NEW DELHI: India's ambitious plan for green ammonia production and supply has been encountering significant challenges. Despite the government's sixth extension of the tender, the project has failed to attract any bidders, jeopardizing the initiative to decarbonize the agriculture sector.
The State-owned Solar Energy Corporation of India (SECI) issued the sixth extension on March 31 for the green ammonia production and supply tender due to a lack of applications. The deadline for the sixth extension is until April 30.
Producing green ammonia is crucial for decarbonizing Indian agriculture and achieving the climate goals set under the Paris Agreement. Currently, India is the second-largest importer of synthetic ammonia, which is used to manufacture fertilizers that support its agricultural sector.
However, the domestic production and import of ammonia have contributed to nearly 25 million tonnes of CO₂ emissions annually, a potent greenhouse gas. According to the Paris Agreement, India must significantly reduce its emissions by 2030.
Last year, on July 29, SECI invited bids for the production of 5.39 lakh metric tonnes of green ammonia.
Experts suggest that the government lacks clarity regarding subsidy amounts and the complexities associated with this nascent industry, which has no precedent for price discovery.
The green ammonia manufacturing strategy is part of the Strategic Interventions for Green Hydrogen Transition (SIGHT) program under the National Green Hydrogen Mission (NGHM).
Manufacturing green ammonia using renewable energy offers a sustainable alternative to traditional ammonia production. One of the major applications of green ammonia is fertilizer production, which is essential for modern agriculture. Other uses include energy storage, fuel for various sectors, and manufacturing plastics, explosives, and synthetic fibers.
According to a market expert, the cost of producing synthetic (gray) ammonia is approximately Rs 40 per kilogram, while the cost for green ammonia is estimated at around Rs 80 per kilogram. However, the government has proposed a subsidy of Rs 7-8, which manufacturers feel is insufficient to cover the cost. Industry want the government shall take care of difference of cost and also payment in US dollars to cover the dollars fluctuation cost.
Meanwhile, a new South Korean technology has emerged with an estimated production cost of around Rs 64 per kilogram.
"Even the current rate of subsidy cannot cover the costs of the new Korean technology, so the industry is unable to move forward," stated a senior officer at SECI, speaking on the condition of anonymity.