresh food and in beverages. And the industry supplies AdBlue which abates tailpipe emissions keeping heavy duty trucks on the road.

The fertilizer industry continues to be committed to Europe’s decarbonisation efforts. The transition takes very considerable investments, and investments in turn is dependent on income-generating production. The current situation endangers industry’s ability to finance future investments in bringing the necessary climate neutrality in 2050, not just for the fertilizers industry itself, but through investment in ammonia as clean energy carrier for society in general.

The upcoming European Council taking place on 21-22 October where energy prices will be discussed, is an opportunity to ensure a coordinated approach across the EU bloc to soaring energy prices and agreeing on urgent corrective measures for households and businesses. The European fertilizer industry requests corrective measures that will allow to return to conditions whereby EU producers can continue supplying European farmers with high quality and sustainable EU-made fertilisers.

For more information visit EU industry under threat of shutting down - Act now - Fertilizers Europe