The Impacts of the EU Carbon Border Adjustment Mechanism on Agriculture

Abstract of the paper presented at the 18th EAAE Congress in Bonn in 2025. This study assesses the implications of the EU Carbon Border Adjustment Mechanism (CBAM) for the agricultural sector, focusing on fertilizer markets through an integrated modeling approach combining the global computable general equilibrium model MAGNET and the EU-focused partial equilibrium model CAPRI. Results indicate that CBAM and the EU Emissions Trading System (ETS) jointly drive a 21% decline in EU mineral fertilizer production and a 37% reduction in imports, contributing to a global greenhouse gas (GHG) emissions decrease of over 570 million tonnes of CO₂eq. Within the EU agricultural sector, higher fertilizer prices lead to a 22% reduction in nitrogen fertilizer use and a 5.4% decline in agricultural GHG emissions (22 Mt CO₂eq), with limited evidence of land-use change or biodiversity loss. Although regional differences in production costs and income impacts emerge, global carbon leakage remains minimal, suggesting that CBAM effectively complements the ETS in curbing emissions and reinforcing the EU’s climate policy objectives. Keywords: Carbon Border Adjustment Mechanism (CBAM), Fertilizer markets, Greenhouse gas (GHG) emissions, EU Emissions Trading System (ETS), EU-Agricultural Income and production Further information ACT4CAP27 is a European research project aiming to enhance analytical capabilities, tools, and collaborative technical infrastructure within the policy modelling community, to provide support for evidence-based EU agri-food policies post-2027. ACT4CAP27 Project coordination: Wageningen Economic Research, The Hague, NLContact: [email protected] | Website: https://act4cap27.eu/ Project duration: 1 March 2024 – 28 February 2029 Funding acknowledgement ACT4CAP27 is funded by the European Union. Horizon Europe Grant Agreement No. 101134874. Views and opinions expressed are however those of the authors only and do not necessarily reflect those of the European Union or the European Commission. Neither the European Union nor the granting authority can be held responsible for them.