Home › Research › CCTS Fertiliser N₂O Abatement
Fertilisers · CCTSCCTS and Fertilisers: Why N₂O Abatement at Nitric Acid Plants May Be the Sector's Highest-Return Decarbonisation Investment
India's fertiliser sector made it into the CCTS draft notification back on June 23, 2025. While we are still waiting for the final gazette-notified GEI targets for the sector, the immediate priority for compliance investments is remarkably clear. Nitrous oxide emitted by nitric acid plants carries a global warming potential 273 times that of carbon dioxide. Every tonne of N₂O eliminated through catalytic abatement removes an astonishing 273 tCO₂e from a plant's total GEI footprint. For a large or older high-emission nitric acid plant producing 5,000 tonnes of N₂O per year, applying catalytic abatement at 90 percent efficiency could unlock up to roughly Rs 98.3 crore in theoretical CCC regulatory value annually under an illustrative Rs 800/CCC scenario. This creates a projected payback in just 1 to 4 years. Put simply, no other single investment in the Indian fertiliser sector offers this kind of massive GEI reduction against its capital cost.
India's fertiliser sector GEI targets initially appeared in the June 23, 2025 draft notification, which was subject to a 60-day public consultation. As of April 2026, the final gazette-notified plant-specific GEI targets remain unpublished. The October 8, 2025 gazette covered the first four sectors, and the January 16, 2026 gazette added Refinery, Petrochemicals, Textiles, and secondary Aluminium. Fertiliser, however, is still pending. CEEW noted in February 2026 that ongoing delays risk weaker final targets. Consequently, plant operators should proactively begin internal MRV aligned with expected CCTS methodologies, primarily using FY2023-24 as a baseline reference, rather than sitting on their hands waiting for the final gazette.
Key Takeaways
India's fertiliser sector produces roughly 75 Mt CO₂e per year, accounting for about 2.7 percent of total industrial emissions. While roughly 20 major ammonia-urea plants fall under the broader CCTS draft, this is not a sector-wide lever. It acts as a highly concentrated opportunity applicable exclusively to fertiliser and chemical producers operating nitric acid units, such as those producing ammonium nitrate, explosives intermediates, or specific complex fertilisers. While gas makes up 70 to 80 percent of standard urea production costs, targeting N₂O provides a totally separate, highly actionable decarbonisation strategy for these specific facilities.
Nitrous oxide (N₂O) forms as an unintentional byproduct during nitric acid production. When the platinum-rhodium catalyst gauze inside the ammonia oxidation reactor converts ammonia, a fraction turns into N₂O instead of the desired nitric oxide. The IPCC AR6 confirms N₂O holds a global warming potential 273 times that of CO₂ over a 100-year span. Nitric acid production ranks among the largest sources of process-related N₂O emissions in the chemical industry. Unlike Haber-Bosch CO₂, which demands expensive feedstock substitution to fix, N₂O operates as a point-source emission perfectly suited for catalytic destruction at a surprisingly modest cost.
Catalytic N₂O abatement successfully eliminates 80 to 97 percent of N₂O through two proven routes. Secondary abatement installs a catalyst bed downstream of the ammonia oxidation reactor, while tertiary abatement treats the tail gas stream at lower temperatures. This technology is highly mature, actively deployed at well over 100 installations globally, and particularly popular across Europe. It requires zero modifications to the core ammonia oxidation chemistry, though plant managers will need to accommodate tail-gas system retrofits, pressure drop management, and monitoring upgrades.
The financial case under CCTS is compelling. For a large or older high-emission nitric acid plant producing 5,000 tonnes of N₂O annually, achieving 90 percent catalytic abatement eliminates 4,500 tonnes of N₂O. This directly equals 1,228,500 tCO₂e removed per year. At an illustrative CCTS pricing of Rs 800 per CCC, this unlocks up to roughly Rs 98.3 crore per year in theoretical regulatory value, assuming the full abatement turns into tradable surplus credits. Factoring in an installation cost between Rs 15 and Rs 60 crore, the estimated payback lands between 1 and 4 years based entirely on CCTS value.
CBAM creates additional exposure to direct emissions and can impact indirect electricity-related emissions depending on the product and methodology. A plant emitting 5 kg of N₂O per tonne of nitric acid produced will face roughly €89 per tonne in CBAM certificates derived just from N₂O (priced at €65 per tCO₂e). Following a 90 percent abatement, this drops sharply to roughly €9 per tonne. However, this CBAM premium only creates real financial value for producers actively exporting to the European Union, which remains limited for most Indian fertiliser PSUs right now.
Why N₂O is the absolute priority: The chemistry and the carbon arithmetic
The fertiliser sector's greenhouse gas profile splits into two distinct problems. The first is CO₂ generated by the Haber-Bosch process, derived from steam methane reforming of natural gas to produce hydrogen. Eradicating this CO₂ relies on green hydrogen or carbon capture, remaining a massive, long-term operational hurdle. The second issue is N₂O emerging from nitric acid plants. This emission is chemically unintended, entirely preventable using commercially proven technology, and hits the climate 273 times harder per tonne than Haber-Bosch CO₂. For any chemical company operating a nitric acid unit, prioritizing N₂O abatement is an operational decision that pays for itself rapidly under moderate carbon pricing models.
To understand why, we look at the Ostwald process, which creates nitric acid from ammonia in three stages. Ammonia oxidizes at roughly 890°C over a platinum-rhodium gauze to produce nitric oxide (NO). This NO then oxidizes into nitrogen dioxide (NO₂), which is absorbed into water to yield nitric acid. However, the Pt-Rh gauze isn't perfectly selective. A fraction of the ammonia reacts incorrectly, forming N₂O instead of NO. This rogue N₂O plays no further part in the nitric acid chemistry and is simply vented into the atmosphere unless specifically abated. As the gauze ages, its selectivity drops and N₂O formation actually increases. This naturally incentivizes operators to schedule timely gauze replacements and install downstream abatement systems as a permanent fix.
Unabated emission factors generally swing from roughly 2 to 12 kg of N₂O per tonne of nitric acid produced, depending heavily on burner designs, catalyst health, and plant age. A high-emission plant pushing out up to 1 million tonnes of nitric acid annually will subsequently release between 2,000 and 12,000 tonnes of N₂O. If we conservatively assume a baseline of 5,000 tonnes, applying the 273 multiplier reveals a staggering 1.365 Mt CO₂e per year sourced strictly from N₂O. This mirrors the sheer scale of CO₂ emissions from the plant's Haber-Bosch ammonia synthesis, yet it can be technically eliminated at a fraction of the cost.
Decarbonisation options ranked by ROI
Secondary abatement (HT-deN₂O): A catalytic bed installed downstream of the ammonia oxidation reactor intercepts the nitrous gas stream at high temperatures. This achieves 80 to 97 percent N₂O elimination and requires relatively low capital costs if space permits within the existing reactor vessel. Tertiary abatement (LT-deN₂O): Utilizes a separate reactor to treat the tail gas stream at lower temperatures, necessary when reactor geometry prevents secondary abatement. Pairing both achieves near-complete N₂O elimination. The technology is commercially proven with well over 100 global installations. It leaves the core ammonia oxidation chemistry completely untouched, though it does require modifications for tail-gas handling, pressure drops, and thermal integration. This should be the very first investment featured on any applicable Indian plant's CCTS compliance roadmap.
Indian gas-based urea plants routinely consume between 9 and 10.5 Gcal per tonne of ammonia, while global best practices hover around 7 to 8 Gcal per tonne. This leaves a 15 to 25 percent improvement gap. Core interventions include condensate recovery systems, installing variable frequency drives on heavy compressors, optimizing secondary reformers, and upgrading CO₂ removal units. For context, GSFC secured a roughly 8 percent CO₂ reduction by investing Rs 35 crore in similar upgrades. While these investments take longer to execute and verify compared to N₂O abatement, they secure sustained GEI reductions and lasting operational cost savings.
Fertiliser plants generally lean on electricity for operational utilities like cooling water pumps, compressors, and instrumentation, rather than for the core chemical synthesis. Electricity typically accounts for 10 to 20 percent of the total energy input at gas-based facilities. Switching from grid electricity to renewable sources reliably reduces Scope 2 GEI under CCTS. FACT Cochin, for example, successfully integrated 20 MW of solar capacity. However, given the continuous operational demands of fertiliser plants, securing baseload RE contracts or battery-backed solar infrastructure is strongly preferred over basic daytime solar agreements.
India's proposed Hydrogen Purchase Obligation mandates that fertiliser plants begin procuring a fraction of green hydrogen. At current market costs near $4 to $6 per kg (with optimistic forecasts plotting a drop toward $2 per kg by 2030), replacing just 1 percent of conventional hydrogen cuts roughly 0.02 tCO₂e per tonne of urea. Blending up to 10 percent is technically feasible today, though commercially marginal. Transitioning fully to green ammonia eliminates Haber-Bosch Scope 1 CO₂ entirely but introduces the challenge of sourcing separate CO₂ required for urea synthesis. This remains the 2030 to 2040 lever. It is vital for long-term strategic planning, but serves as a secondary priority for immediate FY2025-27 CCTS compliance.
CBAM Scope 1 and 2: A highly lucrative but narrow export advantage
Under CBAM, fertilisers and cement face broad embedded emissions coverage. This establishes exposure on direct emissions and, dependent upon product specifics and methodology, meaningful indirect electricity-related emissions. This contrasts with certain metal categories where indirect emission tracking is either limited or phased in slowly. For Indian fertiliser exporters shipping to the European Union, direct production emissions, explicitly including N₂O at its GWP-adjusted value of 273 tCO₂e per tonne, alongside relevant indirect emissions, must be actively verified and covered by purchased CBAM certificates.
Consider a nitric acid plant emitting 5 kg of N₂O per tonne of nitric acid produced. The embedded emission equals 1.365 tCO₂e per tonne. Tracking against an EU ETS price of approximately €65 per tCO₂e, this plant faces roughly €89 per tonne of nitric acid strictly in CBAM certificate costs drawn from N₂O alone, before even accounting for Haber-Bosch CO₂. Imposing a 90 percent catalytic abatement crushes this penalty down to roughly €9 per tonne. That €80 per tonne saving acts as a massive commercial advantage at any meaningful EU export volume.
Despite these numbers, CBAM currently serves as a strategic future incentive rather than an immediate sector-wide mandate. It only creates tangible value for producers with active, meaningful EU export exposure, which remains quite limited for most Indian fertiliser PSUs right now. The initial CBAM declaration deadline lands on September 30, 2027, covering the 2026 calendar year, forcing EU importers to possess product-level emission data from their Indian suppliers. Fertiliser plants lacking N₂O abatement and verified data will likely be stuck with conservative default emission values, severely inflating their certificate liability moving into 2028.
The fundamental data architecture required to navigate CCTS (identifying emission sources, documenting emission factors, and certifying production volumes) maps almost perfectly to the data demanded by CBAM's embedded emission verification methodology. A fertiliser plant that successfully establishes verified CCTS MRV immediately builds the data infrastructure required to execute CBAM product-level emission reporting. Conversely, a plant delaying its CCTS MRV will invariably lack the data needed to dodge CBAM default values, resulting in severe financial penalties across both systems simultaneously. Plant operators are highly encouraged to begin internal MRV practices aligned with anticipated CCTS methodology immediately.
Where this thesis does NOT apply
While this article details an extraordinary financial opportunity, its applicability is strictly bounded by operational realities. First, pure urea plants: Facilities that exclusively produce ammonia and urea, completely lacking downstream nitric acid integration, simply have no N₂O emissions to abate. Second, already-abated plants: Facilities that either maintained older CDM-era catalysts or proactively installed abatement for ESG reasons cannot generate additional baseline-beating credits for practices they already perform. Third, domestic-only producers: The CBAM export premium applies exclusively to products reaching European shores; for purely domestic suppliers, the CCTS CCC value remains the singular financial driver for this investment.
Frequently Asked Questions
What is N₂O abatement and why does it matter so much for plants under CCTS?
Nitrous oxide (N₂O) forms as an unintentional byproduct during nitric acid production. The IPCC AR6 confirms it carries a global warming potential 273 times that of CO₂. Therefore, every tonne eliminated removes 273 tCO₂e from the GEI calculation under CCTS. For a plant producing 5,000 tonnes of N₂O a year, installing 90 percent catalytic abatement effectively removes 1,228,500 tCO₂e annually. At an illustrative Rs 800/CCC, this generates up to roughly Rs 98.3 crore per year in theoretical regulatory value, paying for itself in roughly 1 to 4 years. No other industrial lever delivers this kind of GEI impact relative to capital cost.
Has India's fertiliser sector received final gazette-notified CCTS GEI targets?
As of April 2026, no. The fertiliser sector appeared in the June 23, 2025 draft notification. The January 2026 gazette added refineries, petrochemicals, textiles, and secondary aluminium, but fertiliser remains pending. Analysts at CEEW warn that ongoing delays increase the risk of weaker final targets. Plants should not wait; they must begin internal MRV aligned with the expected CCTS methodology using the June 2025 draft as a working reference.
Does CBAM apply to N₂O from Indian fertiliser plants?
Yes. CBAM actively covers fertilisers on Scope 1 (which explicitly includes N₂O at a GWP of 273) and can include Scope 2 depending on the methodology. If a plant emits 5 kg of N₂O per tonne of nitric acid at an EU ETS price of €65/tCO₂e, the CBAM penalty from N₂O alone sits near €89 per tonne. Following a 90 percent abatement, this plummets to roughly €9 per tonne, saving the exporter roughly €80 per tonne. However, this financial windfall only matters to facilities actively exporting to European markets.