Content
- India’s Energy Shift Through the Green Ammonia Route
- Stick together
India’s Energy Shift Through the Green Ammonia Route
Source : The Hindu
A. Why in News?
- At India Energy Week 2026, PM highlighted $500 billion investment opportunity in energy transition, signalling shift from energy security to energy independence.
- SECI concluded landmark green ammonia auction under SIGHT (National Green Hydrogen Mission), institutionalising aggregated procurement.
- Discovered prices:₹49.75–64.74/kg ($572–744/tonne), nearly 40–50% lower than EU’s H2Global benchmarks.
- Contracts include 10-year fixed-price offtake agreements with fertiliser plants, ensuring long-term revenue certainty.
B. Relevance
GS II
- National Green Hydrogen Mission (2023) as strategic industrial policy.
- Climate commitments: Net-zero 2070, updated NDCs.
- Trade dimension: CBAM, hydrogen corridors, green certification regimes.
GS III
- Energy transition & renewable integration.
- Industrial decarbonisation (fertiliser, shipping, power).
- Green finance, PPP, blended finance.
- Technology-led competitiveness in green manufacturing.
C. Static Background
1. What is Green Ammonia?
- Produced by combining nitrogen (air separation) with green hydrogen via electrolysis powered by renewables.
- Unlike grey ammonia (natural gas-based), green ammonia is near-zero carbon, avoiding emissions from steam methane reforming.
- India is 2nd largest ammonia producer; nearly 80% consumption in fertiliser sector.
- Heavy dependence on LNG imports for grey ammonia exposes sector to global gas volatility.
2. Policy Framework
- National Green Hydrogen Mission (2023) targets 5 MTPA green hydrogen by 2030.
- SIGHT Programme provides production-linked incentives and aggregated demand aggregation via SECI.
- Strategic ambition: Position India as global hub for green hydrogen derivatives.
- Nodal agency: Solar Energy Corporation of India (SECI).
D. Economic Analysis
1. Price Discovery & Competitiveness
- Auction prices:₹49.75–64.74/kg ($572–744/tonne) versus grey ammonia at ~$515/tonne.
- Cost gap narrowed due to:
- 10-year fixed contracts.
- Production subsidies of ₹8.82/kg, ₹7.06/kg, ₹5.3/kg (tapering first three years).
- Price certainty shields producers from:
- Gas market volatility.
- Currency fluctuations.
- Geopolitical supply disruptions.
2. Market Design Innovation
- Aggregated procurement: 724,000 tonnes/year across 13 fertiliser plants.
- Pre-identified coastal delivery points enable shipping-based logistics.
- Auction saw 15 bidders, 7 awardees, enhancing competition and transparency.
- Contracts substitute nearly 30% of ammonia imports, improving trade balance.
- Compared to EU H2Global and Korea’s CHPS, India achieved broader participation and lower discovered prices.
E. Strategic & Geopolitical Dimension
1. Energy Independence Shift
- India imports nearly 85% crude oil and relies on LNG for ammonia production.
- Green ammonia supports transition toward renewable-driven hydrogen economy and domestic industrial base.
2. Climate Diplomacy
- Contributes to Net-zero 2070 and 50% non-fossil capacity by 2030 targets.
- Export potential to:
- EU (CBAM exposure).
- Japan & South Korea (hydrogen import strategies).
- Enhances India’s credibility as clean energy supplier to Global South and OECD markets.
3. Maritime Fuel Future
- Green ammonia emerging as marine bunker fuel alternative.
- Aligns with IMO decarbonisation pathway for global shipping.
- Potential integration with port-led development under Sagarmala framework.
F. Environmental Dimension
Benefits
- Avoids CO₂ emissions from steam methane reforming.
- Decarbonises fertiliser supply chain, reducing embedded emissions.
- Enables movement toward circular nitrogen economy.
Risks
- Ammonia toxicity and storage hazards.
- High water demand for electrolysis.
- Renewable intermittency affecting hydrogen production stability.
Mitigation
- Hybrid renewable systems with storage integration.
- Strengthened industrial safety codes.
- Harmonised green certification standards aligned with global norms.
G. Financial & Infrastructure Dimension
Bankability Drivers
- 10-year fixed-price contracts enhance revenue stability.
- Blended finance and risk-mitigation instruments improve project viability.
- Sovereign-backed payment structures increase lender confidence.
Infrastructure Requirements
- Dedicated renewable energy parks.
- Port storage terminals and ammonia handling facilities.
- Pipelines and cracking infrastructure.
- Robust monitoring and certification systems.
H. Governance & Regulatory Challenges
- Regulatory clarity on grid access and banking provisions.
- Harmonised green taxonomy and certification.
- Alignment with evolving EU and OECD standards.
- First-mover risks and financial closure constraints.
I. Critical Evaluation
Strengths
- Aggregated demand reduces fragmentation.
- Competitive pricing relative to global benchmarks.
- Long-tenor contracts improve investor confidence.
- India’s low renewable tariffs provide structural advantage.
Risks
- Fiscal sustainability of production subsidies.
- Land acquisition and grid integration constraints.
- Export market volatility.
- Technology obsolescence risk in rapidly evolving hydrogen economy.
Core Insight
- India’s competitive edge lies in cheap renewables + scale + institutional innovation, enabling early-mover advantage in green ammonia markets.
J. Way Forward
- Develop Green Ammonia Export Corridors (India–EU, India–Japan).
- Integrate green ammonia under PLI schemes for fertilisers.
- Establish nationally recognised green certification framework.
- Expand coastal storage and shipping infrastructure.
- Promote R&D in ammonia cracking technologies.
- Introduce Carbon Contracts for Difference (CCfD).
- Create dedicated green hydrogen trading exchange.
- Align with SDG 7, SDG 9, SDG 13 and Just Energy Transition principles.
K. Prelims Pointers
- Green ammonia = nitrogen + green hydrogen.
- SIGHT operates under National Green Hydrogen Mission.
- SECI aggregates demand and conducts auctions.
- Grey ammonia derived from natural gas (SMR process).
- Target: 5 MTPA green hydrogen by 2030.
- Ammonia can function as marine fuel and hydrogen carrier.
L. Practice Mains Question
- Discuss how green ammonia can bridge India’s transition from energy security to energy independence. (15M)
Stick together
Source : The Hindu
A. Why in News?
- State visit (2026) of Luiz Inácio Lula da Silva to India reaffirmed deepening India–Brazil strategic partnership amid global trade turbulence.
- Both nations agreed to double bilateral trade to $30 billion by 2030, signalling diversification beyond traditional commodity exchanges.
- MoUs signed on critical minerals, steel & mining, digital cooperation, aiming to reduce overdependence on China-centric supply chains.
- Visit occurred amid U.S.-imposed 50% tariffs on both countries and uncertainty after U.S. Supreme Court ruling on tariff authority.
- Leaders reaffirmed commitment to multilateral order, WTO centrality, and Global South solidarity.
B. Relevance
GS II
- India–Brazil bilateral relations and South–South cooperation.
- Reform of UNSC, WTO, Bretton Woods institutions.
- Multilateralism vs unilateral trade regimes.
GS III
- Trade wars, protectionism, tariff weaponisation.
- Critical minerals security and supply chain resilience.
- Biofuel cooperation and alternative energy diplomacy.
C. Static Background
1. Institutional Groupings
India and Brazil are members of:
- BRICS – emerging economy bloc promoting multipolarity.
- IBSA (India–Brazil–South Africa Dialogue Forum) – democratic South–South platform.
- G20 – global macroeconomic coordination forum.
- G-4 (India, Brazil, Germany, Japan) – UNSC reform coalition.
- Co-founders of Global Biofuels Alliance (2023).
- BRICS’ New Development Bank (NDB) headquartered in Shanghai.
Significance of Platforms
- Push for reform of Bretton Woods institutions.
- Greater voice for developing nations in global decision-making.
- Exploration of alternative financial mechanisms and local currency trade.
D. Economic & Trade Dimension
1. Bilateral Trade
- Current trade stands near $15 billion; target of $30 billion by 2030.
- Key sectors:
- Agriculture (soy, sugar, meat).
- Pharmaceuticals.
- Engineering goods.
- Energy and biofuels.
2. Trade Diversification Strategy
- Reduce reliance on China-dominated supply chains.
- Cooperation in lithium, rare earths, steel, mining.
- Strengthen industrial resilience through diversified sourcing.
3. U.S. Tariff Shock
- Both nations faced 50% tariffs under U.S. reciprocal measures.
- Additional scrutiny linked to:
- BRICS alignment.
- Russian oil imports.
- Iran trade.
- Reflects weaponisation of trade policy and erosion of WTO norms.
E. Geopolitical & Strategic Analysis
1. Global South Assertion
- Lula’s “unionise” metaphor emphasises collective bargaining power.
- Advocates coordinated approach instead of fragmented bilateral concessions.
- Reaffirms commitment to WTO-centred multilateralism and sovereign equality.
2. BRICS in Transition
- Expanded BRICS membership enhances representational legitimacy.
- Push for local currency settlements and alternative financial rails.
- Faces Western scepticism and possible sanctions pressures.
3. UNSC Reform Push
- India and Brazil seek permanent membership through G-4 coalition.
- Reform stalled due to P5 resistance and geopolitical rivalries.
- Convergence strengthens moral claim for equitable representation.
F. Energy & Climate Cooperation
- Collaboration in bioethanol and renewable technologies.
- Coordinated stance on climate equity and just energy transition.
- Brazil: Global leader in bioethanol exports.
- India: 20% ethanol blending target achieved ahead of schedule trajectory.
- Supports green growth and South–South energy cooperation.
G. Strategic Autonomy Dimension
- India balances Quad engagement with BRICS participation, avoiding bloc politics.
- Brazil pursues independent foreign policy rooted in strategic autonomy.
- Shared preference for multipolarity over bipolar confrontation.
- Emphasis on diversified partnerships amid global volatility.
H. Risks & Constraints
1. Internal Constraints
- Brazil’s election cycle may disrupt diplomatic continuity.
- India–U.S. trade negotiations require calibrated diplomacy.
2. Structural Limits
- BRICS lacks enforcement or dispute resolution mechanisms.
- IBSA has limited operational momentum.
- WTO dispute settlement system remains weakened.
3. Divergences
- Different engagement patterns with China.
- Varied regional security priorities.
- Geographic distance increases logistics costs.
I. Critical Evaluation
Strengths
- High institutional density: BRICS + IBSA + G20 + G-4.
- Complementary economic structures.
- Shared Global South narrative in governance reform.
Limitations
- Bilateral trade modest compared to China–Brazil trade.
- Limited private sector integration.
- Symbolic rhetoric often exceeds economic depth.
Core Insight
- Strategic convergence must move beyond symbolism toward institutionalised economic integration and supply chain interdependence.
J. Way Forward
- Fast-track feasibility of Preferential Trade Agreement.
- Operationalise local currency trade settlements.
- Establish India–Brazil Critical Minerals Corridor.
- Revitalise IBSA as democratic Global South forum.
- Submit coordinated proposals for WTO and UNSC reform.
- Develop BRICS-based supply chain resilience framework.
- Expand membership of Global Biofuels Alliance.
- Align cooperation with SDG 17 (Global Partnerships) and reform-based multilateralism.
K. Prelims Pointers
- IBSA comprises India, Brazil, South Africa; separate from BRICS.
- G-4 includes India, Brazil, Germany, Japan.
- BRICS’ New Development Bank headquartered in Shanghai.
- Global Biofuels Alliance launched at G20 Delhi Summit 2023.
- Brazil is world’s largest exporter of ethanol.
L. Practice Mains Question
- India–Brazil relations reflect the resurgence of Global South diplomacy. Discuss. (15M)
