Green ammonia pricing in 2025–26: CBAM takes effect as the grey–green spread narrows

Green ammonia pricing has never been simple to track. The market is thin, with volumes currently traded well below the scale at which systematic price discovery occurs. Most transactions take place under long-term bilateral agreements rather than spot markets, and the terms of those agreements are almost never publicly disclosed. The price indicators that exist are principally model-based estimates derived from renewable electricity costs, electrolyser capex, ammonia synthesis, and capital recovery assumptions — not observed transaction data.

With those limitations acknowledged, the directional signals from 2025 and into 2026 are consistent and increasingly meaningful. Green ammonia prices in Germany reached approximately $860 per tonne CFR in Q1 2026, according to publicly available assessments. The United States is indicated at $807 per tonne, Canada at $875, Australia at $856, and India at $722. These figures are not directly comparable — they reflect different production cost structures, transportation assumptions, and certification requirements — but they establish a range that is substantially below the $1,200 to $1,500 per tonne estimates that were common three to four years ago.

What CBAM has changed

The European Union's Carbon Border Adjustment Mechanism came into full force on 1 January 2026, covering hydrogen, fertilisers, aluminium, iron and steel, cement, and electricity. For the ammonia market, its impact operates through two channels: it imposes a direct cost on imports of conventional ammonia from carbon-intensive production locations, and it provides a structural demand signal that increases the relative attractiveness of low-carbon ammonia for European buyers.

CBAM charges on major conventional ammonia exporters to the EU range between $50 and $200 per tonne in 2026, based on EU default emissions values for exporting nations. For the most carbon-intensive producers — those using coal-based production, primarily in China and parts of the Middle East — the CBAM charge is at the higher end of that range. For producers in countries with lower grid emissions intensity, the charge is lower, but still material. The European Commission's CBAM certificate price for Q1 2026 was set at €75.36 per tonne of embedded CO2, reflecting the current EU ETS carbon price.

The effect on trade flows is already observable. European ammonia imports from several major suppliers were down materially in January and February 2026 relative to prior years, with front-loading in Q4 2025 — before CBAM came into effect — followed by a marked reduction in Q1 2026 volumes. Whether this reflects buyers switching to lower-carbon supply, reducing inventory drawdowns from pre-CBAM purchases, or simply a structural reduction in demand from European conventional ammonia producers facing their own competitive pressures is not yet clearly separated in the available data.

Regional pricing dynamics

India's green ammonia price at $722 per tonne reflects the country's competitive renewable electricity costs and the policy support provided by the National Green Hydrogen Mission's SIGHT reverse auction programme. SECI's SIGHT rounds in 2025 achieved record-low bid prices that, for the first time, approached cost parity with grey ammonia under long-term contract conditions. India's trajectory — declining costs driven by solar capacity expansion, improving electrolyser procurement, and policy certainty — points towards prices below $600 per tonne by the late 2020s under favourable scenarios.

Australia's indicative price of $856 per tonne sits close to the German CFR figure, reflecting high renewable resource quality but elevated electrolyser and balance-of-plant costs, more expensive capital, and significant shipping distances to Asian and European demand centres. Australian projects will need sustained cost reduction and long-term offtake agreements at volumes that justify project finance to close the remaining gap.

The United States figure of $807 per tonne is heavily influenced by the IRA's Section 45V production tax credit, which provides up to $3 per kilogramme of clean hydrogen produced — equivalent to approximately $525 per tonne of ammonia at typical conversion ratios. Without the 45V credit, US green ammonia production costs would be significantly higher than the current price indication suggests. The credit is project-specific and subject to the additionality and temporal matching requirements that determine which projects qualify for the full credit level, introducing meaningful uncertainty into US project economics as qualification guidance continues to be developed.

The grey–green spread

The price premium of green over conventional grey ammonia has been the central commercial obstacle to deployment at scale. Grey ammonia prices in Europe in 2025 and early 2026 have ranged approximately between $300 and $480 per tonne, reflecting natural gas input costs and European gas market conditions. At a green ammonia price of $860 per tonne in Germany, the premium over conventional product is roughly $380 to $560 per tonne — a gap that cannot be bridged by price alone in the near term.

What CBAM begins to do — and what a fully implemented IMO Net Zero Framework would accelerate significantly — is impose costs on the conventional product that reduce the effective premium. A CBAM charge of $100 to $200 per tonne on grey ammonia imports, combined with EU ETS costs on domestically produced conventional ammonia, meaningfully compresses the economic gap. If the IMO framework is adopted at MEPC 85 in autumn 2026, with a global fuel standard and emissions pricing mechanism that applies to maritime bunker fuel purchasing, the economics for ammonia as a shipping fuel improve further.

What the pricing trajectory means for project economics

The question for project developers and their lenders is not the current spot price indication but the expected price over a 20 to 25-year project life. Long-term offtake agreements — the instruments that actually enable project finance — are being negotiated at prices that reflect this longer view, typically between $600 and $900 per tonne depending on volume, certification standard, delivery location, and inflation linkage.

The Uniper and AM Green agreement signed in January 2026, covering up to 500,000 tonnes per year from 2028, provides a partial data point: the existence of the agreement suggests that terms within this range were acceptable to both parties, though the precise price remains commercially confidential. As more long-term agreements are disclosed — even partially — they will gradually provide the price discovery signal that the sector currently lacks.

The Observatory's assessment is that green ammonia pricing is on a consistent downward trajectory driven by renewable electricity cost reductions, electrolyser scale and learning curves, and improving project execution. The CBAM effect provides a meaningful structural tailwind in the European market. The remaining challenge is closing the last portion of the grey–green premium in a way that is policy-supported but not entirely policy-dependent — a condition that requires volumes to grow, supply chains to mature, and the market to develop the liquidity that enables genuine price discovery.