Market evolution: Carbon dioxide (CN 281121) — 2015–2025

Introduction

This report examines the evolution of EU trade in carbon dioxide (customs code 281121) over the period 2015–2025. Carbon dioxide is classified under Chapter 28 (inorganic chemicals) and has a direct Prodcom mapping (20.11.12.30). The data reveals a market undergoing a profound structural transformation: the EU tripled its export volumes while simultaneously shifting from a net importer to a net exporter, driven by a significant expansion of domestic production. At the same time, the geopolitical landscape of EU trade partners was reshaped dramatically, with Eastern European trade flows reoriented sharply following the 2022 conflict in Ukraine.

1. The Volume-Price Divergence: Export Boom Amid Collapsing Unit Values

Export volumes nearly tripled while unit values halved

The most striking feature of EU carbon dioxide trade over the decade is the sharp divergence between export volumes and export prices. EU exports to non-EU countries surged from 116,592 tonnes in 2015 to 336,080 tonnes in 2025 — a 188.3% increase. Over the same period, the export unit value collapsed from €371 per tonne to €164 per tonne, a decline of 55.7%. The net effect on export value was a modest 28.2% increase (from €43.3 million to €55.5 million), masking a fundamental shift in market dynamics.

Import prices moved in the opposite direction

In contrast to exports, EU import prices rose over the same period. The import unit value climbed from €175 per tonne in 2015 to €225 per tonne in 2025, a 29.1% increase. Meanwhile, import volumes edged down from 201,834 tonnes to 185,981 tonnes (−7.9%), and total import value rose from €35.9 million to €42.0 million (+17.1%). This widening price gap — falling export prices alongside rising import prices — suggests that the EU increasingly competed on volume and cost in external markets while importing higher-value or more costly CO₂ from specific suppliers.

The export price decline reflects oversupply and commoditisation

The convergence of export unit values toward a low of €162 per tonne (the minimum reached during the period) suggests increasing commoditisation of CO₂ in EU export markets. The export price dropped below the import price from roughly 2020 onward, reversing the historical relationship. This likely reflects the impact of expanded EU production capacity flooding regional markets with competitively priced product.

2. A Structural Shift: The EU Transitioned from Net Importer to Net Exporter

Domestic production expanded by two-thirds

EU production of carbon dioxide grew substantially over the decade, rising from 3.24 billion kilograms in 2015 to 5.40 billion kilograms in 2025 (+66.5%). Production value increased even faster, from €382 million to €680 million (+77.8%), indicating that while production volumes grew, domestic pricing held up better than export pricing. This capacity expansion was the fundamental driver behind the EU's changing trade position.

Net import reliance turned negative

The EU's net import reliance shifted decisively from a small positive value (+0.44% in 2015) to a negative value (−1.86% in 2025), meaning the EU became a net exporter of CO₂. The swing was even more pronounced at its peak, reaching −3.37% at one point during the period. This represents a 524% change and confirms a structural transformation from a balanced or slightly import-dependent market to one with a consistent export surplus.

Export propensity nearly doubled

The export propensity — the share of domestic production directed to non-EU exports — rose from 4.5% to 8.2% (+82.1%). This metric registered the highest salience score (123.9) among vulnerability indicators, underscoring that the growth of outward trade orientation was the defining vulnerability-relevant trend of the period. Trade intensity also rose, from 9.0% to 13.7% (+52.2%), though at a lower salience score (88.5).

The Netherlands led EU specialisation

Among EU Member States, the Netherlands displayed the strongest export specialisation in carbon dioxide in 2025, with a Revealed Symmetric Comparative Advantage (RSCA) of 0.58 and an RCA of 3.74. The Netherlands accounted for 54.2% of EU production and 14.5% of total EU exports. Other specialised producers included Estonia (RSCA 0.40), Latvia (0.35), Austria (0.31), and Finland (0.23). At the other end, Ireland (RSCA −1.0, no recorded production), Romania (−0.91), and Luxembourg (−0.82) were the least specialised, relying heavily on imports to meet domestic demand.

3. Geopolitical Reorientation: Partner Shifts, Shocks, and Diversification

Eastern European trade flows were reshaped after 2022

The most dramatic partner-level shifts in EU CO₂ trade correspond to the geopolitical rupture following Russia's invasion of Ukraine in early 2022:

• Belarus: EU exports collapsed from €1.09 million in 2015 to just €1,164 in 2025, a 99.9% decline.
• Russia: EU exports fell from €434,359 to just €81, effectively a complete cessation (−100%).
• Ukraine: Conversely, EU exports to Ukraine surged from €1.77 million to €5.36 million, a 202.4% increase, likely reflecting Ukraine's growing need for imported industrial chemicals amid wartime disruption of domestic supply chains.

Import sources diversified away from Norway and Israel

On the import side, the EU's two largest suppliers in 2015 both saw their share decline significantly:

• Norway: Import value fell from €8.24 million to €4.84 million (−41.3%), despite Norway remaining a top-7 partner.
• Israel: Import value plunged from €9.13 million to €3.84 million (−57.9%), from what was the single largest import source in 2015.

These losses were offset by the rapid growth of imports from closer or newer suppliers:

• North Macedonia: Imports surged from €2.84 million to €8.34 million (+193.8%), making it the largest EU import source by 2025.
• United Kingdom: Imports more than doubled from €2.73 million to €5.85 million (+114.2%), potentially reflecting post-Brexit trade reorientation.
• Switzerland: Imports grew from €595,000 to €1.96 million (+229.8%).

Market concentration decreased on both sides

The Herfindahl-Hirschman Index (HHI) for import concentration fell from 1,494 to 1,128 (−24.6%), while export concentration declined from 1,665 to 1,155 (−30.6%). Both readings remain below the 2,500 threshold associated with a highly concentrated market, but the declining trend confirms that the EU broadened its trade relationships over the decade. However, the volume-based export HHI increased from 1,751 to 3,004 (+71.6%), indicating that while the EU diversified its export value across more partners, export volumes became more concentrated — consistent with the massive volume surge directed at a handful of key markets.

Notable price shocks point to supply disruptions

The volatility analysis detected several significant price shock events:

The North Macedonia shock is particularly striking: a 109.8% price increase in 2022 with an abnormality score of 669.0 and a 31.4% value share, suggesting a major supply disruption from that country coinciding with the broader energy crisis in Europe. Among import partners, Israel exhibited the highest overall volatility (coefficient of variation 0.60), consistent with the large swings in import value from that supplier. On the export side, the United Kingdom showed the highest volatility (CV 1.36), reflecting the large and variable nature of bilateral CO₂ trade.

Within the EU, Germany and Poland emerged as export growth leaders

Among EU reporting Member States, export growth was led by several Member States that scaled up their non-EU shipments substantially:

The Netherlands, despite remaining the largest single exporter, saw its export value decline by 45.3% — a consequence of the sharp unit-value compression in its high-volume trade. Meanwhile, import-side dynamics within the EU showed Italy (+340.8%) and Ireland (+57.4%) as the fastest-growing importers, while Denmark (−38.6%) and Sweden (−42.0%) saw the steepest declines.

Conclusion

The EU carbon dioxide market underwent a fundamental transformation between 2015 and 2025. Domestic production expanded by 66.5% in volume, enabling the EU to shift from a marginal net importer to a consistent net exporter. This capacity growth, however, came at the cost of significant export price erosion: unit values halved from €371 to €164 per tonne, even as volumes nearly tripled. The result was a commoditisation of EU CO₂ exports that compressed margins despite strong volume gains.

Simultaneously, the geopolitical landscape of trade was redrawn. The collapse of exports to Belarus and Russia, the surge of exports to Ukraine, and the reorientation of imports toward North Macedonia and the United Kingdom all reflect the realignment of European trade flows following 2022. Price shocks — most notably the 110% import price spike from North Macedonia in 2022 — underscore the vulnerability of EU supply chains to sudden disruptions, even as overall market concentration decreased.

Looking ahead, the key question for EU policymakers and industry participants is whether the continued expansion of production capacity can be sustained without further eroding export prices, and whether the diversification of trade partners provides sufficient resilience against future supply shocks. The rising export propensity (now at 8.2% of production) signals growing exposure to external market conditions — a dynamic that warrants close monitoring.