India as global leader
India aims to produce 5 million tonne of green ammonia by 2030 through state subsidies under the National Green Hydrogen Mission (NGHM) to enhance self-reliance and reduce imports. The country has also signed agreements with local manufacturers for the production of 724 lakh metric tonne (mt) of green ammonia for domestic use. For India, ammonia is directly connected to country’s food production as it is main ingredient for producing the fertilizer Di Ammonium Phosphate (DAP) which got disrupted due to Iran war.
Currently, over 70 per cent of the approximately 30 million mt of ammonia required in India is imported, primarily in the form of grey ammonia sourced from fossil fuels like natural gas. Major suppliers include Oman, Saudi Arabia, Qatar and Bahrain but recent geopolitical events, particularly the West Asia crisis, have interrupted supply routes through the Strait of Hormuz. The production process of grey ammonia is highly carbon intensive. For every tonne of ammonia produced, about 1.9–2.6 tonne of CO₂ is emitted. Currently, India emits approximately 25 to 43 million tonne of CO₂ per year in the production of grey ammonia that accounts for about 5-10 per cent of global carbon emissions of around 450 million tonne of CO₂ each year. In terms of the overall picture, this represents roughly 1.2 to 1.8 per cent of total global greenhouse gas emissions. Under the Paris Agreement, India is required to lower its emissions by transitioning to green ammonia which involves using electrolyzers and renewable hydrogen.
However, to access the EU market, Indian companies must comply with the stringent Renewable Fuels of Non-Biological Origin (RFNBO) regulations. A senior government official indicated that while India’s policies are suitable towards the domestic market but compliance with RFNBO is necessary for accessing EU markets. He noted that the strictness of EU regulations may deter long-term investment in the sector but expressed hope that PM Modi’s visit to EU countries this month could address these challenges.
EU rules may derail India’s ambition
On January 27, the EU and India concluded a significant Free Trade Agreement, referred to as the ‘mother of all deals.’ Despite this, the EU will apply the Carbon Border Adjustment Mechanism (CBAM) to ammonia imports based on their CO2 intensity, with green ammonia, characterized by zero CO2 emissions, exempt from the tariff.
However, India faces structural challenges that hinder the development and export of green ammonia to the EU. EU Delegated Acts 2023/1184 and 2023/1185, adopted in 2023, established stringent criteria for classifying ‘green’ hydrogen,’ which must be produced from renewable fuels of RFNBOs. The regulations introduce three key requirements: additionality, temporal correlation and geographical correlation.
