India’s fertilizer sector depends on imports of natural gas, ammonia, and fertilizers. Geopolitical conflicts and supply chain disruptions have caused unusual spikes in the price of these imported goods, particularly natural gas, which has increased the burden on government fertilizer subsidies.
Domestically produced green hydrogen and ammonia can help reduce India’s dependence on raw material imports, improve food security, and limit emissions from fertilizer production. Although green hydrogen has the potential to reduce India’s dependence on natural gas imports, there are currently many challenges to its implementation. Identifying these challenges and harnessing green hydrogen for the future of India’s fertilizer industry can help ensure food security by enabling sustainable agricultural value chains.
Ensuring the sufficiency of raw materials and energy supplies
Supply chain disruptions due to geopolitical conflicts, inflation, and rising fuel prices often lead to restrictions on the availability of natural gas. Fertilizer manufacturers need alternative raw materials and raw materials to operate smoothly during such disruptions. Domestically produced green ammonia, a derivative of green hydrogen, can be replaced by imported ammonia. Locally produced green hydrogen can also act as an energy carrier, which reduces import dependence on fossil fuels and creates export opportunities for derivatives, including ammonia.
The need for technological upgrades to deploy green hydrogen
Since ammonia is directly usable in various chemical processes and ammonium fertilizers, many industries are willing to switch to green ammonia to meet their carbon emission goals. Gray ammonia is produced directly using atmospheric nitrogen, while green ammonia uses nitrogen that is physically separated by a pressure swing adsorption (PSA) unit.
Several technology providers are working to improve green ammonia technology. Nanjing Kapsom Energy Limited, a chemical plant design, engineering, and construction company, has developed the world’s first green ammonia plant in Bikaner, Rajasthan. It is a vessel with an alkaline electrolyzer for hydrogen production and a PSA for nitrogen gas (Figure 2), with ammonia as the final product.
Integrated fertilizer plants produce urea through a reaction of ammonia and carbon dioxide (CO2), a compound already present as a by-product of fossil ammonia production. By using green ammonia to produce urea, urea production companies must import carbon dioxide from outside, from other concentrated CO2 streams, such as those from the cement industry.
As the industry transitions to green hydrogen, urea plants must use a mixture of gray and green ammonia to keep up the flow of carbon dioxide (Figure 2). But complex fertilizers do not face this challenge and can easily use green ammonia. In India, complex fertilizers (excluding urea) consume about 3 million tons of ammonia per year, which is equivalent to about half a million tons of hydrogen. These facilities can easily convert to green ammonia and, in many cases, use the existing production process.
Green Hydrogen Standard Agreement
A critical step in deploying green hydrogen for CO2 removal is its precise and technical definition. Creating a common standard for green hydrogen could help closely monitor its most important properties and enable global trade. As the industry is still in its infancy, ambitious standards should be avoided to allow the ecosystem to develop.
Impact on Production Costs
Given that gray hydrogen prices are currently determined by fossil fuels and exchange rates (if the fuel is imported), urea production is exposed to natural gas price uncertainty. In October 2022, urea prices increased by
.2 kg in the international market. However, the retail price of its agricultural products in India remained at a subsidized level of 5.3/kg. Green hydrogen produced at home can help the government cut a trillion-rupee fertilizer subsidy bill and achieve a milestone of self-sufficiency in urea production.
The green hydrogen economy depends mainly on the capital investment in the electrolyser, the operating costs of its regular maintenance (due to chimney changes), and the costs of renewable energy. The price of urea, which uses green hydrogen, is expected to fall in the coming years, along with capital investment and lower rates for renewable energy. To further reduce the technical costs of electrolysis plants, the National Green Hydrogen Mission aims to encourage domestic hydrogen production until prices become competitive with gray hydrogen. In addition, initiatives such as gray carbon pricing and indirect incentives (e.g., tax incentives) can also reduce the price gap.
Transition to green hydrogen
India is one of the largest exporters of agricultural products in the world and is becoming the most populated country on the planet. Ensuring the timely and affordable availability of fertilizers is essential for India to ensure food security. Self-sufficiency in fertilizer production requires investments in joint ventures and utilization of the country’s RE potential.
To initiate the consumption of green hydrogen in large-scale industries, the Ministry of Power has announced the Green Hydrogen/Green Ammonia Policy, which offers benefits of connectivity, time-bound open access, banking, storage of green hydrogen in bunkers, and waiver of interstate transmission payments. These measures, along with the recommendations given in this article, can enable the introduction of green hydrogen and ammonia in India, increase the resilience of the Indian fertilizer industry to various externalities, and ensure food security for a growing country.
