A representative body for European fertiliser producers has said that the industry on the continent is “in full-fledged crisis”.
Fertilizers Europe said over the weekend that sky-rocketing gas prices have led to the curtailment or shutdown of the majority of European fertiliser production.
The group highlighted that the cost of natural gas is eight to 10 times higher in Europe than in the US (and higher in other global fertiliser hubs), and that European producers are unable to compete on the domestic and global market.
Fertilizers Europe called for “urgent and decisive” EU-driven crisis management action to restore fertiliser production.
This, the group said, is key to securing the EU’s strategic autonomy for fertiliser and to ensure Europe’s long-term food security.
With gas prices up over 1,000% since last year, the European fertiliser industry “faces an unprecedented crisis”, the industry body warned.
“The European fertiliser industry is in full-fledged crisis because the European gas market is bust. The record-high prices of natural gas, which represents 90% of industry variable production costs, makes it impossible for European producers to compete,” said Jacob Hansen, Fertilizers Europe’s director general.
“As a result, over 70% of European production capacity has been curtailed. If the situation prevails, we fear that remaining producers could also be affected.”
The group has urged the EU institutions and member states to “take immediate action” to avert an energy and fertiliser crisis.
“The current crisis begs for swift and decisive action from EU and national policy makers for both the energy and fertiliser market,” Hansen said.
He added: “The gas market needs to be looked at to address today’s challenges, support domestic industry, and restore market confidence.
“The policy makers should also seriously consider crisis management policies for the fertiliser industry to minimise long-term repercussions for EU food security.”
Hansen said that moving away from dependency on Russia for energy and raw materials cannot be achieved by “closing plants and moving jobs outside of Europe”.
“An urgent correction of current gas polices is therefore needed to address this very serious crisis. Europe needs a strong domestic fertiliser industry to continue producing food and, in the long run, to develop Europe’s hydrogen economy using green ammonia by the fertiliser industry,” Hansen argued.