Green H2/ NH3 Use in Refineries and Fertilizers

IH2A expects steel, refineries, and chemicals (fertilisers) industrial clusters to be hydrogen early adopters, as part of their decarbonisation plans, with potentially distributed models. Green Hydrogen demand aggregation of the top 10 state-owned refineries, fertilizer plants and chemical plants, alone should add up more than the 1.5 MT of domestic green hydrogen consumption (and production) estimated for 2030.

This requires some economic research and modelling, to arrive at the annual green hydrogen price subsidy and committed offtake from govt-owned enterprises. IH2A's view is that while govt-owned enterprises can act as anchor offtakers and provide an important demand aggregation signal to project developers and investors, private enterprises will complement government efforts and, in some cases, lead on H2 project development with higher ambitions on hydrogen transition in an effort to decarbonize their plants faster.

H2 transition in the fertilizer sector will be challenging in the short term as the sector is heavily subsidized already. The introduction of carbon pricing offers a pathway for quantitatively measuring carbon footprint and makes a better case for transition towards lower carbon technologies and systems. Currently, approx. 70% of grey ammonia that is used in the fertilizer sector is imported, leading to significant drain on India's foreign exchange reserves. Import substitution with domestically manufacturing green ammonia, from locally produced green hydrogen, will reduce India's import dependence in fertilizers, conserve foreign exchange, reduce carbon emissions in agriculture and build a net-zero pathway for the sector.