Green Ammonia Export Economics: India-EU FTA, CBAM Zero-Levy and the Kakinada Project | Reclimatize.in
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Fertilisers · Green Hydrogen · CBAMGreen Ammonia Export Economics: The India-EU FTA, CBAM’s Zero-Levy Advantage and What the Numbers Actually Show
India’s green ammonia has a commercial case that no other product in any CBAM-covered sector can claim: a genuine double-zero at the EU border. Zero import tariff under the India-EU FTA. Zero CBAM certificate obligation under RFNBO and GHCI certification. Grey ammonia from India, by contrast, faces both a legacy tariff and a growing carbon levy that is estimated to add €16 to €58 per tonne in year one alone. AM Green’s Kakinada project — under active equipment installation, with Uniper committed to 500,000 tonnes per year from 2028 — is the commercial proof point. This article maps exactly what that double-zero advantage means in numbers.
India and the EU concluded their Free Trade Agreement on 27 January 2026. Ammonia and urea exported from India to the EU under the FTA face zero import tariff — eliminating the 6.5% duty on ammonia and 5.5% on urea that previously applied. The FTA provides no CBAM exemption: the EU explicitly stated CBAM is a non-tariff, non-preferential measure, and India’s negotiators confirmed no CBAM concessions were obtained.
Green ammonia certified under EU RFNBO (Renewable Fuel of Non-Biological Origin) rules or India’s GHCI with embedded emissions below the CBAM threshold effectively carries no CBAM certificate obligation at the EU border. Grey ammonia from India, using the EU’s default embedded emission values, faces a CBAM cost estimated at €16 to €58 per tonne of urea in 2026, rising substantially toward 2034 as EU ETS prices increase and free allocation phases out.
CBAM for fertilisers is facing political pressure within the EU. Within days of CBAM going live on 1 January 2026, Commissioner Maroš Šefčovič announced the EU would propose temporary suspension of MFN tariffs on ammonia and urea to offset CBAM costs, and signalled that a new Article 27a emergency brake could allow retroactive CBAM suspension for fertilisers if significant food price inflation is demonstrated. As of March 2026, fertilisers remain within CBAM scope — but the political environment introduces uncertainty that Indian producers planning multi-decade investments need to factor carefully.
AM Green’s Kakinada project has completed FID (August 2024), begun major equipment installation (January 2026), secured RFNBO pre-certification from CertifHy, and has binding offtake commitments from Uniper (500,000 tpa from 2028), Yara (50% of phase 1), and RWE (250,000 tpa from 2027). Production in phase 1 is targeted to begin in the second half of 2026, with 0.5 MTPA by 2027 and 1 MTPA by 2028. The project is building the supply chain infrastructure for India’s green ammonia export industry.
India’s structural cost advantage in green ammonia production is significant and durable. SECI SIGHT Mode 2A auctions demonstrated prices as low as Rs 49.75/kg (approximately USD 600/t), which is 40 to 50% below comparable European production costs and approaching parity with grey ammonia. Combined with zero FTA tariff and zero CBAM, Indian green ammonia has a potential landed-cost advantage at EU ports over virtually all competing green ammonia suppliers.
The RFNBO certification requirement is the most demanding technical condition Indian green ammonia producers must meet for EU market access. EU rules require temporal matching of renewable electricity consumption to production — monthly until 2030, then hourly from 2030. This means green ammonia cannot simply be certified on an annual average basis: the production facility must demonstrate hour-by-hour (from 2030) that the electricity driving electrolysis is from a qualifying renewable source. AM Green Kakinada’s combination of pumped hydro storage and wind-solar hybrid is specifically designed to meet this requirement.
How the double-zero works
The commercial case for Indian green ammonia in EU markets rests on two independent advantages that compound each other. Understanding each one separately before examining how they interact is important, because each has conditions, caveats and uncertainties that affect how reliably it applies in practice.
The first zero — import tariff under the India-EU FTA
The India-EU Free Trade Agreement, concluded on 27 January 2026 after nearly two decades of intermittent negotiations, creates a zero tariff corridor for Indian goods entering the EU across most sectors. For ammonia and urea, this eliminates the most-favoured-nation tariffs that previously applied: 6.5% on ammonia (CN code 2814) and 5.5% on urea (CN code 3102 10). On an ammonia price of approximately USD 515 per tonne, the 6.5% tariff alone adds approximately USD 33 per tonne. Eliminating it improves the landed cost of Indian ammonia at EU ports by that amount.
It is important to note the limits of this first zero. The FTA provides no CBAM exemption — the EU’s negotiating position was unambiguous on this. India’s Commerce Secretary Rajesh Agrawal confirmed publicly on 28 January 2026 that India received no concessions on CBAM regulations as part of the FTA. What India secured instead was a most-favoured-nation commitment on CBAM flexibilities (whatever the EU grants to any other country also applies to India), a technical dialogue on verifier accreditation and carbon pricing recognition, and a non-violation clause with rebalancing rights if new measures nullify FTA concessions. These are meaningful diplomatic assurances for the medium term, but they do not change the CBAM certificate requirement for Indian grey ammonia exporters today.
The second zero — CBAM for green ammonia
Green ammonia — produced from renewable electricity through electrolysis, with lifecycle emissions below 2 kg CO₂e per kg of hydrogen as required by India’s GHCI, and compliant with EU RFNBO temporal matching requirements — has embedded emissions that are effectively at or near zero. CBAM certificates are required in proportion to embedded emissions. If the embedded emissions of a tonne of green ammonia are close to zero, the CBAM certificate obligation is close to zero.
The CBAM benchmark for ammonia is set by the EU’s implementing regulations. For an RFNBO-certified green ammonia producer with near-zero embedded emissions, the CBAM cost is effectively eliminated — not because green ammonia is exempt as a category, but because its verified embedded emissions are so low that the certificate requirement is negligible. This is the precise mechanism: CBAM charges are proportional to the gap between the product’s verified embedded emissions and the EU ETS-aligned cost that EU producers already bear. For green ammonia with sub-2 kg CO₂e/kg H₂ production, that gap is minimal.
The specific contrast with grey ammonia is quantified in the analysis by Sandbag, published in February 2026. Using EU default embedded emission values for ammonia imports — which apply when producers do not provide actual verified data — the CBAM cost for urea can reach approximately €42 to €58 per tonne in 2026. Using actual verified data for a typical efficient plant, the cost falls to approximately €16 per tonne. Green ammonia, with near-zero embedded emissions, faces essentially nothing.
CBAM for fertilisers in January 2026 — what actually happened
The implementation of CBAM for fertilisers did not go smoothly in its opening weeks, and the political turbulence that followed is directly relevant to how Indian producers should think about their CBAM strategy.
CBAM went live on 1 January 2026. Within a week, Commissioner Maroš Šefčovič announced two parallel responses to agricultural minister pressure — primarily from France and Italy — about fertiliser price inflation. First, the Commission proposed temporarily suspending MFN import tariffs on urea (5.5%) and ammonia (6.5%), stating this would “broadly compensate the impact of CBAM.” Second, Šefčovič confirmed the Commission was developing Article 27a — a new emergency brake provision that would allow the Commission, through a delegated act, to temporarily remove any CBAM-covered good from scope if its inclusion causes “severe harm to the EU internal market due to serious and unforeseen circumstances related to the impact on prices.” Retroactive application to 1 January 2026 was confirmed as legally possible — though practically moot since CBAM certificates are only purchasable from 1 February 2027.
It is important to understand what the Commission’s response actually means. Commissioner Šefčovič was clear that fertilisers remain in CBAM scope — the temporary tariff suspension and the Article 27a mechanism are parallel mitigation measures, not CBAM exemptions. The underlying CBAM architecture for fertilisers was not reversed. The political debate was about the pace and severity of price impact on European farmers — not about whether decarbonising fertiliser production is the right long-term policy direction.
The January 2026 debate introduced uncertainty that Indian producers planning multi-decade green ammonia investments must think about carefully. If Article 27a were used to temporarily suspend CBAM for fertilisers, the financial incentive for green ammonia over grey ammonia — which partly rests on green ammonia’s zero CBAM cost — would temporarily narrow. But three points mitigate this risk. First, any suspension under Article 27a is explicitly temporary and requires co-legislator approval; it is a safety valve, not a policy reversal. Second, the EU’s structural commitment to decarbonising nitrogen fertiliser production is embedded in the European Green Deal and is unlikely to be abandoned. Third, Indian green ammonia’s cost advantage over European production is primarily driven by India’s low-cost renewable electricity — not CBAM. Even in a temporary CBAM suspension scenario, Indian green ammonia delivered to EU ports at USD 600/t would still be significantly cheaper than European green ammonia. The CBAM zero-levy is an additional competitive advantage, not the foundational one.
The RFNBO requirement — the technical condition for the second zero
The zero CBAM advantage for Indian green ammonia is not unconditional. It requires meeting the EU’s RFNBO (Renewable Fuel of Non-Biological Origin) standards — which are more demanding than simply producing hydrogen with renewable electricity and certifying it under GHCI.
The EU’s RFNBO delegated acts require temporal matching between renewable electricity consumption and hydrogen production. This means the renewable electricity consumed by the electrolyser must demonstrably be generated in the same period as the hydrogen production — not simply offset on an annual average basis through RECs or carbon credits. The matching requirement was monthly until 2030 and moves to hourly from 2030. The reasoning is additionality — the EU wants to ensure that green hydrogen production is actually driving new renewable electricity generation rather than simply claiming credit for existing renewable output.
For Indian producers, this requirement has important infrastructure implications. A solar-only electrolyser — which generates hydrogen only during daylight hours — cannot meet hourly RFNBO matching from 2030 without either curtailing production at night or supplementing with energy storage or wind power. This is why wind-solar hybrid plants with pumped hydro or battery storage are the preferred architecture for EU-export-oriented green ammonia projects in India. AM Green Kakinada’s combination of 4,500 MW wind-solar hybrid with 950 MW of pumped storage capacity is specifically designed to deliver the high utilisation rate (up to 90%, per AM Green’s own disclosures) needed for RFNBO compliance across all hours.
India’s GHCI threshold of 2 kg CO₂e/kg H₂ is aligned with but not identical to the EU RFNBO standard. The Sandbag analysis found that the two are sufficiently compatible for GHCI-certified Indian hydrogen to be considered for RFNBO compliance — but formal mutual recognition of the two certification frameworks has not yet been established. This is the specific technical dialogue that the India-EU FTA’s technical working group on CBAM and carbon pricing is tasked with advancing. CertifHy — the European renewable fuel certification body that pre-certified AM Green Kakinada in June 2024 — is actively engaged in bridging India’s GHCI framework to EU RFNBO requirements, hosting a webinar specifically on this in June 2025.
AM Green Kakinada — the anatomy of India’s first green ammonia mega-project
AM Green (incorporated by the founders of Greenko Group, Anil Chalamalasetty and Mahesh Kolli) is building what will be among the largest green ammonia projects in the world at Kakinada, Andhra Pradesh. The project converts an existing ammonia-urea complex — acquired by AM Green — into a green energy hub, using the established industrial and port infrastructure of Kakinada while entirely replacing the hydrogen production chemistry from natural gas reforming to electrolysis.
0.5 MTPA by 2027, 1 MTPA by 2028
across Kakinada, Tuticorin, Kandla
Rs 13,000 crore for K1
4,500 MW wind-solar + 950 MW PSP
alkaline; ~90% utilisation
Key offtake commitments (all binding as of March 2026):
Yara Clean Ammonia (Norway) — long-term supply of up to 50% of green ammonia from Phase 1 (approximately 500,000 tpa). Yara is one of the world’s largest ammonia traders and distributors; this agreement provides global marketing credibility and revenue certainty for the first half of phase 1 production.
Uniper (Germany) — binding long-term offtake for up to 500,000 tpa of RFNBO-compliant ammonia starting from 2028, announced January 2026. Uniper is simultaneously constructing a 28 tonnes per day ammonia cracker in Germany (with thyssenkrupp Uhde) to reconvert the ammonia to hydrogen for European industrial use. This is the largest single green ammonia offtake agreement from India to date.
RWE Supply and Trading (Germany) — MoU and subsequent agreement for 250,000 tpa from 2027. RWE is building green hydrogen infrastructure in Germany and is seeking diversified RFNBO-compliant supply from low-cost global producers.
BASF (Germany) — exploring offtake of 100,000 tpa for chemical manufacturing, consistent with BASF’s stated goal of decarbonising its ammonia-based chemical production.
The combined offtake from Yara, Uniper, RWE and BASF approaches or exceeds the planned 1 MTPA Phase 1 capacity — meaning the full Phase 1 production volume of AM Green Kakinada has prospective buyers before a single tonne has been shipped.
The project’s brownfield approach — converting an existing Nagarjuna Fertilizers and Chemicals complex — is strategically important for two reasons. First, it significantly reduces capital expenditure compared to a greenfield site by reusing existing plant infrastructure, permits, utilities and port connectivity. Second, it retains the institutional knowledge of ammonia handling and operations within the site, reducing ramp-up risk. The Kakinada Port connection enables direct loading of ammonia into specialised tankers for shipment to Rotterdam — a logistics chain that AM Green formalised through an MOU with the Port of Rotterdam for a dedicated renewable molecules corridor.
The competitive landscape — who India is competing with
India’s green ammonia export strategy does not exist in isolation. Saudi Arabia, Oman, Australia, Chile and Morocco are all developing large-scale green ammonia export projects targeting European markets. Understanding where India sits in this competitive landscape is essential context for any realistic assessment of the commercial case.
| Country / Project | Cost advantage | RFNBO temporal matching | EU FTA | India’s edge |
|---|---|---|---|---|
| India (AM Green Kakinada) | Lowest-cost solar + wind; PSP for 24h matching | Pre-certified (CertifHy) | Zero tariff (Jan 2026) | Cost + FTA + RFNBO + GHCI alignment |
| Saudi Arabia (NEOM) | Very low solar cost; but high desalination water cost | In progress | No EU FTA; MFN tariff applies | India wins on FTA + water cost |
| Australia (multiple) | Low-cost solar; high shipping distance to EU | Developing | Australia-EU FTA in negotiation; not yet concluded | India wins on logistics to Europe |
| Chile (H2Chile) | Wind + solar hybrid; remote from EU | Early stage | EU-Chile FTA exists; limited ammonia provisions | India wins on geographic proximity and cost |
| Oman (multiple) | Low gas cost for transitional blue hydrogen | In progress | No EU FTA | India wins on FTA and green credentials |
| EU domestic (blue/green) | High renewable cost; high capital cost | Compliant | N/A (domestic) | India undercuts on production cost by 40–50% |
The competitive analysis demonstrates that India’s combination of low renewable electricity cost, geographic proximity to Europe relative to Australia and the Americas, zero FTA tariff, and RFNBO pre-certification architecture gives it a structural advantage that is hard for most competitors to replicate simultaneously. Saudi Arabia comes closest on renewable cost but lacks an EU FTA. Australia has low renewable cost but faces 25% higher shipping distance to European ports and no EU FTA. Chile has strong renewables but is the most remote from European markets.
The one area where India needs continued investment is temporal matching infrastructure. The move to hourly RFNBO matching from 2030 favours projects with pumped hydro or large battery storage — which India has through its unique pumped storage potential (Karnataka, Andhra Pradesh, Maharashtra). AM Green Kakinada’s 950 MW of pumped storage capacity is the template for what the hourly-matching requirement demands from 2030.
What the economics look like in numbers
Putting all components together — production cost, FTA tariff saving, CBAM differential, and shipping — the landed cost comparison between Indian green ammonia and European domestic production in 2028 (when AM Green Kakinada Phase 1 reaches full production) looks approximately as follows.
| Cost component | Indian green ammonia (AM Green type, 2027-28) | EU domestic green ammonia (electrolyser, 2027-28) | Indian grey ammonia (LNG-based, 2027-28) |
|---|---|---|---|
| Production cost | ~USD 550–650/t (declining; SIGHT Mode 2A = ~USD 600/t) | ~USD 900–1,200/t (European renewable cost basis) | ~USD 380–450/t (domestic gas) or USD 515/t (LNG) |
| FTA import tariff (ammonia, 6.5%) | €0 (India-EU FTA) | N/A (domestic) | €0 (India-EU FTA) |
| CBAM certificate | ~€0 (near-zero embedded emissions) | ~€0 to minimal (EU ETS already paid) | ~€30–80/t (rising; default or actual values) |
| Shipping to EU (Kakinada→Rotterdam) | ~USD 40–60/t | €0 (domestic distribution) | ~USD 40–60/t |
| Estimated landed cost at EU port | ~USD 600–720/t | ~USD 900–1,200/t | ~USD 540–640/t + CBAM levy = ~USD 600–760/t total by 2030 |
The table makes three things clear simultaneously. First, Indian green ammonia in 2027-28 is already substantially cheaper than European domestic green ammonia production — by a factor of 1.5 to 2 times. Second, as CBAM costs for grey ammonia rise toward €80 per tonne and beyond through 2034, Indian grey ammonia’s landed cost advantage over Indian green ammonia narrows steadily and eventually reverses. Third, by the early 2030s, as green hydrogen costs approach USD 2/kg and CBAM on grey ammonia rises, Indian green ammonia at EU ports may be price-competitive with or cheaper than Indian grey ammonia after accounting for all border costs. At that point, the commercial case for green ammonia shifts from being CBAM-driven to being cost-driven — a structurally stronger and more durable foundation for the market.
Frequently Asked Questions
Does the India-EU FTA exempt Indian fertilisers from CBAM?
No. The FTA eliminates import tariffs on ammonia (6.5%) and urea (5.5%), but provides no exemption from CBAM. India’s Commerce Secretary confirmed publicly on 28 January 2026 that no CBAM concessions were obtained. What India did secure was a most-favoured-nation commitment: any flexibilities the EU grants to other countries on CBAM will also apply to India. A technical working group will facilitate verifier accreditation and carbon pricing recognition — laying the groundwork for the Article 9 CCTS deduction mechanism to function smoothly for Indian exporters over time.
Could CBAM for fertilisers be suspended under Article 27a, and what would that mean for India?
Article 27a, proposed by the Commission in December 2025 and still requiring co-legislator approval as of March 2026, would allow temporary suspension of CBAM for specific goods if their inclusion causes severe harm to the EU internal market due to unforeseen price impacts. Commissioner Šefčovič confirmed it could apply retroactively to January 2026, though practically moot since CBAM certificates are only purchasable from February 2027. If applied to fertilisers, it would temporarily narrow the CBAM cost differential between green and grey ammonia — but would not eliminate India’s production cost advantage or the FTA zero tariff. A temporary suspension is not a structural reversal of the EU’s decarbonisation trajectory for fertilisers.
What is the difference between GHCI and RFNBO certification, and which does India need?
India’s GHCI (launched April 2025) sets a 2 kg CO₂e/kg H₂ threshold for certifying domestic green hydrogen production. The EU’s RFNBO (Renewable Fuel of Non-Biological Origin) standard governs which hydrogen qualifies as renewable for EU market purposes — including temporal matching requirements (monthly until 2030, hourly from 2030). For an Indian green ammonia producer to access the EU CBAM zero-levy, they must meet the RFNBO standard, not just the GHCI standard. CertifHy bridges this gap — it is an RFNBO-aligned certification body that pre-certified AM Green Kakinada. The India-EU technical working group is working on formal GHCI-RFNBO equivalence recognition, which when established would allow GHCI certification to automatically qualify for EU market access.
How does the CBAM cost for grey ammonia compare to the green premium?
At 2026 EU ETS prices of approximately €80/tCO₂ and using actual verified emission data (approximately 1.1 tCO₂/t urea for an efficient integrated plant), the CBAM cost is approximately €16/t urea. Using default values, it rises to €42-58/t. The green ammonia premium over grey in SECI Mode 2A auctions — approximately 10% or USD 50-60/t — is currently slightly above the CBAM cost using actual values, and comparable to or below the cost using default values. By 2030, as EU ETS prices rise toward €100-130/t (projected under Fit for 55), CBAM costs for grey ammonia would reach €110-143/t — well above the green premium. The cost crossover where green ammonia is fully competitive with grey ammonia (including CBAM) happens between 2028 and 2032 depending on the rate of green hydrogen cost decline and EU ETS price trajectory.
What is AM Green’s current production timeline and volume for Kakinada?
AM Green targets first production at Kakinada in the second half of 2026, following the equipment installation ceremony in January 2026. The phased ramp-up targets 0.5 MTPA by 2027 and 1 MTPA by 2028. Total capacity at Kakinada across multiple phases is 1.5 MTPA; the broader AM Green portfolio across Kakinada, Tuticorin and Kandla targets 5 MTPA by 2030 — equivalent to approximately 1 MTPA of green hydrogen, or one-fifth of India’s NGHM domestic production target.