The competitiveness of Canada's fertilizer industry is currently under threat. Our fertilizer producers and manufacturers currently face a disproportionate regulatory burden on carbon pricing relative to our global competitors.
Fertilizer production facilities are emissions-intensive and trade-exposed, putting them at high risk of competitiveness and carbon leakage impacts.
Fertilizer Canada completed a study with PwC last year to quantify the impact of Canada's current carbon pricing regulations on our sector. The study showed that the fertilizer sector is facing up to $1.32 billion in cumulative carbon costs from 2025 to 2030. Nearly 60% of the overall carbon pricing burden faced by Canadian fertilizer producers stems from indirect carbon costs applied to energy and electricity inputs, as well as transportation fuels, which are passed down costs to Canadian fertilizer producers and are beyond the industry's control.
Unlike our major international competitors, including Russia, Belarus and the U.S., Canada is one of the few countries to apply both direct and indirect carbon pricing to fertilizer production, energy inputs and transportation. This results in substantial cost increases to production that can't be passed down to customers in an intensely competitive global commodity market.
In other words, none of the other major fertilizer-producing nations competing in North America have implemented carbon pricing, which puts us at a competitive disadvantage.
Of course, the cost of carbon alone doesn't tell the whole story. If the cost of carbon is weighing down one side of the see-saw, the other side could be balanced by effective carbon credit markets, investment incentives and lower-carbon premiums. Unfortunately, the see-saw is not balanced for the fertilizer sector in Canada. We don't have an established global pricing premium on lower-carbon commodity fertilizer products. The investment tax credits have been designed with constrained scope and timelines, and we lack stability in the current carbon credit markets.
Given the strategic importance of fertilizer, it is essential to protect and strengthen our industry's competitiveness.
We are looking for government to recalibrate industrial carbon pricing and align the investment readiness of the fertilizer production sector to provide some relief from these impacts of carbon pricing.
While maintaining provincial jurisdiction, this recalibration should recognize fertilizer production in the highest-risk category of emissions-intensive and trade-exposed sectors and provide relief from tightening factors. For nitrogen manufacturers, we are also seeking relief on how industrial process emissions are captured for use as feedstock.
These changes are needed to address the very real competitiveness challenges we are seeing and to preserve and develop capacity for future investment in clean tech. This will support an environmentally and economically competitive fertilizer sector here in Canada.
We are not alone in raising concerns with the competitiveness of emissions-intensive and trade-exposed sectors. We contributed to a joint brief that was submitted to the committee on behalf of nine industry sectors that raised concerns with the recent discussion paper from ECCC. Our brief recommended a renewed focus on competitiveness, provincial and territorial flexibility, and revenue recycling under Canada's carbon pricing programs.
Thank you for your attention. We welcome your questions.