There are 10 nitrogen fertilizer companies in Egypt with 14 production lines, the majority of which are ammonia/urea plants and only four ammonia/nitric acid/ammonium nitrate plants. In 2020, Egypt produced 6.7 million tons of urea of which 4.7 million were exported making it the world’s 5th largest exporter with 40.00% exported to European Union. The introduction of European carbon border adjustment mechanism (CBAM), which may trigger similar actions in other is a real threat to Egyptian fertilizers exports. According to CBAM, the importer will pay a tax proportional to the difference between ammonia embedded emissions and the free allowance set by relevant regulations. There are general guidelines for estimation of embedded emissions, however, detailed industry specific calculations have not yet been developed. Estimation of ammonia embedded emissions takes into consideration both the fuel used within the ammonia plant system boundary and that used for exported steam and for electricity generation. There will be two different values for ammonia embedded emissions based on whether or not exported energy takes place: 1.62 tCO2/t NH3 in the case of ammonia/urea plants and 2.52 in the case of ammonia/nitric acid plants, where no steam or CO2 exports takes place. Since embedded emissions directly impact the competitiveness of the Egyptian fertilizers, a rigorous methodology is proposed that takes into consideration all these aspects compared to other estimation techniques using different levels of approximation and exclusions. The impact of different decarbonization measures on embedded emissions and CBAM cost is also investigated taking into consideration the phaseout of free allowances.
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