Wooden panels: concerns over urea being subject to CBAM, costs up by 40–60 per cent

There is still no resolution for wood-based panel manufacturers, who have been calling for months for urea to be excluded from the list of materials subject to the CBAM: introduced on 1 January, the Carbon Border Adjustment Mechanism is an EU regulation that imposes a tax on imports of raw materials and semi-finished products whose production generates high levels of CO2. These include urea, a natural gas derivative used primarily in agriculture as a fertiliser (85 per cent), but also in the panel industry as a base for the production of adhesives.

The vote by the European Parliament’s Environment Committee on the revision of the regulation, which took place on Monday 6 July, confirms that urea is among the raw materials subject to the new carbon border adjustment mechanism, and the level of concern regarding the potential impact on European board manufacturers – and, by extension, on the entire timber and furniture supply chain – has risen even further.

Assopannelli, the FederlegnoArredo association representing companies in the sector, has expressed concern at the emerging trend which, in effect, weakens strategic manufacturing supply chains.

“We cannot accept that decisions taken for environmental reasons – and whose objectives we therefore support – should result in a further weakening of the competitiveness of European businesses, without there being any concrete supply alternatives within the Union,” reads a statement published by the association, which for months has been drawing the attention of Italian and European institutions to the negative consequences that such measures have on the sector, specifically calling for ‘greater pragmatism and flexibility in the application of the regulation, advocating the introduction of temporary suspension mechanisms in exceptional circumstances and, above all, the exclusion of urea from the scope of the CBAM, as well as measures to protect downstream industries that will suffer disproportionate economic impacts’.

“Urea is a strategic raw material for the production of resins and adhesives used in wood-based panels, accounting for around 43 per cent of direct production costs,” explains Fantoni, president of Assopannelli. The entry into force of the obligation to purchase CBAM certificates from January 2026 could result in an additional cost for urea ‘of between 40 and 60 euros per tonne in 2026 alone, and result in increases in panel costs of around 10–12 per cent by the end of the first four years of implementation,” adds Fantoni. This additional burden would not be limited to panel manufacturers, but would spread throughout the entire value chain, affecting the competitiveness of furniture and interior design companies and, inevitably, the final prices for consumers.”