Good morning to everyone. I am Maria Gabrielsen. I'm the Head of Investor Relations here in Yara. A big welcome to everyone, both joining online and especially to you joining us here physically in the auditorium. The event is being streamed live and is also recorded for later publishing. Today's agenda, you can see here, it's split into a hybrid event and an all-physical event. We will start with the presentation where Svein Tore will start giving an introduction to Yara and our key strategic priorities for the coming years. We will then hand over to our Director for Market Intelligence, Silje Nygaard, who will take you through the nitrogen market fundamentals. Before giving the word to EVP Global Production, Johan Labby, to go through our priorities in the production system.
EVP Europe, Mónica Andrés Enríquez , will take you through how we work downstream, focusing on our markets and how we generate premiums for both farmers and Yara. Before handing the word to Magnus, CFO, to take you through the financials and giving the word back to Svein Tore Holsether for closing remarks. There will be a Q&A afterwards where participants online can already now submit questions to the email address listed below your webcast window, while persons in the auditorium can ask questions by raising your hand when we get to that. So after that, we will break for lunch for those physically here, and we will have some breakout sessions, which I will come back to explain how it works a bit later. With that, it's my pleasure to hand the word over to Svein Tore Holsether.
Thank you. Thank you so much, Maria, and good morning, and welcome to Yara's Capital Markets Day. We're very happy to see so many of you here physically at our headquarters in Oslo, and also a big welcome to those of you joining us online. Today, we'll give you an update on our strategy for the years ahead and also how to then strengthen the resilience and also how to grow sustainable returns. We will demonstrate the value of Yara's business model, our key competitive advantages, and also our growth opportunities.
Last year, we celebrated our 120-year anniversary as a company, and we are born from the application of science, and it was partly showed in the film already, but this is about solving the biggest challenge of the time if we go 120 years back or so at the turn of the century, as we saw significant population growth as a result of the Industrial Revolution, and farmers were asked to increase food production. However, this proved to be a challenge because when you remove crops from the field, you also remove nutrients, and unless you're able to replace nutrients, that will have an impact on your yield. So not only were they struggling to keep production, it was actually going down, and a key nutrient here is nitrogen. 78% of the air that we breathe is nitrogen.
However, it's not available to the majority of the crops from the air. They need it in fixed form. That was the challenge that was sent to scientists across the world, how to sequester nitrogen from the air. That was solved by Professor Birkeland at the University of Oslo through the use of electric power, and then together with the industrialist Sam Eyde and with funding from the beginning from the Wallenberg family, that was the start of our company in 1905, then they went on to go from a breakthrough idea, a breakthrough technology, to full-scale production within just a few years, and from our Norwegian origins, export has been important really from the very beginning of our company across Europe in the early stages and also all the way to Asia.
I was really pleased to see I was in Thailand a couple of months ago, and there I was shown that the importance of our product and the joint history between Thailand and Norway dating back to almost the very start of our company. In 1907, the King of Thailand actually came to Norway to visit our founders, to visit the location that you just saw on the film to learn more about fertilizer, and he became one of our very first customers. We are very honored that this is a THB 100 bill from Thailand. That event is actually on the currency in Thailand. To be a company that produces a product important enough to be on the currency of a country is something that we are very proud of, and we're very honored of that recognition from Thailand.
Thailand is still a very important market for Yara. Today, we are a world-leading crop nutrition company, and our global and integrated business model is a core strength, and that is what ensures resilience within the Yara organization. Through our 120 years of history, we have weathered massive geopolitical shifts, but always stayed true to our core, contributing to feeding the world through our crop nutrition knowledge, and in an ever-changing world, we aim to show you today our plan to continue down just that path, so as always, we will start with safety, and we are committed to providing a safe workspace for our employees and contractors. We have our Safe by Choice way of working that is truly embedded into our entire organization. Any accident, small or big, can be avoided, and our long-term ambition is zero accidents, and that's what we're working on every day in Yara.
As you see here, we have brought down our numbers significantly over the recent years. We are industry-leading in terms of accidents, and also when we compare to a wider industry group, we are delivering quite well on safety. However, 2025 has not continued that same positive trend when it comes to accidents, and as you see, we have an increase taking us to 1.1 TRI rate. So that's the number of accidents per 1 million hours of work. So that is something that we're taking very seriously and that we're working on throughout the organization on how to turn this trend and get back to continued reduction in accidents. Tragically, we've also had a fatal accident in Yara in 2025 on August 6th. We had nearly had seven years without fatal accidents, and tragically, this happened on August 6th at our Rio Grande facility in Brazil.
This is a large site in a small community, and at that location, there are colleagues, there are friends, there are families, very often all three things at the same time, and it's making a big impact on that whole organization. Indeed, the entire Yara family, we are all deeply impacted by this. We have our Safe by Choice way of working. We have Golden Rules for how to work. Our colleague who died in that accident, Amaral, he followed all these rules. He worked according to Safe by Choice, yet we had a roof structure that fell down, and that led to the fatal accident. That is when our colleagues and our contractors are following our Safe by Choice way of working and our Golden Rules, it's our responsibility, it's my responsibility to ensure that we have a safe working space.
On August 6th last year, we did not, and that is my responsibility, and we take that very seriously, and we're having a thorough investigation to ensure that this never happens again, and we're also working with the entire fertilizer industry to share our learnings on this to ensure that we all learn from each other, which is the common practice within the fertilizer industry. We remain committed to our Safe by Choice way of working. This is a very tragic reminder of the importance of that. We go through every accident, every recordable accident in Yara in detail. I know each and every one of them and my commitment to this that on a rolling 12-month basis, I know by heart every accident that has happened in our organization.
Now, I don't expect everyone in all of Yara to know all accidents, but through the line organization, we do, and for the ones that are relevant for that line organization, and then this is a joint commitment also with our unions, so every Friday, we go through the accidents together with the line organization, with the union, with myself to learn and to transfer these learnings across to continue on this journey. We remain committed to achieve our ambition of zero accidents. We live in an unpredictable world, and energy and agriculture are among the most impacted industries when it comes to global events that disturb both financial and commodity markets, as we've seen in recent years. Nevertheless, Yara, through our history, and including the last five years, we have proven to be resilient.
And if I try to briefly go through some of the events that we've been through in the last few years in 2020 with COVID and ammonia markets coming to a complete standstill, that is, of course, a challenge for any company. And with our organization, we managed through that, utilizing our assets, utilizing our flexibility to deal with this. Also, as you know, operating our plants takes a high degree of technical expertise. How do you run the plants if you can't bring people into the same room? How do you ensure that you have the capabilities and the capacity to run the plants? Well, this is not something that we could take for granted going into this, but we were very pleased to see how our entire organization stepped up to deal with the uncertainty and to ensure continued operations throughout COVID-19.
In the summer of 2021, energy crisis. Energy prices started to increase in Europe and created a very large energy cost delta compared to other parts of the world. That also made a new operating environment for us where we had to deal with this kind of energy price volatility and, again, utilizing the flexibility in our system. Well, we knew that we had flexibility in how to run our ammonia plants, but we took that to the extreme, running our plants up and down to flex with energy prices, importing ammonia when needed in order to ensure that we maximized production and had availability of finished goods. In 2022, then the majority of our phosphate, potash, and supplies, and also our third-party ammonia disappeared pretty much overnight as a result of sanctions on Russian and Belarusian suppliers.
Thanks to an incredible effort by our plant organizations, production organization, and our procurement team, they were able to do what I thought would not be possible. As all of you know, when you're switching raw materials, that's not something that you take lightly. When you switch from one grade of phosphate to another or potash and so on, that's something that you do over significant time periods, test runs, see how it works, fine-tuning, and so on. We didn't have that luxury at the time. We had to make massive changes overnight, and that kind of commitment made that possible to continue running. Not without its issues, of course, but the ability of the organization to react to this is not something that you can plan for and not something that you can take for granted.
Our organization, our people were able to do that. 2023, 2024, extreme volatility in energy prices and nitrogen prices and global trade flows once again had major shifts. I think we can say 2025 was not a quiet year either, and the start of 2026 does not seem to be less turbulent. Despite this, Yara's business model has proven to be resilient, and this is due to our global diversification and also the energy flexibility that we have in Europe. When you combine that with our very competent workforce, I think it's right to say that Yara is a battle-proven organization. Throughout this, Yara has upheld strong shareholder returns. We have distributed $5.5 billion since 2020, and also, at the same time, we have taken tough measures.
That is to further adapt Yara's business model, to adapt our business model to the new reality, and at the same time, aiming for significant growth in shareholder returns going forward. Yara is a purpose-driven company. For those of you that are here physically, I'm sure that as you entered into our building, you could see our mission on the wall in the lobby here. This is not just a statement on our walls in our offices and production plants throughout the world. This is how we run our business every day. We spent one year to develop our mission statement following the Paris Agreement in 2015 to ensure that this is a joint effort and one that we all recognize in how we do our business every day.
And our mission to responsibly feed the world and protect the planet sort of captures the duality of what we're doing back to our origins 120 years ago, growing enough food, ensuring that there's food for a growing population, but now, at the same time, also looking after the planet. And that duality is what drives our organization. Everyone in Yara knows what our mission is. And I could, and I do this sometimes, I challenge any company in the world of size on our employees' ability to tell you what our mission is. I think we're quite unique. Everyone knows that, and that has proven to be extremely valuable in times of volatility and uncertainty because we have that North Star. We know why it's important.
We know the purpose of our company, and that enables us to do what it takes in order to keep our system running and to be delivering on our commitment to society on growing food and looking after the planet. We operate in an essential industry feeding the population. Half of the world's food production is a direct result of fertilizer. That is a strong purpose. Our vision, a collaborative society, a world without hunger, a planet respected, is how we look forward, look ahead as a company, and that is about working across the value chain, realizing the opportunities, ensuring that we're doing our part in overcoming barriers, silos in order to think full value chain, to see what can we do upstream to help downstream, first and foremost with the farmers, but also throughout the whole value chain with food companies and also society at large.
For us, these are not just words. These are actions, and I hope that we will be able to demonstrate that also through our presentations today. Then looking into the future, Yara has taken significant steps to be part of the solution that the world needs. The world needs 50% more food for a growing population. As I already said, 50% of the food today already is made as a result of mineral fertilizer. However, that food the world needs to be produced within planetary boundaries. This means that we have to continue on our path to reduce emissions and also optimizing nutrient use efficiency in the field of the farmers to support a sustainable food system. These are not abstract issues. These issues shape policy. They shape investment decisions and also shift customer demand. We are well positioned for that.
The fertilizer sector, with the very nature of how we produce our products, is a major contributor to emissions. And we know that. And that also means that it's a responsibility on us to reduce those emissions and do this as efficiently as possible. And Yara has made early efforts to address just that and to reduce our emissions. And here in front of me, I have a Yara in-house developed catalyst. This was developed by our R&D team in Porsgrunn in Norway. This is an N2O abatement catalyst. Through the utilization of this, it has been a major contributor of Yara reducing our total greenhouse gas emissions by nearly 50% already by the time of the Paris Agreement. And I should also add that we're licensing out this technology and the catalyst to other parts of the industry.
This catalyst reduces nearly 30 million tons of CO2 equivalents a year, so if you put that in context, the combined emissions of all of Norway is 45 million tons, so that says something about the value of R&D, product innovation, and application of these technologies. We have continued on that path, and I'm really proud, and our entire organization is proud to say that we will reach our greenhouse gas intensity targets for 2025, and at the same time, it is important to do this in a way that supports profitability as well. And I've been very clear, both with all of you attending here, but also with other stakeholders, that there will be no green transition with red numbers. Profitability is also a must. It needs to be profitable to decarbonize in order to do this at scale.
If I reflect on the investments that we made on emissions reductions in the last few years and look at the average payback of that, it's about three years. We've been able to do profitable decarbonization in Yara. This is through ensuring higher energy efficiency. That means that we're consuming less gas to produce our products. That's also very helpful as we look into this and the way forward. It's not only about that. It's also about the downstream part of it. It's about nutrient use efficiency, which is the hallmark of our knowledge and how we work all the way into the field of the farmers to address their opportunities and their challenges as well. This is not just good for the planet. It's also good business.
Our key competitive advantages have been the drivers of our performance, and we plan to enhance those further to bring additional improvement, and I'll start from the bottom here. Core to our business is global scale and optimization, and this is vital in a capital-intensive industry like ours. It's about optimizing production. It's about optimizing flows, and I would say nowhere is this more visible than in ammonia, where you need scale in order to justify the cost of the infrastructure, and this is absolutely critical to participate. Operational excellence is key, and it's about ensuring that our production assets have maximum uptime, and we're very proud of our track record and how we've driven this forward with the target that we set for 2025 production back in 2019. That target for finished goods production is within reach.
And when you put that into the context of what we've been faced in terms of disturbances in the last few years, this is something that we are very proud of that we've been able to achieve. Then on energy, despite our current exposure to European gas prices, our premium product stronghold in Europe can also operate on imported ammonia. And that is providing flexibility on energy exposure. And we saw that in 2022. We saw it in 2023 on how we're utilizing that to flex our operations to deal with high energy price fluctuations. That flexibility and how we utilize that, we're now translating that into how we can also get advantage and flex on our energy exposure going forward. And then lastly, our global in-market, in-the-field presence is key here.
Our product portfolio, of course, the agronomic advice, the tools, the services that we yield to ensure farmer profitability, which also supports our premium product portfolio. And that adds value over commodity products. Our strategic priorities are designed to address global trends and also opportunities while utilizing the strengths that we have in our business model. It's about maximizing profitability on our current operations, and it's also about driving value, accretive growth. And this is true global scale and optimization. It's about operational excellence, and it's about driving the asset utilization and improving core profitability in our operations. Our flexible assets mean that we're able to strengthen our nitrate margins and then also shifting our cost position downwards on the ammonia cost curve. And that we will then do through improving our energy exposure.
By investing in U.S. ammonia, we can achieve this with the added benefit then on top of lower emissions through that and further than strengthening our European operations through linking that into that. In Europe, as a carbon tax market, this is also enabling us to capture growth opportunities. In connection with the second quarter 2024 report presentation, we launched also a cost and CapEx reduction program, which we expect will be delivered at $30 million above the target by the fourth quarter of 2025. But as we've said also before, our improvement journey does not stop there. Yara continues to seek further improvement opportunities on a broad set of initiatives. That is why today we're launching a target to improve our EBITDA by more than $200 million by end of 2027 and $350 million by end of 2030.
In total, this will lead to a cash flow expansion of more than $600 million from 2024 to 2030, reflecting then Yara's commitment to continued cash flow improvement. Through targeted improvements coupled with also supportive market fundamentals, Yara is positioned to deliver strong shareholder return going forward, so the combination of delivering on the cost program and new targeted EBITDA improvements will lift Yara's return on invested capital, excluding special items. Yara's return on invested capital through third quarter 2025 on a rolling 12-month basis, excluding special items, was just about 10%. All else equal, today's announced EBITDA improvements will deliver on an additional 2 percentage points in ROIC, strengthening our returns and supporting us to deliver on our through-the-cycle target of more than 10%. In addition to our improvement program, lowering our energy cost is also a key strategic priority.
In December, we announced our advanced negotiations with Air Products to partner up on low carbon ammonia and those products in the U.S. and Saudi Arabia. We see a strong strategic fit and synergies between our two companies where we're combining Air Products' industrial gas capabilities, and low emission hydrogen with Yara's ammonia production and the ammonia network and the distribution network that we have. Despite many project announcements, demand for low carbon ammonia is slower than anticipated, but Yara is in a unique position because with the internal demand for ammonia that we have and also the external sales that we have, we have a captive demand that is large enough to ensure significant offtake tonnage from ammonia products, which puts us in a unique position.
CBAM is obviously important and an important element to the business case, and we will closely monitor changes in the coming months, and I will explain a bit more on that on the next slide, but before I get to that, just say that we also have a developed terminal system in Europe that represents a significant cost advantage for us and that we are bringing into the partnership here. These products, they then continue to build on the resilience in our business model and enable us to do profitable decarbonization across Yara and at the same time delivering double-digit returns in line with our capital allocation policy. They also show that Yara has great flexibility in terms of decarbonization and on energy cost, both equity position and also on sourcing, and that enables us to make the right decisions at the right time.
Our approach to all of this is firm. These products must be accretive to our shareholders. As you may have seen, the European Commission issued some news on fertilizers on Wednesday afternoon. This causes confusion and it causes uncertainty. Let's start with what was said. The Commission suggests that they will suspend regular import tariffs on fertilizers, which they are 6.5% on urea and 5.5% on ammonia. In addition, the Commission opened up for mechanisms to enable monitoring of the impact of CBAM on the internal market and also allow for temporary suspension of CBAM in case of unforeseen circumstances. Our interpretation is that this new proposal will then need to be voted and approved. The Commission also provided a guideline that the suspension could be retroactive once suspension mechanisms were approved.
Suspending CBAM while continuing the reduction of EU ETS allowances will reduce the competitiveness of EU producers. The intention of CBAM was to put a carbon cost on imports into Europe to mirror the cost that the European industry has been subject to for a number of years. Increasing the carbon cost burden on European producers would have a significant negative impact on European industry and also on European strategic autonomy, which goes straight against the intention of CBAM in the first place. It will harm European fertilizer production and increase dependence on imports, especially if CBAM was suspended. More importantly, I would like to challenge the concept of emergency. It's been crystal clear that carbon cost would be reflected in the cost of the product. The additional carbon cost is based on the Commission's own methodology and default values.
This cannot be a surprise or an emergency. It's exactly what it was supposed to do. The impact that this will have on short-term fertilizer prices is uncertain. This means risk, and risk normally lead to higher added cost on the product. For Yara, I think as we've proven over the last few years, we are prepared for uncertainty. We have flexibility, and we will be able to utilize that flexibility, which means that we can flex between all types of carbon footprint. We can run on green ammonia. We can run on blue ammonia. We can also run on imported gray ammonia, for that matter. The energy cost component of this is still very valid. We have a resilient business model. Clearly, we're also looking into the opportunities here to decarbonize.
Any of these decisions will be done if they are financially viable. And we have not taken any large investment decisions in Yara based solely on CBAM. So while we are considering investments in U.S. investments on low carbon ammonia, we have not taken the financial investment decision. And we'll take our time to closely monitor the developments before we make that final decision. And key for this and any investment decision that we make is robust financials. And as I already said, no green transition with red numbers. So for any potential investment in the U.S., they need to be profitable also without CBAM. However, if CBAM was to be fully suspended, we would not be in a position to invest in such projects. But I have to be clear, they have not suspended CBAM. That was not the message.
Then let me conclude this part of my presentation with the organization. We have organized our leadership and organizational structure to deliver on strategic priorities and improvement areas. It's about focus. And as you see on this slide, and you will see throughout the presentations today and for those of you here in Oslo in the breakout sessions as well, you will see that we have a very strong and experienced management team in place. And we have a highly competent workforce ready to continue to further deliver on enhanced value from Yara's robust business model. So with that, I'll hand over to Silje Nygaard, who will go through the recent developments in the nitrogen markets. Thank you.
Thank you, Svein Tore. So my focus today will be on market developments, and I will focus specifically on the medium to long-term outlook today.
But before we start to look forward, let's have a look briefly backwards at how the market developed in 2025. 2025 was a year with demand-driven pricing in the urea market, which is characterized by urea prices being above cash cost for all the key producers. In addition to that, as you can see from the slide here, we had a falling natural gas price in Europe throughout the year, improving margins throughout, which again is something you can typically see in a demand-driven market, a disconnect between energy prices and urea prices. This strong development came despite the fact that we had good supply in the global market. This was mainly driven by China adding more than or allowing more than 4.8 million tons of urea export for the year, compared to only 0.3 million tons in 2024.
We also had low crop prices for the year, representing another headwind. When it comes to the added supply from China, this was not offset for the year by production issues elsewhere, but we did have that as well. We had production issues in Egypt, in the market, Egyptian producers due to a lack of natural gas over summer. The conflict in the Middle East also caused supply disruptions in Iran and Egypt. And finally, there was also lower production in India. When it comes to demand, that was particularly strong in India in 2025. That was driven by a very strong agricultural season in India, as well as rebuilding of inventories from unusually low levels in 2024. And also, as mentioned, the loss of domestic production.
The strong sales in India persisted throughout the year, and we had another month of sales records in December, reducing the risk of an inventory overhang going into 2026. This combination of strong urea prices coupled with an increase in supply is indicative of healthy demand for the year. Let's spend a little bit more time and look at urea demand. The reason for using a little bit of time on that is that very often people equate nitrogen demand growth with urea demand growth. So what we're trying to illustrate on this slide is that that is actually only one of the factors driving the need for additional urea capacity over time. But of course, the underlying nitrogen demand growth, that is the basis that is driven by things like food demand, growing populations, and agricultural practices.
So if we look at that for the past 10 years, that growth has averaged 1.1% over time. But then in addition to that, that growth rate is amplified when we look at urea because urea is the major fertilizer, nitrogen fertilizer product where capacity still be growing, the added capacity. So meaning that urea has had to take market share from other products to compensate for less growth in other products. So that in addition, that adds 0.6% to that growth number, meaning that urea demand growth has been 1.7% in this time period. Then there's the final factor, and that is that there is a need to replace aging capacity in the world. You see it, we have included an example here.
If we look back to this period here, back to 2010, urea capacity grew with 50 million tons in that period while production only increased 30 million tons. If we translate that then into growth rates, that means that over time, 1.2% every year has been lost in output from installed capacity in this period. When we look at this replacement need, this is driven both by closures and lower utilization rates. In addition to age, lack of maintenance, exhaustion of feedstock resources, natural gas resources, for example, and lower scale and efficiency of all the plants contribute to this replacement need over time. By the way, this is also why capacity lists are an unreliable source for actual production capacity because typically capacity is not removed from these lists.
Okay, so now looking forward, and what we have done here is that we have made an illustration, the graph to the left here, that is the current urea consumption multiplied with the historical growth rates that you saw on the previous page. If you use those growth rates, you arrive at a need for urea capacity growth of 3.9 million tons with a breakdown as you see on the different elements here. Of course, if you are doing forecasting, you have to mean something about how this will look in the future, and what we have done here is that we've just drawn a couple of illustrations so that you can kind of see. Of course, you can have different views on this depending on what you expect in terms of future demand growth, but also what you expect in terms of output from existing plants going forward.
How you read this graph then: when you compare that demand growth with the actual capacity in the pipeline for every year where capacity added is below that demand, that is indicative of a tightening market balance. While in this low case that we've drawn here, you see the market is more or less in balance. That's in a way how to interpret it. It's important to note, of course, that this is very difficult when you look year for year because, of course, demand can be impacted by things like inventory effect that can fluctuate. Output from existing plants can fluctuate. In addition, the supply that is added can be delayed. That is very normal to see. We also see very often that the publications differ in terms of their views on when the different new projects will commission.
If we look forward, another unclarity in the market now is China. China has, over the past couple of years, kept strict control over their domestic urea supply. Their policy has been to ensure ample available urea at a stable and low price. So that how much is available from China as exports in the coming year will depend on things like their policies, how the domestic market develops, as well as how net capacity develops in China. Switching to another important market topic, European gas prices. We have already in 2025 seen an easing of the global LNG balance. On the graph to the left here, you see changes in exports and imports of LNG for the year, and what you see from this graph is that in 2025, U.S. had better availability, so they added LNG to the market.
Most of that kind of benefit went to Europe. Europe had got access to more LNG, partly because of the increase in exports from U.S., but also partly because Asia bought less LNG for the year. That availability led to a falling gas prices in Europe throughout 2025, as you see in the middle graph. As I mentioned, in a demand-driven market, as we were in 2025, falling natural gas prices in Europe leads to expanding margins for European producers. If we then look forward, and this graph here, you see the capacity growth in LNG capacity over the coming years. What you can see here is that we are entering into a period with a wave of new LNG capacity coming into the market, dominated by projects in the U.S. and Qatar.
You see on this graph, you see that if we compare it to the last period where we had supply growth in the LNG market, actually every single year you have more supply being added than what we have had in the past. In addition to that, FIDs continue to be taken on LNG capacity, which extends this capacity growth period beyond 2030. Switching topics again, Svein Tore already touched upon it. Carbon pricing in Europe is, of course, a factor that is relevant for future prices. The graph on the left here is, you've seen it before, but it's intended just as a reminder that Europe remains a net importer of nitrogen, mainly in the form of urea, and that is important in setting the European price level. This graph here shows you that we have already seen an impact from CBAM on the European prices.
You see we had a period just before this deadline of purchasing urea to arrive at European ports before CBAM, 1st of January. Towards the end of November, you saw an increase in Egyptian prices. Egypt is one of the key suppliers to Europe, indicating buying activity ahead of the CBAM implementation. Thereafter, you see the Egypt price falling again, lower activity as that deadline passed, but urea prices in Europe stayed at a higher level. Right now, this differential between the price in Egypt and the price in Europe is roughly $100, representing a structural differential from both carbon costs, freight costs, and other duties, as was expected and intended, as Svein Tore mentioned. Also, as already mentioned, now, of course, there is some uncertainty regarding CBAM. I think from a market perspective, we will just have to wait and see what happens.
However, as long as this uncertainty prevails and as long as carbon remains a part of European production economics, likely carbon is going to continue to be relevant as a pricing factor in Europe. Final topic, ammonia and here focusing only on the long term, what we are illustrating here is a way that one can think of long-term ammonia prices, so the incentive price logic, many of you are familiar with it already, that implies that ammonia prices over time should move to a level high enough in order to cover both operating costs and a fair return on investment for capacity growth to happen to meet demand growth over time. As mentioned there as well, that cost should be in a way the places where it makes sense or is optimal to construct new capacity.
The logic of ammonia prices being pulled toward this level is evident in historical data, and we have tried to illustrate that here by showing a couple of examples, so there are two examples here. We look back to 2007 when the full cost of building a plant in the Middle East was estimated around $300, and another example in 2015, we're looking at the U.S., this is around the time we built our Freeport plant together with BASF in Texas, when full cost was $450. If we compare those estimates to realized prices in the coming years, what we see when we adjust for inflation is that for this first example, the price ended up roughly $60 above, while in this last one, we are approximately $30 below, but of course, it's a relatively short time period.
Ammonia plants are typically constructed to be there not for 10 years, but for maybe 30, 40 years at least. And when it comes to the ammonia market going forward, we are entering now a period with more capacity additions than what we've seen in the past years, which might mean a period of lower prices. However, according to this logic, at some point, there should be a convergence back to a higher level again in order to cover capital costs. And that can be driven by a number of things. It could be closures of old capacity at the lower end of the cycle. It can be through more ammonia being directed to different downstream uses, such as urea, for example, ammonia projects plugged with urea. Or it could be through demand growth over time, either from traditional or new uses. That was all I was planning to cover.
Happy to hand you over to Johan Labby, our EVP of Global Production. Tha nk you.
Thank you, Silje. Thank you, Silje. Good morning, everyone. I'm going to guide you through the way we are working with and strengthening our production system. The production system is really the backbone of Yara business and key driver for value generation. As an order of magnitude, 70% of our invested capital is in our production system. This represents a very large financial exposure, which means that it is critical to ensure safe, reliable, and profitable operation. Svein Tore did mention very well the way we are working with safety and our commitment towards safety. I'm not going to come back on it, but you should all know that there is no business, no profitable business, no reliable business without safe operation.
Most of our nitrate capacity located in Europe can run on imported ammonia and is running on imported ammonia. It has been detailed that the color of ammonia can be flexed. That is a very important prerequisite to keep in mind, and that is key for Yara flexibility. In addition, we have taken significant steps to flex even further the production system. I'm going to come back on it. You will see that we are operating a globally diversified portfolio of assets. We have a systematic way of working, and we are driven by operational excellence, but first, let's take a look at our production system. We are operating all around the world, 25 high-performing production plants, seven located in the Americas. We have North America, low gas price, and the asset in Belle Plaine, located in the very high premium market for nitrogen. Then Latin America.
Yara is holding the entire or near to the entire nitrate and NPK capacity in this part of the world. Europe, 13 high-performing assets able to flex the ammonia sourcing for the majority of them. Asia and Africa, five production assets located to ideally reach the Asian market of ammonia, the growing agricultural market in India, and the mining market in Australia. That is our production system, and I'm going to demonstrate how we are going to operate or how we are operating and flex this European system to optimize. But first, as it has been mentioned by Svein Tore earlier, back in 2019, we have started an improvement program aiming to increase the production capacity from 19.4 million tons of finished product back in 2019 to 21.1 million tons of finished product in 2025. Today, I am happy to announce that this target is achieved.
We are navigating, as you can see, at all-time high level since five quarters in a row at approximately 21 million tons of finished fertilizer. This represents an 8% increase in volumes and $250 million U.S. dollars as positive impact on our bottom line. This is by operating assets in a better way and performing systematic de-bottlenecking of our premium plants and future-proof assets. At the same time, it has also been mentioned our GHG carbon intensity target that we set in 2019, aiming to reduce by 10% our GHG emission intensity target that we measure by ton of CO2 per ton of nitrogen by 2025. And I'm quite comfortable to announce that this target will be reached. We are consolidating the final number, but the 10% of GHG emission intensity target will be real.
This represents a saving or an impact, a positive impact of $100 million U.S. dollars of our bottom line. And we are not only profitably decarbonized in Europe, but also outside Europe by operating our asset in a more efficient way. At the end of the day, less gas consumed to produce our nitrogen. And this comes on top of significant reduction, which have already been taken thanks to the catalyst mainly before 2018. This comes on top. But we can still further improve. We are, as we speak, performing multiple investments, and I would like to focus on three of them. The first one, the expansion of Cartagena N PK plants. We are investing $50 million U.S. dollars, mostly executed. Commissioning of this expansion will start very soon to add 80 kilotons in our portfolio of NPK product.
This will represent $12 million as margin addition in Cartagena. In parallel, Porsgrunn. Two years ago, Porsgrunn was producing 2.2 million tons of NPK per year. By strengthening our operation, by performing systematic de-bottlenecking of the plants, we are today operating at 2.5 million tons of finished product. Our goal by 2030 in Porsgrunn is to continue that journey to reach 2.8 million tons of finished product by 2030. We have nearly 400 kilotons added in our portfolio right there. We have described that our portfolio of assets in Europe, and I will come back on it, can run on imported ammonia, but not all of them. Sluiskil is one of the assets in the need of the ammonia production to be able to fully operate the nitrate part, urea and ammonium nitrate part.
Therefore, Sluiskil, the three ammonia plants we have there, we have decided to take a significant step of performing a carbon capture and storage project, the first of its kind in Europe. It's a significant commitment to reduce our CO2 emissions and to profitably decarbonize Sluiskil. The first transborder agreement between the Netherlands and Norway, the biggest liquefaction plant of CO2 being built as we speak, twice as big as the biggest one in operation today. Costs have been mostly taken, and the commissioning is going to start Q2 2026. In addition, we have established a list of a systematic de-bottlenecking approach of our future-proof assets. This will bring an addition of one million tons of premium product by 2030 by growing organically, which means through our existing portfolio of assets, by operating our asset better and performing systematic de-bottlenecking.
Let me guide you through the way we are utilizing our CapEx. As you know, our business is CapEx intensive. Every year, we are utilizing between $700 million-$850 million U.S. dollars in our asset portfolio. The difference depends on the turnaround cycle of each and every asset. The year where we have concentrated turnaround activities, we are in the need of more CapEx, and the year where we have less turnaround activities, we need less CapEx. Two years ago, we have categorized our asset portfolio in four different categories. The harvest categories are the one where position has been decided already. We are either closing the asset, hibernating the asset, or dismantling the assets. Obviously, the less of our CapEx is going there.
Moving on to the marginal categories, that's the asset sitting there where we are monitoring turnaround per turnaround cycle, and we ensure continuity from a turnaround period to another turnaround period. Then the Hold categories, that's where we want to operate and strengthen our operation, but we are extremely careful when considering long-term developments in that category of assets. Finally, the future-proof, that's where there is no question about potential development of those assets. Porsgrunn, Sluiskil are two examples of this, and there are some more. And you can see the repartition of the CapEx we utilize per categories. And this has been a key driver to develop and to increase our production volume by focusing on where we are generating the most value and accept a bit more flexibility on the asset where we are generating less of the value.
In our business, like I said, it's strongly linked to our turnaround cycle, typically four years, where the year before and the year of the turnaround, we need the most CapEx, and two years after, we can harvest the CapEx invested to run the asset optimally. That's what we scrutinize carefully, and even more so when you are going down into the categories. What are the scope of the turnaround? What do we need to ensure safe and reliable operation for the next turnaround cycle? Our European system is flexible. There is a notion which is important to understand, is that nitrates, ammonium nitrate, and NPK are able to run on imported ammonia. You need the ammonia from a storage tank, and you can utilize that ammonia. For producing urea, you cannot do that.
You need an ammonia plant connected and up and running because you need the CO2, you need the steam in addition to the ammonia. That is the reason why the three assets you see on the right-hand side, they cannot be disconnected from their ammonia plants. We need to run the ammonia to run the urea. But they are linked to the industrial part of our business, mainly AdBlue, hence benefiting from the AdBlue premium. Sluiskil, nitrate capacity and urea capacity, it's a hybrid plant. We need both. But there, for running the urea plant, we need the ammonia, and we can flex to a significant extent the ammonia sourcing for running the nitrate plants. The rest, Porsgrunn has own production, but can run either on locally produced or imported ammonia, and all the rest is running, as we speak, on imported ammonia.
As it has been mentioned, irrespective of the color of the ammonia, irrespective of the source of ammonia, irrespective of the carbon content at the end of the day of the ammonia, our business is to optimize day by day the flow of ammonia through our production system. And now I would like to guide you through the way we operate our ammonia system. We handle every year 4 million tons of ammonia. 1.7 million goes to external sales. 2.3 million is optimized through our production system. In total, our production system needs in Europe 3.7 million tons of ammonia to run and 0.5 million outside Europe. The difference between the 4 million and the 2.3 million is the locally produced ammonia. We have in total 18 ammonia terminals and 14 vessels to handle that ammonia and optimize the flow of ammonia all around the world. And we can still further optimize.
Let me take an example. In Sluiskil, the ammonia terminal, we were able to receive Handysize vessels, meaning small ammonia vessels. By performing an investment of $8 million, we have transformed the ammonia terminal, being able to receive bigger ammonia vessels. The first one was there a couple of months ago. This has a positive impact of $15 million only by optimizing and making bigger the ammonia terminal we have there. And similar steps are going to be taken in other ammonia terminals in Europe to gain flexibility in Rostock, in Uusikaupunki, in many other plants. We are taking that steps to flex even more the flow of ammonia coming into Europe. If we take a look at our ammonia system in Europe, it's unique because it's located on the coast side.
It's ideally positioned stretching from France, the west coast of France, going to the Benelux, the Baltic Sea, and the Nordics in the south in Italy, ideally located to receive ammonia to run our own production system, but at the same time to reach the growing demand expected on ammonia from now until 2030. We have seen recently ammonia terminals changing hands for an amount of $300 million, one single terminal. We have 18 fully operational ammonia terminals in our portfolio today. Svein Tore has already mentioned and covered quite well the announcement that we made back in December on exploring two major projects with Air Products. The first one, the Darrow project. The Darrow project is a combination of the largest hydrogen and ammonia complex being built in the U.S. with the biggest and only scalable import infrastructure in ammonia, which exists currently in Europe.
That's what it's all about. It's really a strategic feat between two companies. The setup in the Darrow project is such that Air Products is building the entire plants, three box units producing hydrogen nitrogen, two ammonia loops, 1.4 million tons each ammonia loops, and storage tank and harbor facilities. Plus, the plant is getting ready for CCS, carbon capture and sequestration, in order to qualify for the 45Q tax credit. Once the plant will be built and commissioned, Yara will acquire the ammonia part, meaning the ammonia loop, storage, and harbor facilities, getting the nitrogen and the hydrogen based on a long-term agreement with Air Products, while Air Products will operate the hydrogen facilities, and a third party will be on board it for the carbon capture and sequestration part of the project.
Air Products hydrogen facility produces 20% more hydrogen than what it's needed to run the two ammonia plants, which means that adjusting the CapEx for additional hydrogen, we see a CapEx per ton of this project, which has a significant advantage. Being early start of the project, having a head start, it gives a significant advantage to this project as well. Engineering has been completed. Procurement is completed. Equipment is there already. Grant has been prepared already. This is a head start which reduces the CapEx risk quite significantly, but this is not a given. A lot of work remains. We know that, and the construction market in the U.S. is quite challenging for the time being. We are monitoring that closely. We are monitoring the construction market. We are monitoring and working hard to get the final CapEx figure of that project.
In addition, the whole geopolitical situation and political situation, as described by Svein Tore , will also be monitored, aiming to take FID or to be in a position to take FID by mid-2026. In NEOM, in Saudi Arabia, this is a green project, power supplied by solar and wind, performed by Air Products, together with ACWA Power and NEOM. And Air Products is the off taker of that part. And Yara will distribute the volume on a commissioned basis. That is the setup that we are discussing with Air Products today. This is all about the earliest project existing with the biggest infrastructure for handling ammonia currently existing in Europe. It creates a lot of benefits. Ammonia is so much more than just building a plant. We know that a lot of developers are discovering that as we speak. I can tell you that.
We are combining the gas capacity and knowledge of Air Products with our ammonia knowledge, together with our infrastructure and midstream position, which makes this project one of the most profitable and most credible projects currently being developed. I would like to conclude by saying that and summarizing that Yara is operated a globally diversified asset of high-performing plants. We have a strict capital allocation policy and strict prioritization amongst our portfolio of assets. We have a world-leading ammonia platform. I think it has been clearly demonstrated. And we are all set for value-assertive production growth in premium product and low-carbon ammonia. Thank you. I will now hand it over to my colleague, Mónica Andrés, EVP Europe, who is going to guide you through the downstream part of our business. Thank you.
Thank you, Johan. Good morning, all. My pleasure to be here. On the strong asset footprint that Johan has described to us, and in addition to that, our strong presence in downstream is also remarkable, and it is based on strategic advantages and competitive advantages that generate value for Yara, and the first advantage that we have is the agronomical knowledge. We know that our portfolio works in the field, and we know that it works in the field because we have been for decades working with farmers that have provided us with feedback on what the challenges that we had and also how our products were operating. We have the highest nutrient use efficiency. That means that our portfolio applied in the field with the right doses works and works by increasing the yields of the harvests, but also increasing the quality of the harvest, and that, in the end, generates value for the farmers.
So the value that is generated for Yara is anchored in the value that we generate in farmers because we work hand in hand with farmers. Together with that, the second main competitive advantage that we have is the global and the scale, the global optimization and the scale. And it's because we have a unique position to drive our business. We can, with that, overcome the seasonality of the business and optimize the margins. So with that, we are, in a way, unbeatable on this. And rather than being a subject of inherent volatility that is linked to our business, we are, with our value proposition, we are able to defend sustainable margins and sustainable profitability for the company in a market that is, as Silje already mentioned, described, is in continuous growth.
But we have challenges as well on delivering our fertilizers because Johan is producing 24/7, all year long, and he is increasing production activity. And we need to sell. We have to move these tons that are generated in our production. And the challenge that we have is that we are operating in a system, in a business that is seasonal because the farmers have a very narrow window to apply fertilizers for most of the main crops. So how can we offset this seasonality? Well, we do that with our global presence. And with our global presence and optimizing the margins and the volumes that we allocate to the different markets, we are able, as you see here, to deliver fairly stable volumes all along the quarters. And with that, we are able also to improve the profitability. We have presence in more than 140 countries.
There will always be a country with demand. With that, we are confident that we will have markets to swallow and deliver all the products that Johan is going to produce now and, in the future, as well. As you see here, the seasonality in the Americas, and that is mainly the Southern Hemisphere, has a different pattern than Europe. This is key. That is the way we work. Africa and Asia provide more stable consumption all along the year because they are more in the cash crop segments. Industrial is very stable as well. Bear with me in industrial because this is part of our integrated business model, industrial products. They are not delivering industrial products to crops because it's about industrial applications for the products that we produce in our assets as well. They are not exposed to the seasonality that the fertilizers have.
So with that, it provides us with some stability that we need. But also, industrial has developed their strategy and their go-to-market by defending the position of the use of the portfolio by also offering reliability and just-in-time supplies. We have a very strong presence with our production sites, but also with the logistical hubs. And this is key in the industrial segment in order to be closer to the customers and be able to supply them with the demand when they need it. So we supply with products when they need that. With that, we've been able in industrial solutions to increase the commercial EBITDA in more than 160%. And we are able also to defend 25% premium above the commodity urea in many cases. So you see the main markets for industrial products are Europe and North and South America, Brazil mainly.
This is a fundamental part of our business. Normally, we don't talk that much about industrial, but it's also relevant. Back also to fertilizers. But taking into consideration our global scale and the challenges that we have, we have a responsibility to serve the market. We are in a global business, and we need and we are moving big volumes. For that, it's fundamental to have a strong logistical setup to drive the scale that we need. One example of that is in Hanoi. That is the state-of-the-art production hub of water-soluble fertilizers. It has a capacity of 60 kilotons. It's quite big, I can tell, in this range. And we are able to serve high-value crop markets on that, being close to farmers, being close to customers in a business that is in continuous growth. We move now to Canada, Contrecoeur.
This is an import terminal with a capacity of 160 kilotons. It's in a port in eastern Canada and the St. Lawrence. It's able to import product even in wintertime, all year long. With that, we ensure the supplies to Canada because it's a very important market in our business, by receiving the product that we need and to be ready for the campaign and the season when it happens. Brazil, Rio Grande. We own a pier there. We own a blending unit. We own a bagging facility there. The capacity is 2.5 million tons. We are talking about big volumes because Brazil is a big country as well. With this, in Rio Grande, we are connected with logistical barges and also railway. This is a main hub that supplies the small hubs in South Brazil.
And with that, we ensure, again, to be closer to the market, closer to the customers, and be able to demand what the farmers need, the products. This is, I can tell you, unbeatable, and it is hard to replicate. This is one of the main competitive advantages that we have because we are not dealing with commodities. We are dealing with mainly premium products. And this is one of the main slides that I would like you to bear in mind. 60% of the production that we do is premiums, 60%. This brings stability to our business and also sustained margins going forward. We are based on the agriculture needs. So we are in constant contact with farmers, with the end consumers, with food companies to understand what their challenges are. We are living and working with vegetables.
These crops are being grown, facing the climate challenges as well and in continuous change. Being close to the markets, being close to farmers, and having the agility to respond to farmers' needs is the fundamental part of the business that we drive in downstream. It's about having the ears well open and being ready and flexible to move. As an example of this, we have prepared some proof points that have been collected in a video.
Yara grows shared v alue. Across the world, we work with farmers and partners to improve food security, cut emissions, and enable prosperous businesses. In Thailand, durian is one of the most valuable export crops and a large contributor to Yara's earnings, with 45,000 tons of NPKs delivered annually at a 40% premium compared to the average portfolio. Yara's durian solutions support fruit shelf-life extension, strengthens outer skin, and improves overall product quality for exports. Growers see higher yields, earlier harvests, 15%-30% higher market premium, lower costs, and 30%-50% higher profits. Italian growers rely on YaraMila Nutri range to increase yield, improve quality, and strengthen overall crop performance. Yara has 10%-15% higher margin per ton on its YaraMila Nutri range versus portfolio average. YaraMila Nutri offers NPKs coated with Procote biostimulants.
For growers, this leads to 9% increased nutrient absorption versus regular NPKs, 4% higher yield, and minimum 10% increased profit. In Latin America, Yara products and solutions enable coffee farmers to boost yields sustainably, leading to higher profit, stronger supply chains, and partnerships with world-leading coffee brands. For Yara, working with coffee farmers has translated to a 36% volume growth, and farmers see a 30% yield increase compared to traditional practices, a 15%-20% increased profit per hectare, and 30%-50% lower carbon footprint. Beyond fertilizers, AdBlue now represents 8% of Yara's total deliveries in a market expecting continued growth the coming decade. With five production plants and 50 terminals, Yara's unparalleled market presence ensures reliable supply to customers and robust margins and return on capital to Yara. Thanks to AdBlue, 80 million vehicles can operate to strict emissions regulations worldwide, offering millions clean air to breathe.
At Yara, we believe in solutions that create shared value for farmers and customers, for Yara, and for our planet. Our products don't just boost yields and increase quality. They contribute to a sustainable food future. Our strength lies in more than just products. It's our agronomic expertise, our global market presence, and our innovative solutions. This enables us to work across the food value chain to deliver value that matters today and tomorrow.
Seeing it is believing, right? And how will we translate the video into numbers that we want to see? It's on these premiums. We were talking about sustained premiums along the history and the future as well. On the left-hand side, you can see for NPKs, this is the yellow line represents the commodity blend, so based in urea, DAP, and MOP. And the blue one is the realized price already for NPKs, our compounds, Yara compounds, the premium ones. And you see that there is sustainably we are able to maintain and keep $200 of premium. And the same happens with nitrates. And here in the right-hand side, the yellow one is urea. And the blue one is Egypt urea, the commodity. And the blue one is our nitrate realized prices in Europe. You see? Sustainably premium above urea.
It is how it's happened in the past and will happen in the future. But it's based on the strategy I already showed to you. Because farmers believe in our crop advice and our digital tools and all the information that we get and we provide to them, this is a continuous flow of information back and forth. Seeing is believing. That farmers see in this way, and we see in our data that is quite relevant. This is NPK, so it's for the micronutrients, nitrogen, phosphorus, and potassium. We have also in our business micronutrients that are the essential mineral fertilizers that improve the crop's health as well. Together with micronutrients, we have biologicals. What is biologicals? Biologicals, they have a biological source.
What they do is that they support and enhance the resilience of the crop against frost, against flooding, against drought. That is the reality of farmers. A couple of months ago, Gabe was in my home country. We were in Seville. We were visiting four farms: almond, pistachio, potato, and olive trees. It was amazing to see that the farmers were asking for more biologicals. Why? Because they have seen that by application of biologicals, they can test and see already that the crops become more resilient. When a flood happens, and you know that in Spain, we have suffered that, the crop is able to recover faster because when the flood happens, the oxygen in the soil is substantially reduced, but it can be recovered. Also, it provides resilience against drought. Now that is a reality. Water scarcity is a reality.
With biologicals, we are confident, and we know because we are science-based as well, that we can provide this security to farmers because farmers are living in agriculture in general. It's a very uncertain business. And there's a business for us as well on this because biologicals consist of $10 billion. And it's growing. It's growing sustainably. It has multiplied by five in the last five years. And you can see also the revenues have increased by 45%, and the gross margin has increased by 50%, which is music for our ears. We have invested already in a new plant to double the capacity of micronutrients and biologicals in Pocklington in the U.K. And we are ready to start delivering already in 2026 in the year we are in.
Our sales agronomists know already how to deal with this and how to expand our portfolio and our offering also in this segment that is very profitable. And so we are very confident that we will succeed on this. Here it is. Yeah. And we are in Europe, right? I'm EVP Europe. Europe has been in the eye of the storm in the last five years and continue to be. But it's also the core business for our company. And we have a business model that is very hard to replicate. This is the idea I would like to bring after this presentation. It's very hard to replicate, not only because of the strong site and plant footprint, but also because we have the logistical hub and setup to be able to supply the customers and the farmers in a way that is the most efficient.
We have and continue to build in our market share. In average, we are 25% market average in the core markets. Here in Norway and Nordic sales, we are higher. Our market presence is quite higher. And with that, we get the information we need from the markets so we can move ahead on setting our pricing. And we can move ahead on positioning our products in the logistics warehouses, in the logistical hubs that we have in the warehouses. And with that, we are growing our nitrate presence, both in straight nitrate applications, but also nitrate NPK-based. And also, we are able to provide Johan with the predictability of the products that we are going to sell. So we are in an integrated business. So Johan brings the ammonia and produces the ammonia and also the products that we need that are demanded in the markets.
On top of this, we have decarbonization market opportunities as well. We are ready to deliver already above one million tons of low-carbon fertilizers already in 2026 that comes out of the CCS project, carbon capture and storage in Sluiskil, as you know, so the potential investment in the U.S. will bring lower carbon fertilizers. So we are ready with our market presence, with our knowledge and the contact that we have with customers and farmers. We are ready to deliver also in the low-carbon segment at the moment that demand shows up, and as mentioned, CBAM is an important driver of this development. I know that you are quite aware of what CBAM is. But here, just a couple of ideas that I want to remark. The average emission of carbon footprint to produce one ton of urea accounts for 1.5 tons of CO2.
Every ton of urea produced means 1.5 tons of CO2. And this is the production that is the average emissions for those producing outside Europe. Europe imports nitrogen above 25%. So urea produced outside Europe will be imported into Europe. And with CBAM, they have to pay for this carbon. And this carbon, it's a fixed number. It will depend on the carbon cost. But it's fixed because urea cannot be decarbonized. So that urea is going to be. What happens with Europe? With Yara. With Europe, we have a lower carbon emission, but in Yara, we are even lower. So we have a competitive advantage because we have invested already in this with the catalyst. We have invested already in reducing our carbon footprint. So our competitive advantage is translated in a further premium that we can build on our portfolio.
So because we can uplift the price of the nitrates that are being sold and delivered in Europe, that are produced in Europe as well, by the fact that the urea imported will have to pay for this carbon tax. So far, CBAM was implemented one week ago. There are some doubts. But the message to you is that we are ready to move fast on the premiums and the prices to leverage on this. And we are ready for this. And we are ready for that because Yara has been prepared for this for years with very smart, I would say, investments. The catalyst is one of them. It was a tiny investment that reduces substantially the NOx emissions. So with that, we reduced our GHG already. We have invested already in Sluiskil for the carbon capture and the storage. And our baseline is lower than the competitors.
CBAM is implemented since 1st of January. With that, the importers have to pay, and they will be phased in. Yara, the producer, will be charged on the phase out of the free allowances. We have been already working and investing on this. Actually, we have a quota bank of ETS quotas that accounts for six million. That translated into dollars is above $500 million that we have in our bank already. We can use that to pay for the free allowances that are going to phase out, or we can sell them in the market depending on our interest. Today, there's already business with these free allowances and the quotas that we are able to collect and harvest out of these investments. Sluiskil will reduce 800 kilotons of CO2 already this year. It will start this year.
And that will add more to the quota bank. So these investments are already done. Will we invest further? Well, it depends on how CBAM evolves. So far, what we have in our bank is already money. And we will work on that. In the future, we have Svein Tore and Johan already described the flexibility of our business. We are producing ammonia in Europe. We are producing outside. We are bringing the ammonia that we need. And we produce and we sell and distribute according to the needs. Whether it will stay in Europe or outside Europe, it will depend on the CBAM evolution and the market needs as well. But then, as I said, we are ready for the future. So with that, we will increase or improve our portfolio with low-carbon fertilizers. We can run our operations with low-carbon footprint in Europe, and we have this flexibility.
It opens up a new segment, a new business segment that is with the food companies and the food chain. They have expressed and also publicly very ambitious sustainability pledges. And they have to commit to them. And most of that comes from their Scope 3, that are the emissions that come from their suppliers, that are the farmers who can contribute to the reduction of this Scope 3. Only those that have the lowest fertilizer footprint. Who are the ones that have the lowest in the world? It's Yara. So there's business there. We are already signing off contracts with PepsiCo, Nordzucker and PepsiCo worldwide, also in Latin America, Nordzucker also in Germany, and many others. So this is a new business opportunity that we are building. And we do not forget our traditional business. That is our base. Our backbone is what I already described so far.
This is a new opportunity that comes and that will be incentivized by the CBAM framework. With that, I get to the end of my presentation and the summaries. I would like to remark that we are in a pole position to generate value now, but also for the future. The other key strength is the global position that we have, the global optimization that we do with our portfolio and our assets and the logistical hub. Don't forget that. We are leading premium product position and knowledge margin, the value-aggressive growth in low-carbon products and biologicals. That is the new segment coming on stream. The value proposition food to serve future requirements of food systems when they come. Thank you very much. Now, I pass the word to our CFO that will go Magnus, that will go better and deeper in the financials.
Thank you. Thank you, Mónica. And good morning, everyone. Very nice to see so many of you here. And as we've seen through the previous sections, these competitive edges that Mónica and Johan talked about are very important for us. And they're also very important for our financial results. And how is that? Well, the two lower ones, the scale and the global optimization and the operational excellence, are really key in any market scenario. It's about lowering the fixed cost per ton, lowering the CapEx per ton. And that is, of course, a very important competitive edge in the CapEx-intensive industry. Moving up, the operational excellence also is important in terms of energy consumption. And obviously, being exposed to energy prices, the less you use per ton produced matters a lot as well.
On the optimization part, also very, very important in terms of making sure that the products go where we get the best net back for them at all times. And that is important in an industry where anything from weather to political decisions can change reality in a very short period of time. We are flexible on energy. Yes, we have a lot of production base in Europe. But with our ammonia system, our actual gas exposure is different and it's flexible. And last but not least, and probably the most differentiating part is that decades of farm knowledge, decades of application knowledge enables us to add an additional premium above commodity value, which is, of course, a value in itself, but which also means that we have more stability in our results.
Looking at our results, we see both from market implications, but also from the actions taken over the last 12 months that we've seen a significant improvement. EBITDA last 12 months of end of Q3 of NOK 2.6 billion is among the highest results we've had in our history. That also translates into a very strong increase in earnings per share. Of course, in a capital-intensive industry, we also have a very hard focus on return on that invested capital. We're very happy to see that we are now at special items above 10%. We will, of course, continue to work to improve that further. Free cash flow as well, seen a significant improvement, which is, of course, at the end of the day, what really matters.
Then the final number we have up here is gross margin, which is not necessarily a very good measure of profitability development in our industry. It is worth noting that we do have a gross margin which is quite stable. I would say almost remarkably stable considering the volatility of the industry that we have. That, of course, reflects the flexibility in the system that we've talked about earlier today. Improvements, both from the market as well as internal improvements, of course, and with a focus on strict capital allocation provide strategic flexibility. A strong balance sheet is very important for us. We are strongly committed to our investment-grade rating. We have an unbroken record of maintaining this since the IPO in 2004.
But maintaining a strong balance sheet not only secures our rating, but also ensures that we have flexibility and capacity both for value-aggressive growth as well as shareholder return through the cycle. Taking a short pause, looking at our scorecard from 2020, the world has, of course, changed a lot since then, and so has the relevance of some of the KPIs. But I think it's still worthwhile to have a look at how we've done. And starting with some of the ones that we are very happy with, of course, happy to see that Return on Invested Capital is above 10%. And of course, this is a key focus to improve even further going forward. As Johan mentioned as well, finished fertilizer production will achieve the target set that represents a significant increase in volume, but also significant value in margin, as was illustrated.
And that's something that's come through years of hard work and also, importantly, lays the foundation to grow that even further going forward. And on the ammonia side, you will see that we are short of our target despite having a 500 million tons increase on the target. And that is from the fact that we prioritize value over volumes for ammonia, as we've talked about many times. If we can import more profitably than producing, then that is what we do. And that, of course, impacts the number as well. On fixed cost and greenhouse gas emission intensity, we also reach our target. And as both Mónica and Johan talked about, we've done that in a profitable way. Operating capital is one of the areas that we're not completely happy with yet.
It has been impacted since that target was set by a dramatic change in product flows, obviously, since what has happened since both 2020 and 2022. So this is an area that we'll focus on going forward. And we are, of course, not happy with our TRI, our safety numbers plateauing, even though they're industry-leading. And that's, of course, an area that we'll continue to work on going forward as well. And the KPIs that we've had in our KPI sheet will still be continued to be reported in our integrated reporting annually. Digging a little bit more into the cost side, we are happy to report that we are ahead of our original target of $150 million. And by the end of Q3, we had realized $180 million, also when you adjust for the little bit of the help that we get from the currency.
This comes primarily from overhead cost reduction, but also a significant portion ties to portfolio optimization of lower-performing assets. Even though we lost some volumes from that, obviously, the margin loss was quite small. So the EBITDA effect is almost full from those actions. Maintaining strong discipline and strong CapEx discipline will, of course, remain a key focus going forward. Also in terms of really increasing shareholder value, we cannot unilaterally focus on cost. We have to play on all the strengths that we have in our system. Looking a bit at productivity, obviously, reducing fixed costs also delivers productivity increase. Closing down less efficient assets delivers a productivity increase. I think it's worth stopping here a little bit and look at some of these numbers as well.
FTE per ton, as an example, is not necessarily a very good measure of productivity and the impact it has on profitability. Salary costs differ a lot between different locations, but also value of ton differ a lot. And also, for instance, when we sold our Qafco assets, that had a lot of tons attached to it, but no FTEs. So for us, we look more at fixed cost per ton. And we do see that with the reduction in fixed costs that we've had, we've had an improvement over the last years. And also looking at it in real terms, we are roughly at the same level where we were in 2015. But I think what's important to remember here is that there are two sides of this equation. And going forward, we, of course, will continue working on fixed cost.
What's also important for here is to actually increase volumes and increase, of course, the profitability and the margin per ton of volumes. That is what we'll do going forward at the same time as maintaining control of cost and CapEx. That's kind of what leads us into our improvement program. Johan and Mónica have talked about the different measures that we do. If we try to summarize it, we've categorized it into four fairly broad categories, but I think specific enough to give an idea of what we're trying to achieve. The first one, maximizing asset utilization. That's what Johan talked about. That's about getting more tons and more profitable tons out of the CapEx, out of the assets that we already have. That we will do through reliability improvements, through de-bottlenecking at fairly reasonable investment levels.
From a value creation perspective, increasing production through the assets we already have is obviously what makes the absolute most value for the shareholder. On the logistics side, it's also a lot about scale. We talked about the ammonia example. If we sort of scale up that example, we see a significant improvement potential in reducing cost per ton shipped ammonia. We ship a lot of ammonia. This comes about from all the changes that we've had over the recent years in the ammonia system. But basically, it's about bigger vessels. With the ammonia infrastructure we already have, we can expand that to take larger vessels at a very, very reasonable investment, as Johan demonstrated with one example from Porsgrunn. As Mónica also talked about, on the logistics side, on finished fertilizer, scale matters a lot as well.
The bigger the facility you have, the lower your logistics cost per ton. And there also, we see an improvement potential through growing more through our existing assets, using better utilization of the CapEx that we have. On the market side, which is, of course, also a very, very important aspect for Yara, we have a lot of different initiatives. Growing our market share in Europe is one important element. And of course, after the turmoil that we've had over the recent years, we now have a strengthened position. We've done a lot of changes and adaptations, both on the asset side as well as the market side. And we have a clear aim. And we have regained significant market share in Europe. And of course, we always benefit more from selling close to our chimney.
At the same time as we use our global system, both to generate significant premiums outside Europe, as well as having the flexibility to adapt to changing market conditions, both in Europe as well as in other markets as well. We talked about adjacent offerings, and Mónica talked about that: YaraVita, YaraAmplix. Here we have a growth opportunity in a market that we're already in and already delivered significant growth, which, of course, is tightly linked to our core, but also represents a different revenue stream than the traditional fertilizer as well, and this also ties very much into the smaller to medium-sized investments that we have prioritized over the last years, such as the YaraVita plant in the U.K., such as the NPK expansion in Cartagena, which are now more or less complete.
Now, of course, it's the time to harvest the synergies from that as well. Of course, finally, we will maintain a very strict focus on cost and a strict focus on CapEx allocation. With this, we've set a target of increasing our EBITDA from improvements by $200 million by the end of 2027 and $350 million by the end of 2030. These improvements, we believe, will increase shareholder value creation, but also increase our earnings resilience and robustness further, which, of course, is important. We do have a robust business model. We have stated that and demonstrated that it is more robust through the volatility that we have in the markets. We are, of course, also naturally impacted by shifts in the global commodity markets.
It's important for us to also have transparency on this and making sure that the improvement targets we set are sort of separate from how markets develop, even though, of course, a big part of the job we do is also to adapt to that market development. We have outlined some earnings scenarios. The two main drivers for Yara's profitability from an external perspective are urea and TTF. Of course, there are others as well. But I think looking at this matrix gives you, and this is in line with the sensitivities that we post on our website as well, gives you an impression of where the market can take us. I think adding to that what Silje presented, a scenario with tightening supply demand scenarios on the urea side, also a lowering gas price environment in Europe, sets an outlook for improved earnings going forward.
Of course, the improvement program will nevertheless go its course. We will follow these targets irrespective of how the market develops. On the CapEx side, we have for several years guided at an average level of approximately $1.2 billion in real terms. Investments in Yara are strictly scrutinized. We have also been below that level in nominal terms in several years when that made sense. I think at the end of the day, what matters for us is to make sure that both the fixed cost and the CapEx that we deploy have the best possible shareholder return, but also applying capital discipline, not only in terms of making sure that our balance sheet is strong, but also making sure that we don't take on more than what we can handle.
We have put a lot of emphasis on maintenance CapEx, making sure that also the maintenance CapEx goes where the return is the highest. And we've stabilized that around the levels you see. Johan talked about the natural variations there is. And also looking at our assets, also investing in cash-generating assets is always a good investment as well, because those are the cheapest expansion tons that we get. On the total CapEx spend, also including the potential investments in the U.S., we do believe that the guidance that we've given on average is a fair estimate going forward as well. So that guidance is kept. And in the case of a positive FID, that project will, of course, be a priority. There will be flexibility for other smaller investments, rather investments into our capacity that make sense as well. But rest assured that capital discipline will definitely apply.
And this is also one of the main reasons why the project with Air Products that we are evaluating fits well. It represents a value, a creative opportunity for both parties, but it also represents a lower CapEx for Yara compared to a lot of other alternatives. Project economics in total for both parties, of course, is reflected by the underlying project. And we do believe that both the scale and the early adoption or the early start that this project has, having come as far as it has, gives it a specific advantage compared to other projects. It is also a model that we know quite well. We have the exact same setup in our Freeport plant where we buy hydrogen over the fence. And so this is in line with sort of the industrial gas business model as well.
And it reflects the 45Q tax credits, which then the carbon capture takes place on the Air Products side. And they are responsible for capturing this. But of course, that reflects the overall project economics and the price for the hydrogen and the nitrogen that we buy. And it does give us the same gas-to-nitrogen exposure as we have in our ammonia plant, which is what we seek, which is the sort of the hallmark of the Yara share as well. And then, of course, from a business case perspective, everybody obviously wonders, what about CBAM? Well, I think first of all, it's important to remember that to do a successful project for Yara, lowering the gas cost and having the right CapEx are the two most important factors for a project with stronger return. Then in addition, there's the 45Q tax credits.
Then obviously, building a plant that can capture CO2 with decarbonized ammonia, the CBAM, so the price you get for decarbonizing obviously plays a big role as well. As Svein Tore already said, CBAM is not canceled. Carbon pricing in Europe is definitely not canceled. We will, alongside other metrics such as construction costs and other factors that go into the business case before FID, monitor that very, very closely up until the final investment decision together with AP, which is slated somewhere mid this year. But as we've stated all along, Yara will only make investment decisions if we believe it's profitable for our shareholders. We have the flexibility. We have a lot of options.
I think comparing this project to all the other projects that we have seen, we do see that it does offer a more attractive EBIT profile, a more attractive cash flow profile looking at the entire investment period. I think also it fits very well into our system, which ultimately benefits both parties. Also, the U.S. project, but let's not also forget the NEOM project as well. I think it's also important when you think about this project compared to other projects to actually get to the market in Europe. You need to get in, and you need to have the ammonia import tank infrastructure to get there. Johan referenced some of the acquisitions that have taken place.
I think we believe that at sort of a $300 million level, that kind of reflects pretty well what it costs to build ammonia infrastructure in Europe as well. And to have a decent return on that, it means that the cost of bringing ammonia into Europe, whether you build the capacity or rent the capacity, will be somewhere between $60 - $80, perhaps even more depending on the scale of the assets. And this is infrastructure that we already have. But again, we will scrutinize this very carefully, look at all the parameters. And we do realize that sort of our, I wouldn't say dragging our feet, but that this, of course, is to some frustration to the market. But at the end of the day, the most important thing is that we take our time and make the right decision for the shareholders.
And from a capital allocation perspective, it is also, I think, which is a question that a lot of you have, good to think about this potential acquisition CapEx of the finished plant as evenly distributed over the period through 2030. From a capital allocation perspective and our capacity, that is at the end of the day what matters. There will be a milestone payment plan, even though we take over the plant only when it's finished. Exactly how that looked like is not commercially fully finalized yet. But I think from a capital allocation perspective, it doesn't really matter from a plan several years ahead at any rate.
But looking at that and just taking our most recent last 12 months' CapEx, excuse me, cash flow as a starting point, deducting our sort of average maintenance CapEx level as well, slating in sort of a distributed split of the potential acquisition cost with Air Products, also factoring in improvements, we do see that there is flexibility both for dividends as well as potential other opportunities going forward. I think what's important to remember in this context is that if there are great, very value-accretive short-term opportunities that we can take, it always makes sense for Yara to take it. I think what's important to remember is that even though we have the cash to do so, we will still apply very strict capital discipline. I think very much making sure that we don't take on anything more than what we can handle.
For sure, if we do an investment here, that will be our priority. This is also in line with our dividend policy through the period and also, of course, in line with our commitment to our investment grade rating. We have and we maintain a policy of distributing 50% of net income subject to our capital structure. When the capital structure allows, we have also distributed extraordinary dividends in the past, as demonstrated here by distribution more than 50% of our adjusted net income and EPS. I think our main message is that capital discipline will remain strong. Dividend and shareholder distributions remain a priority. In a cyclical industry with the uncertainty there are in this industry, of course, ensuring a strong balance sheet through the cycle, also through a downturn in the cycle is important.
That keeps our flexibility, but also keeps predictability for distributions in the longer term, so to conclude, we now launch on a continued and broadened improvement program for Yara in the short to medium term. This will build on the successful $180 million cost program that we've done, but it will be widened and address much more factors than just cost. Meanwhile, work to de-average our energy cost, lowering our energy cost, will remain a priority. We have significant flexibility. We have flexibility on timing on how to do that, and we also believe we have the best overview of which projects that can succeed, and combining that with what we believe will be a tighter nitrogen market in the medium term, as well as a lower gas price environment in Europe, we do believe that Yara is set for substantial value creation going forward.
And with that, I give the word back to Svein Tore .
Mineral fertilizer has saved more lives than any other invention that mankind has created. The story of Yara is incredible. It's about the fusion of the most basic elements that nature has given us. We use nitrogen from the air, salts from ancient seas and oceans, and phosphate rock from the ground. These are the natural raw materials that make up Yara's mineral fertilizer. Yara was born in 1905 by great minds and great people. And today, half of the world's population is fed using food grown with mineral fertilizer. Yara's business is all about the farmer. Farmers need to ensure that the soil is healthy, that it has the right nutrients in it, and that it's sustainable. And it matters because by 2050, the world will have nine billion people.
We need 60% more food, but we cannot produce more emissions. The problems that the world is facing are bigger than just one company. We have to reach across boundaries to solve these things. We've done that throughout our history and today is no exception. For Yara, it's about bringing people together, feeding the world, and looking after the planet.
Well, thank you, Magnus. And I'll have a few concluding remarks and slides before we head over to the Q&A session. And as you've seen throughout this morning's presentation, Yara has a proven business model. And it's well positioned, and it's demonstrated its resiliency over a number of years. And we're strongly positioned to increase the shareholder value further. And since the very start of our company in 1905, we built that. And it's to respond to the global food needs. We built on that industrial strength.
We created a global reach throughout the globe, and with a deep agronomic knowledge and competence that we've talked about this morning as well. These remain our competitive edges. Today, we support food production in 140 countries across the world. Our diversified footprint and also the integrated value chain, this is really what has helped us to navigate volatility in our markets. It's helped us through energy crisis. It's helped us through geopolitical shocks while still continuing to create strong returns. Yara is a really critical player in the food system. With our products, we are enabling the production of 193 billion meals a year, 193 billion meals a year because of Yara's products. That is a strong purpose, and it says something about the scale of our operations, but also the importance of Yara in the global food system.
Looking forward, the global food system is set to go through some significant changes driven by sustainability. It's driven by technology. It's driven by efficiency. The Food and Agriculture Organization, FAO, did a study back in 2024 where they analyzed the totality of the food system and also looked at the hidden cost of the food system. And what do I mean by hidden cost? Well, it's the impact of emissions. It's on land use. It's on water use. It's on unhealthy dietary patterns, on poverty, undernourishment, runoffs, all of this. That has a cost that is not really captured in the food system today. The totality of that is $12 trillion a year. That needs to be addressed. And as we talked about, and Mónica dug deep into it, how do you balance the nutrition for plants?
How do you ensure that you have the right combination of that to ensure that they grow and that they are strong? It's the same thing for us humans. We also need balanced diets. If you look behind it and look at the food that we're eating, is it as nutritious as it should be? The reality is that it is not. What's the best way to influence that? It's through the crops. We're able to do something about that. We're utilizing that in how the plants grow. Mónica talked about our trip to Spain and how it's utilized by the farmers to grow food in conditions that they're not really set to grow in. If you give the right, call it diet to the plants, they are more resilient. They are able to grow even in more challenging places.
And if there's one profession that is the most impacted by climate change, well, I think it's hard to think of any profession more impacted than farmers. They're working out in nature. And with our solutions, we can help them to be more resilient and to grow more efficient crops and to deal with the challenges. So whether that's drought, flooding, heat, cold, and so on, it's about the crop nutrition opportunity here. So just like in 1905, when we were well positioned to deliver on one of the biggest challenges faced in the world at that time, well, we are also positioned on top of that to support some of the biggest challenges that the world is facing today. And that is something that comes on top of what we're already doing today. And we're set to grow that further.
Then, summarizing our presentation, the key to Yara's resilience and also the value creation, they can be simplified into these four categories. And I hope that through the presentations this morning, we've been able to dig further into each and every one of those and how we're delivering on that. Now, you may view Yara as a complex company operating in a complicated world. And to some degree, that's right. But if we allow ourselves to zoom out a bit and look at this, I think we've proven over the last years and throughout our history that our business model is well positioned to deal with this and that these four competitive edges, they give us the resilience and also the flexibility to deal with these challenges. And it all boils down to this on operating at scale. It's about operating with excellence, high productivity.
It's about flexible sourcing, flexible sales, and on top of that, the knowledge margin. Not more complicated than that, really, so these are the key drivers of our success to date. They will be the key drivers for our success going forward as well, so final slide. We have a strong starting point, and we have a business model that still has significant untapped potential, and we're committed to drive further sustainable value creation and to increase shareholder returns. We aim for concrete EBITDA improvements of $200 million and $350 million for 2027 and 2030, respectively, and these targets are substantiated by concrete actions behind them, and I believe that we have demonstrated our ability to deliver. We have flexible ways and flexible pathways for energy flexibility and diversification, and we have both. All my colleagues really talked about it.
We have the infrastructure in order to make it happen as well. So you need that full integrated value chain and the flexibility to get this done and physical assets to do that. We have that. And we have prepared our company step by step to make this possible. And importantly, we use that knowledge base also to approach how we support agriculture through nutrient use efficiency. And that's irrespective of any regulation. So on top of that, we have a strong balance sheet as Magnus just showed and a strong commitment to our credit rating. And we have the ability to deliver. So on that note, I want to thank all of you for listening. And I'll hand back to Maria, who will then coordinate our Q&A part of this session. Thank you.
Thank you, Svein Tore . I will now ask all presenters back on stage so we can move to the Q&A part of this session. If you are joining the CMD online, I'll remind you that you can ask questions by sending them to the email address cmd2026@yara.com, and for people in the audience, you can just raise your hand, and my colleagues, Frederik and Victoria, will come with a microphone, so please wait till you have the microphone in hand before speaking so that everyone can hear. I can start quickly with a question received online, and that is regarding the EU regulatory development. Bear with me. It's a bit of a long question. I'll try to shorten it. It's regarding the discussions from the EU Commission on Wednesday, and the question is, with what impact has the suspension of the ammonia and urea import tariffs?
What impact does that have on Yara's earnings? And also, how does Yara expect the regulatory landscape to evolve around CBAM? And what implications could it have for the company's strategy, particularly the prospective U.S. blue ammonia project ?
Yeah, that's quite a bit. But I'll try to focus in on some of the elements, and then I'll get some support from my colleagues here. First and foremost, the communication creates a lot of uncertainty and confusion at a time when that is absolutely not needed. And if you take a step back, what was the intention here? It's about creating a level playing field. It's about Europe staying the course on decarbonization and yet supporting the industry so that if we are to produce one additional ton of fertilizer in Europe, we have to pay a carbon tax for that.
So the idea, and if you think about Europe then, if you need an additional ton of fertilizer, either you produce it internally or you import it. And the idea is then that it shouldn't be a disadvantage to produce it in Europe so that the emitter pays for the emissions, so that you pay the same cost when you're importing that into Europe, creating a level playing field. That's what we're aiming for. That's the intention. That's the methodology that the EU has developed over seven years. And it took quite a bit of time to create clarity on this. And this has probably added to some of the confusion going into this. It went into effect on January 1st. And then we had communication around this on Wednesday this week. So then there are two components of it.
One is the import tariffs that really have nothing to do with CBAM, but it's communicated in that context. So that remains to be seen how that's really shifting anything in Europe in terms of price levels. Then on CBAM, they have not suspended it or they haven't canceled CBAM right now. What they've said is that they will monitor it to see if there are unforeseen events or if there are emergency events that are unexpected. This is not unexpected. This is exactly what CBAM is supposed to do. So from that point, there shouldn't be any change at all. But clearly, and we also need to analyze this and fully understand how this will impact and what will happen in the market as a result of this. But we have to step back and also analyze why was this put in in the first place.
It's about Europe's commitment to lowering emissions. It's to create a level playing field. It's about strategic autonomy. That's what it's intended to do. So now then, seven days after implementing it, to do anything that undermines that would be highly surprising. But of course, we will communicate clearly around this. And we also share the concerns among the farmers on profitability and so on. But the quick way to have fixed this would be to take the revenue from CBAM and create incentives to pay that to the farmers. Emitter pays and the farmers are compensated in some way. So creating this kind of confusion at this point in time is not very constructive and will be very clear on that. So how this will continue to impact regulatory development, that's something that we will continue to work on.
But again, I have to emphasize it has not been suspended. CBAM is still in force. Then how does it impact our U.S. blue ammonia projects? And we touch on it on a number of our projects. None of them are entirely based on CBAM. But if CBAM is suspended or canceled, obviously, that will have an impact where we wouldn't likely have the required return on a U.S. blue project. And again, as I said in my presentation as well, no green transition with red numbers, then we would not proceed. So it's about profitability at the end of the day. And we're committed to that. But the infrastructure that we have in place, that was not set up for green or blue. We're building on the structure that we have. So that will be able to operate on gray as well. And we have that flexibility.
Then we'll go in that direction. We maintain that flexibility in our system.
Yeah. Maybe just add in terms of the earnings part of the question, which I guess was related to the regular most favored nation clause tariffs. I think the tariff on urea, I mean, Yara is long on urea and nitrates in Europe. So obviously, any price impact in Europe has a direct impact. I mean, it's 6.5%. So at $400, if they can sample, that's around $25 per ton. Per ton of nitrates is around $15. So I mean, it's an impact. It's not a massive impact as such. I think for reasons probably better described by Silje, but maybe in the breakout, it's not a given that taking that tariff away actually will reduce the price either the way that the market is structured and where that product comes from.
But I think that'll be a little bit lengthy to take here and now. We're, as you know, short on ammonia into Europe. So that has a positive impact. So I think it's hard to say. I think on the CBAM part, it's important to remember that CBAM is still in force. Nobody has taken away CBAM. So I would like to see the trader who would want to import knocking off CBAM of the price when they sell because there might be a retroactive reimbursement of that cost, which, by the way, wouldn't go to the farmer. It would go to the trader. So I think there are a lot of unanswered questions here, whether this has been properly thought through.
But as of now, I can't foresee that anybody in Q1 would sort of disregard the fact that you actually have to pay CBAM for every ton you import into the European Union today.
Okay. Questions from the audience there, Christian?
Yes. Thank you. Christian Faitz, Kepler Cheuvreux. A couple of questions, please. First, on your specialties, can you talk about the opportunities and challenges maybe of your P & K sourcing, and particularly on the K side, and whether it would make sense for you at some point to build a more sizable K position? I know you had plans in the past, but they went somewhere nowhere, I guess. And then the second question would be on the carbon sequestration. Can you talk about the cost dynamics there? For example, how much does the sequestration of a ton of CO2 cost you here offshore Norway? Thanks very much.
Can I start? So for the P and K position, it has been explained during the presentation that we had a system very well established before all this geopolitical turmoil, right? So overnight, all of this has more or less disappeared, and it has been explained that in theory, it took some time to be able to reshuffle the whole logistics system. That's what we had to do within an extreme short time frame, and today, where are we today? After several years, we have built two things. First, we have diversified our sourcing approach for P and K. We are much more global than what we used to be, having a straight line in the past from specific countries. Second, we have learned a lot on our production processes. It was clearly designed for this specific origin of the P and the K.
Today, we manage to get a production system significantly much more flexible than what it used to be. In that sense, we are in a much better position because we have been forced to than in the past. And we are constantly monitoring the position related to P and K globally day by day, month by month, in order to take the best possible position when it comes to sourcing our raw material.
And in addition to that, we have our phosphate mine in Siilinjärvi in Finland as well, and we continue to invest in that. And just given our size in the market, we are also an attractive partner. Of course, when we make as massive shifts as we had to do in 2022, it takes a bit of time to reshuffle and get that in place.
But the size of phosphate volumes that we're buying or potash volumes is so large that we're a very attractive partner to many players in the industry. And given our global footprint, we can also utilize that to source in the most optimal way to support our operations.
And I think on your question on the CCS, obviously, we can't go into the commercial details between us and Northern Lights. But what I can say is that there is, in the current market environment on ETS and the free allowances you get for that sequestration, there's clearly a positive per ton cash flow. And that's the core of the business case that is accretive, is the difference between the ETS and expectation going forward and the cost of actually doing the sequestration. Of course, then discounted and compared to the investment decision.
And then on top of that comes whatever money you can sell or can get of premiums for that product. But the base case is the money you save on or the free allowances you get on the sequestration itself.
And here, scale is important as well. And this is the biggest industrial decarbonization project with CCS in Europe, 800,000 tons. And through that, we're able to do. And also the location of the asset is such that it is possible to do CCS at this scale and at the economics that Magnus just indicated.
Okay. Questions? Yes. Thank you.
Yes. Thank you, Jonassen, ABG. Thank you for the presentation. I think I have three questions. I just wanted to follow up on the regulatory. Sorry for that, but we have to. Obviously, you are planning for different scenarios.
In one scenario where that CBAM was taken out of the equation, how would you, let's say, still be exposed to the ETS and increasing carbon cost? How would you think strategically into such a scenario? The second question goes to Silje. You mentioned that nitrate demand was down annually in the last 10 years. How do you explain that? That's one thing. And could you also talk a little bit about the consolidation that has happened in Europe, nitrate capacity in the last years, and how the market shares are now? And the final question would probably go into the downstream. And that would be, how would AI fit into your business model?
I'll start on the first one, and I'm not surprised that regulatory questions will be heading our way several times today. So let's say CBAM is canceled.
It isn't, but if it was, then it would be extremely surprising if ETS is still and the phasing out of free allowances would still be in place for the industry. I mean, if there's one region in the world that should have learned a lesson on what it means to be dependent, it's Europe. Look what happened on energy. We're depending on imports from Russia in particular. It made sense you had cheaper energy for some time until you didn't. And then we paid an enormous cost of that for households and industries. So then to go straight from that to significantly harming the production of fertilizer within Europe that is vital for food security, that would be trying to find the right surprising. Politically correct. I'll be clearer next week when I'm in Brussels on this one. But that doesn't make sense at all. Should it happen?
Then we're back to the flexibility. We can still import. Then we would bring in ammonia from other parts of the world, likely, and with carbon. Europe is not supporting the decarbonization either. If CBAM is canceled, then we can bring it in. We'll do that. That's back to the resilience that we have in our business model. It will hurt other players much harder in Europe. Hopefully, this will be understood once we start to dig further into the consequences of the communication around this, should we get to the conclusion that CBAM is canceled. I don't see how both of those can happen at the same time, where we phase out and then cancel at the same time. I don't see that as a realistic scenario.
It has to be one or the other, or it will be detrimental to food security and strategic autonomy in Europe.
And just to add from a financial perspective, in that hopefully hypothetical scenario where the EU would say, "Okay, we slam carbon costs on our domestic producers and everybody else can just import freely." Of course, I mean, the price level would reflect that carbon cost in the production in Europe as long as there's production. And we can import gray ammonia. So we're the same. But it would, of course, be detrimental to ammonia production in Europe. But perhaps they would probably realize that when there's one plant left. Hopefully before.
Yeah. On your second question, I think thank you for asking because that's a very important clarification.
The reason why nitrates show a declining trend in that illustration is because there has been no additional capacity being built within nitrates or CAN in that period, meaning that when nitrogen total demand grows, it's basically the product that has been growing that has had to cover for that shortfall. But it's not to say that underlying demand for nitrates necessarily has changed. That is still a very key product in the market, as you touched on as well, especially in Europe, and a product that commands a premium in the market. So it's a reflection basically that no one is adding capacity on those products. And then I think when it comes to this development within the European industry, of course, it's been a volatile couple of years that has impacted everyone, us included.
Of course, we have been in a good position, as both Johan and Mónica have shown, that we have some advantages that have enabled us to continue to produce while some others might not have had that opportunity. But I think in terms of kind of developments on market shares, etc., I don't have much comments. I don't know if you want to add to that.
No, no. You explained quite well. Yeah. Well, we see that demand is growing, and then we are ready to supply them. But no, we see that demand is growing. Also because there is a need for autonomy of food production as well in the region. Europe is self-sufficient in food production. That is, I think it's the only sector where we are self-sufficient in Europe, and for that, the application of fertilizer and access to fertilizers is critical.
The population keeps on growing. So not at the speed I would like, but at this point.
And AI, one of our favorite topics. No, you started and.
I started and you follow. AI is one of our favorite projects and topics. The big advantage of AI is the chance and the possibility to develop predictive models. And for downstream in particular, that would be a great help for farmers. Actually, we have a couple of projects. One is in green grass that we have not finished, concluded, and the other in grains. So to predict the yield will help the farmer in the end because we are helping the farmer to reduce the grade of uncertainty. To predict the estimated yield will help the farmer to take decisions on the application rate.
With that, we can also benefit out of it because that will predict our sales as well as forecast and can make our supply chain operations and decisions in the logistical hubs that we have more efficient. That is in a nutshell.
To add on that, I mean, data is important and utilizing science to make the right decisions. If we think about our product portfolio, the types of product that we're producing, the competence that we have, the more data-driven the decisions are and the more data that goes into regulation, the more data that goes in throughout the whole food system, that's very supportive of our business model and the products that we have. There's huge untapped potential. That's not strange given the complexity of agriculture and all the variables. You're out in nature, right?
So how do you combine weather and soil health, ensuring that you have the right nutrients in the soil? How does that translate into the food system? What can you do in terms of when you fertilize in order to ensure that you have the right yield, the right quality, even time to market? All of that combined will make a very good or a much better decision-making tool for the farmers. And when they have that decision-making tool, that will in turn create a demand for fertilizer products, and they will be more specialized and advanced. And that's the majority of our product portfolio. So we'll be able to tap into new areas as well.
We were also, I mean, I mentioned I was in Thailand to see now how drone technologies used satellite mapping on the fields of the farmers to analyze what do they need where, even drone application of fertilizer. Then weight is an issue as well. You want to have the most effective fertilizer per unit of weight as well. To see how they're completely optimized, that's sort of a trip into the future for us. In the future, that might not be that distant.
Yeah. Frederik, can you get the microphone there?
Thank you. Good morning, Sebastian Bray of Berenberg Bank. I have two questions, please. The first is on the development of nitrate premium or nitrogen specialty premium over there assumed for the next four or five years. The prices of urea have been quite nice.
The prices of the premium have been quite nice. I can understand why the market for urea might remain tight, but why would the specialty premium continue to perform as they have? Is there something supply or demand-led in that assumption? And my second question is on the NEOM project. If I look at the tonnage not allocated to total of clean ammonia for this project, it's something like 0.7 million tons. And if I assume a commission is applied to that by Yara, it could be quite nice, mid-double-digit million-dollar figure. Is this deal signed and concluded, or is it, well, everything is up for negotiation as part of the discussions with Darrow, with Air Products over Darrow at this stage? And does Yara have a right to all of those volumes, or is it something more minor? I might squeeze in a third as well.
You mentioned the EU ETS emissions war chest, the $400 million-$500 million. Is your base case assumption that that remains flat, or is it slightly depleted over the next four to five years? Thank you.
So I will start with the nitrate premium. Yeah. The question, if I understood correctly, how can we guarantee or foresee that it's sustainable in time. And there are several reasons. One is that our strong footprint in Europe, because nitrate businesses and market is in Europe, the main one, that it works at farmer level. So the nutrient use efficiency at farm level is substantially better than the effect of urea. There are less losses as well and less leakage applied in the right rates. Yara has a footprint, has also the reputation.
The farmer has access to agronomic advice when it is needed, has access to digital tools that support them on deciding the application rate on nitrates. That works especially well for nitrates instead of urea because there are less losses as well. Also, we are improving our product portfolio in nitrates as well with nitrogen plus sulfur. That is one of the main products that we have in our portfolio. Sometimes we don't talk about this enough. There is this deficiency of sulfur in Europe, and there is a need for nitrogen and sulfur. We combine both in several grades that we have as well. So that also builds on sustainable margins and premiums going ahead.
On NEOM, we have announced that we are in advanced negotiation with Air Products on two projects, NEOM and Darrow.
It is quite clear that advanced negotiation means that the deal is not done, and we are also clear that we look at the totality of both projects and, more generally speaking, of the whole ammonia strategy. In addition, the progress of the two projects is at a different stage. NEOM is supposed to come online in 2027, while Darrow would come online by 2030. In terms of negotiation, we also have to respect the fact that the two projects are not at the same stage, and there is an urgency on concluding on one compared to the other. To grow on our clean ammonia segments, we also need to have credibility.
To have access and to confirm that we have access to this clean ammonia source is also vital in order to gain credibility, to get to the customers, and to be able to sell and to develop the market related to clean ammonia.
I think maybe important to add that even though, of course, the, let's say, enthusiasm for clean ammonia has been going in waves, it's important to keep in mind that this is a combination of almost one of the only few projects there is, and particularly on renewable ammonia with NEOM, and it's close to being completed, combined with the only player who can really import ammonia into what's the main market for ammonia, and certainly that type of ammonia, which is Europe.
I think, I mean, we don't have an ownership stake in NEOM, obviously, and a commission model is kind of the model that we've outlined. But I think what does that imply? That implies also that there's a net back to Air Products, right? And I think what's often overlooked in the market is that it's not for free to get ammonia ashore, right? We've seen that with acquisitions lately, and we know you can estimate what that cost is. So I mean, the point being that there are clearly strong synergies in this partnership, right? And which, of course, benefits both parties.
And then on the last one, on the EU ETS question and our bank, and as we showed, we have 6 million tons in the bank.
That's really the result of what we've done over a number of years now to increase our energy efficiency, lowering our emissions so that we've been able to be below the allowances and put that into the bank. And then we'll further help on that now with the CCS project in Sluiskil. But as Magnus said here, that's how we monetize in a way that we're then paying for carbon capture and storage, but then we have allowances that we can use to offset that going forward. Whether it's flat or improving, it depends a bit on our production as well because with the trajectory now, there will be a phase-out, but we can choose to produce or not and then import as well.
That's always an evaluation that we do based on economics, whether it makes sense to produce or import or actually go ahead and sell allowances. So we can't really predict that. That's more utilizing the flexibility that we have in our system to make the most profitable decision for Yara.
We're slightly behind schedule. So I'll take a quick question from online, and then luckily physical participants can join the breakout session and ask lots of more questions there. Final question is on Darrow project as well. So how do you see CapEx inflation risk, and also what is your plan B if you don't go through with the Air Products project?
As I mentioned, this project is benefiting from a head start. So a part of the risk has already been reduced by having a head start: engineering, construction of equipment, and procurement, and several activities like that.
But we all know the construction market in the U.S., how it is today, is quite heated, right? So that is clear that the main task from now on is to get the CapEx right and to have the precise information about the CapEx it will take to bring the project to the finish line. We will work hard supporting Air Products with our ammonia expertise and the expertise we have gained over the past years on developing our own project in order to have all the chance for this project to succeed. When it comes to potential alternatives, we have always been doing that. We have always monitored the entire landscape of projects being developed there, and we will still continue doing that.
But so far, it has been explained by myself, by Magnus, that this is, as of today, the best option based on the whole market intelligence we have developed there that we have identified and we are going to pursue from now on.
And this is a project that, I mean, there are strong synergies between Air Products and Yara. So that is our primary path. But of course, for any project, and I think this is what we see across right now, offtake is key to have that captive demand that we have as one part, but also the physical infrastructure in order to move ammonia. So we're bringing in a very valuable part of enabling a project like that to happen, and that remains regardless of what. But this is our primary path, and we're working very well together with Air Products to develop that.
I think from a CapEx perspective, I mean, we want to do this project. Air Products want to do this project because we believe it will be shareholder very accretive at a circumstances and the assumptions that they are. But part of CapEx discipline is to consistently view all those assumptions and also make the right decisions if it turns out not to be the case. I mean, there's no other driving force behind any companies than profitability in this. And as mentioned, we're not driven by the fact that we have to do anything by a certain date. We have multiple alternatives with the infrastructure that we have.
Okay. Thank you to everyone. That marks the end of this hybrid session. So for online participants, we hope you enjoyed today's presentation, and thank you for watching.