Nitrogénművek, which is Hungary’s only fertilizer factory, announced that it would stop production for an indefinite period after 93 years of activity. The company cited “drastic deterioration of the business environment” as the reason for the closure.

Asked by the Hungarian media, the CEO of the company blamed the Hungarian government’s recent fiscal measures imposed, among others, on “the operators of an installation receiving a significant free allocation of CO2 emission rights.”

Last summer, a tax of €40/tons of CO2 was imposed on major carbon emitters (with annual average verified emissions exceeding 10.000 tons) that “have received a free allocation of emission allowances equal to at least 50% of the average of their verified carbon dioxide emissions.”

Furthermore, the executive decided to impose a 10% transaction fee for any transaction with allowances granted for free when operators decide to sell those EUAs before the compliance deadline, with high impact on the liquidity of those companies.

The extra fiscal burden for Nitrogénművek is estimated at around 20 billion HUF (€53 million) per year, worsening the situation which was already grim for the fertilizer industry faced with higher gas prices.

Beginning in October, the government reduced the rate from 40% to 36% but increased the transaction fee from 10% to 15%. The number of the companies from different industries affected by the fiscal measures was estimated at 45, out of a total of 98 which are subject to EU ETS.