26 Jun Green Revolution 2.0: SECI’s ₹1,533 Cr Tender Paves the Way for Green Ammonia in Fertilizers
This article covers “Daily Current Affairs” and the Topic of Green Revolution 2.0: SECI’s ₹1,533 Cr Tender Paves the Way for Green Ammonia in Fertilizers
SYLLABUS MAPPING:
GS-3-Environment- Green Revolution 2.0: SECI’s ₹1,533 Cr Tender Paves the Way for Green Ammonia in Fertilizers
FOR PRELIMS
What is green ammonia? Discuss its significance for India’s fertilizer and energy sectors
FOR MAINS
What are the key challenges India faces in scaling up green ammonia production?
Why in the News?
The Solar Energy Corporation of India (SECI) has issued a landmark tender for the annual supply of 7.24 lakh tonnes of green ammonia, marking a major push towards decarbonising India’s fertiliser sector. Released on June 7, 2024, the tender targets 13 fertiliser plants nationwide. It falls under Tranche I of Mode 2A of the Strategic Interventions for Green Hydrogen Transition (SIGHT) Scheme. The move aims to replace fossil fuel-based hydrogen with cleaner alternatives. The deadline for bid submissions is June 26, 2025.
What is Green Ammonia?
Green ammonia is ammonia (NH₃) produced using green hydrogen derived from renewable energy sources like solar or wind, instead of fossil fuels. It consists of nitrogen and green hydrogen, making it a clean fuel and chemical feedstock. Unlike grey ammonia (from natural gas) and blue ammonia (from natural gas with carbon capture), green ammonia has near-zero carbon emissions. It plays a vital role in decarbonizing the fertilizer industry. Additionally, it holds potential as a green fuel for shipping and power generation.
Why Green Ammonia is Important for India
1. Import Dependence: India relies heavily on imported natural gas for ammonia production, exposing it to global price and supply risks.
2. Fertiliser Link: Ammonia is crucial for nitrogen-based fertilizers like urea, vital for Indian agriculture and food security.
3. High Emissions: Grey ammonia production emits large amounts of CO₂, hindering India’s climate goals.
4. Trade Deficit: Natural gas imports worsen the trade deficit; green ammonia can reduce this burden.
5. Energy Security: Green ammonia, made from renewables, enhances self-reliance and supports Atmanirbhar Bharat.
6. Climate Commitment: It aligns with India’s net-zero targets and promotes sustainable industrial growth.
7. Export Potential: Green ammonia offers a new export opportunity, especially to countries seeking clean energy imports.
8. Support for Green Hydrogen Mission: Its adoption supports the National Green Hydrogen Mission and builds a green hydrogen-based economy.
Strategic Interventions for Green Hydrogen Transition (SIGHT) Scheme
1. Part of National Green Hydrogen Mission: SIGHT is a flagship component under India’s National Green Hydrogen Mission aimed at accelerating the production and use of green hydrogen and its derivatives.
2. Mode 2A – Demand Aggregation: Mode 2A focuses on demand aggregation and offtake support for green hydrogen derivatives like green ammonia, reducing market risk and encouraging private investment.
3. Support for Industrial Transition: It targets hard-to-abate sectors like fertilizers, refineries, and steel by promoting the shift from fossil-based hydrogen to green hydrogen.
4. Long-Term Purchase Agreements: The scheme offers long-term offtake assurance through competitive bidding, enhancing bankability of green hydrogen and ammonia projects.
5. Reducing Production Costs: By aggregating demand and offering offtake security, Mode 2A helps bring down the cost of green hydrogen and ammonia production through economies of scale.
6. Integration with SECI Tenders: The SIGHT scheme is operationalised through tenders like the one floated by SECI for 7.24 lakh tonnes of green ammonia for fertiliser plants.
7. Enabling Ecosystem Development: It complements infrastructure creation, R&D, and manufacturing incentives to develop a full green hydrogen value chain.
8. Alignment with Climate Goals: SIGHT helps India meet its energy transition and net-zero commitments by replacing carbon-intensive hydrogen with clean alternatives.
Government Initiatives for Promoting Green Ammonia
1. Production-Linked Incentive (PLI): Incentive support starts at ₹8.82/kg for green hydrogen (used for green ammonia), tapering to ₹5.30/kg over three years, encouraging economies of scale and technology maturation.
2. Total Financial Outlay: ₹1,533.4 crore has been allocated for Mode 2A under the SIGHT Scheme to support offtake agreements for 7.24 lakh tonnes of green ammonia annually.
3. Payment Security Mechanism (PSM): Ensures reliable payment guarantees to producers by covering payment defaults, enhancing bankability of long-term contracts and attracting investors.
4. Long-Term Offtake Assurance: The SECI tender under SIGHT offers a 10-year offtake commitment, ensuring market certainty and reducing financial risks for green ammonia producers.
5. Focus on Fertiliser Sector: 13 fertilizer plants are targeted under the first tranche, marking a sector-specific strategy to decarbonize ammonia-based nitrogen fertilizer production.
6. Technology-Neutral Bidding: Bids are open to all green hydrogen/ammonia production technologies, promoting innovation and cost-competitive solutions.
7. Alignment with National Green Hydrogen Mission: Supports the target of producing 5 MMT of green hydrogen annually by 2030 and reducing dependency on grey hydrogen derived from natural gas.
8. Infrastructure and Port Connectivity Support: Complementary efforts are underway to enhance port infrastructure, storage, and pipeline connectivity to support green hydrogen/ammonia logistics.
9. Private Sector Mobilization: The scheme incentivizes participation of both public and private sector players, fostering competitive pricing and innovation in the green hydrogen value chain.
Challenges in Scaling Green Ammonia in India
1. High Initial Cost of Green Hydrogen: Green hydrogen production remains 2–3 times costlier than grey hydrogen due to expensive electrolysers and renewable electricity dependence.
2. Lack of Infrastructure: India currently lacks adequate infrastructure such as electrolysers, storage facilities, and dedicated pipelines for hydrogen and ammonia transport.
3. Technology Maturity and Efficiency Issues: Green hydrogen production technologies are still evolving, with concerns around efficiency, water use, and operational stability under Indian conditions.
4. Coordination Challenges: Close coordination is required between multiple agencies—MNRE, SECI, fertilizer companies, and state governments—for effective offtake and project execution.
5. Financing and Investment Risks: Uncertainty around long-term demand, offtake prices, and regulatory clarity poses challenges for securing private investment and low-cost finance.
6. Policy and Regulatory Gaps: Lack of clear safety codes, transport regulations, and emission accounting standards for green hydrogen and ammonia may delay large-scale adoption.
7. Water Resource Constraints: Electrolyser-based hydrogen production requires substantial fresh water, posing concerns in water-stressed regions of India.
8. Global Competition and Market Volatility: India must remain competitive with global producers (e.g., Middle East, Australia) who may have cost or logistics advantages in exporting green ammonia
Way Forward
1. Scale Up Renewable Energy Infrastructure: Enhance solar and wind capacity to ensure cost-effective and reliable green electricity for hydrogen production.
2. Accelerate Electrolyser Manufacturing: Support domestic production of electrolysers through PLI schemes and R&D to reduce capital costs and dependence on imports.
3. Strengthen Policy and Regulatory Frameworks: Establish clear safety norms, emission standards, and certification mechanisms for green hydrogen and ammonia.
4. Develop Green Hydrogen Hubs: Create integrated industrial hubs with co-located renewable energy, electrolysers, and ammonia plants to optimize cost and logistics.
5. Ensure Financial and Market Incentives: Expand payment security mechanisms, viability gap funding, and carbon credit markets to attract private investment.
6. Promote Public-Private Partnerships (PPP): Encourage collaborations between government, industry, and research institutions for technology development and pilot projects.
7. Enhance Water Management Technologies: Promote water-efficient electrolysis methods and water recycling systems to address resource sustainability.
8. Integrate with Global Supply Chains: Position India as a green ammonia export hub by aligning production with global demand, trade policies, and maritime logistics.
Conclusion
India’s green ammonia push, led by SECI’s landmark tender under the SIGHT Scheme, represents a transformative step toward decarbonizing the fertilizer sector and strengthening energy self-reliance. Green ammonia not only reduces CO₂ emissions and import dependency but also aligns with national goals like Atmanirbhar Bharat and net-zero by 2070. However, challenges such as high costs, infrastructure gaps, and regulatory uncertainty must be addressed through coordinated policy action, financial incentives, and innovation. With the right support, India can emerge as a global hub for green ammonia production and exports, driving sustainable industrial growth and climate leadership.
Prelims Questions
Q. With reference to green ammonia, consider the following statements:
1. It is produced using grey hydrogen derived from natural gas.
2. It emits negligible or no carbon dioxide during its production.
3. It is a potential fuel alternative in sectors like shipping and power generation.
Which of the above statements is/are correct?
(a) 2 and 3 only
(b) 1 and 2 only
(c) 1 and 3 only
(d) 1, 2 and 3
Answer: A
Mains Questions
Q. Discuss the significance of green ammonia for India and examine the steps taken under the National Green Hydrogen Mission, particularly the SIGHT scheme, to promote its adoption. Also highlight the key challenges and suggest a way forward
(250 words, 15 marks)
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