Impact of EU Carbon Regulations on Egypt's Fertilizer Exports
The EU's Carbon Border Adjustment Mechanism (CBAM) is set to challenge Egypt's fertilizer export competitiveness, potentially transferring $200-$500 million in tax revenues to the EU by 2034. Without a domestic carbon tax, Egyptian exporters could face significant financial burdens, affecting export revenues and GDP growth.
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The EU's CBAM became fully operational on January 1, 2026, imposing charges on carbon emissions for imported goods. Egyptian fertilizer exports to the EU reached $993 million in 2023, down from $1.6 billion in 2022, with the sector's value decreasing from $3.5 billion in 2022 to an estimated $2.1 billion in 2024 due to production issues and natural gas supply disruptions.
Without a domestic carbon tax, exporters may incur costs related to CBAM certificates, leading to potential financial burdens of $317 million annually. The report forecasts a slight negative impact on Egypt's GDP in 2025, estimating losses of $192.2 million.
The sector, which contributed 5.5% to total exports, relies on natural gas and is shifting to renewable energy sources. The transition to low-carbon practices could improve competitiveness and stabilize fertilizer exports at 889,000 tons annually post-2026.
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