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Fertilisers · CCTSCCTS and the Fertiliser Sector: Why N₂O Abatement at Nitric Acid Plants Is India’s Highest-Leverage Industrial Decarbonisation Investment
India’s fertiliser sector — approximately 20 major plants run by IFFCO, RCF, NFL, GSFC, FACT, and Chambal — was included in the CCTS draft notification of June 23, 2025. Final gazette-notified GEI targets for the fertiliser sector were pending as of April 2026, with CEEW noting that delays risk weaker final targets, as occurred with the first four sectors. What is already clear from the framework is the order of priority for compliance investment: nitrous oxide emitted by nitric acid plants has a global warming potential of 273 times carbon dioxide over 100 years under the IPCC Sixth Assessment Report. Every tonne of N₂O eliminated through catalytic abatement removes 273 tCO₂e from the plant’s GEI under CCTS. For a medium-sized nitric acid plant emitting 1,000 tonnes of N₂O per year, catalytic abatement at 90% efficiency generates approximately Rs 19.7 crore in CCC revenue annually at Rs 800/CCC — with payback from CCTS alone in under 2.5 years. CBAM covers fertilisers on both Scope 1 and Scope 2, making N₂O abatement doubly valuable for any plant with EU export exposure. No other single investment in the Indian fertiliser sector delivers this ratio of GEI impact to capital cost.
India’s fertiliser sector GEI targets were in the June 23, 2025 draft notification, subject to 60-day public consultation. As of April 2026, final gazette-notified plant-specific GEI targets for the fertiliser and iron and steel sectors have not been published. The October 8, 2025 gazette covered the first four sectors. The January 16, 2026 gazette added Refinery, Petrochemicals, Textiles, and secondary Aluminium — fertiliser remains pending. This article uses confirmed sector-level data and abatement technology analysis rather than specific draft plant targets. CEEW (February 2026) notes that delays risk weaker final targets. Fertiliser plants should begin GEI measurement now — the baseline year (FY2023-24) has passed and the FY2025-26 compliance period is running.
India’s fertiliser sector produces approximately 75 Mt CO₂e per year — approximately 2.7% of total industrial emissions. Approximately 20 major plants are covered under CCTS including state PSUs IFFCO (India’s largest fertiliser manufacturer with approximately 19% urea market share), RCF, NFL, FACT, and GSFC. The sector GEI ranges from approximately 1.4 to 2.6 tCO₂e per tonne of fertiliser produced. Gas represents 70 to 80% of urea production cost; domestic supply meets only 14 to 17 MMSCMD against the 46 to 50 MMSCMD needed, with approximately 70% of LNG imported from the Gulf. India produced approximately 31.4 Mt of urea in FY2023-24.
Nitrous oxide (N₂O) is formed as an unintentional byproduct during nitric acid production — a key step in making nitrogen fertilisers — when the platinum-rhodium catalyst gauze in the ammonia oxidation reactor converts a fraction of ammonia to N₂O instead of the desired nitric oxide. N₂O has a global warming potential of 273× CO₂ over 100 years (IPCC AR6). Nitric acid production accounts for approximately 50% of the total GHG emissions from the chemical process industries globally. Unlike Haber-Bosch CO₂ (which requires feedstock substitution to eliminate), N₂O is a point-source emission amenable to catalytic destruction at relatively modest cost.
Catalytic N₂O abatement achieves 80 to 97% N₂O elimination through two proven routes: secondary abatement places a catalyst bed downstream of the ammonia oxidation reactor in the nitrous gas stream at high temperature; tertiary abatement treats the tail gas stream at lower temperature. Combining both achieves near-complete elimination. Technology is commercially mature globally (Koch Technology Solutions, Yara, European licensors) with hundreds of installations. N₂O abatement is currently adopted in less than 50% of plants in developing countries globally (Calyx Global, 2025) — India’s fertiliser PSUs are starting from a low base.
Financial case under CCTS: for a nitric acid plant emitting 1,000 t/year N₂O, 90% catalytic abatement eliminates 900 t N₂O = 245,700 tCO₂e per year. At Rs 800/CCC: approximately Rs 19.7 crore per year in CCC revenue. Installation cost of Rs 8 to 50 crore gives payback of 6 months to 2.5 years from CCTS CCC revenue alone — before CBAM or product premium value is included.
CBAM covers fertilisers on both Scope 1 and Scope 2 embedded emissions — the same coverage as aluminium. N₂O from nitric acid production is a Scope 1 embedded emission at its GWP-adjusted value. A plant emitting 5 kg N₂O per tonne of nitric acid produced faces approximately €89 per tonne in CBAM certificates from N₂O alone (at €65/tCO₂e). After 90% abatement: approximately €9 per tonne — a saving of approximately €80 per tonne exported. At 245,700 tCO₂e eliminated and €65/tCO₂e, this amounts to approximately €16 million per year for an EU-exporting plant at this scale.
Why N₂O is the priority — the chemistry and the carbon arithmetic
The fertiliser sector’s GHG profile has two distinct components. The first is CO₂ from the Haber-Bosch process — steam methane reforming of natural gas to produce hydrogen. Eliminating this CO₂ requires green hydrogen or carbon capture. It is a major long-term challenge. The second is N₂O from nitric acid plants. This emission is chemically unintended, technically preventable with commercially proven technology, and carries a climate impact per tonne that exceeds Haber-Bosch CO₂ by a factor of 273. For any fertiliser company operating a nitric acid unit, N₂O abatement is an operational improvement decision that pays back in months at CCTS price levels.
The Ostwald process produces nitric acid from ammonia in three stages: ammonia oxidation at approximately 890°C over platinum-rhodium gauze produces nitric oxide (NO); NO is oxidised to nitrogen dioxide (NO₂); NO₂ is absorbed in water to produce nitric acid. The Pt-Rh gauze is not perfectly selective — a fraction of ammonia reacts to form N₂O instead of NO. This N₂O plays no role in subsequent nitric acid chemistry and is released to atmosphere unless abated. N₂O yield depends on catalyst condition, temperature, and gauze age: as the gauze ages, N₂O formation increases. This creates a systematic incentive to schedule gauze replacement and to install downstream abatement as the dominant long-term solution.
For a typical unabated nitric acid plant, the N₂O emission rate is approximately 5 to 8 kg N₂O per tonne of nitric acid produced. A plant producing 1 million tonnes of nitric acid per year emits approximately 5,000 to 8,000 tonnes of N₂O annually — equivalent at GWP 273 to 1.37 to 2.18 Mt CO₂e per year from N₂O alone. This is comparable in scale to the CO₂ emission from Haber-Bosch ammonia synthesis at the same facility, yet is technically eliminable at a fraction of the cost.
The four abatement levers — ranked by GEI impact and deployment speed
Secondary abatement (HT-deN₂O): Catalytic bed installed downstream of the ammonia oxidation reactor in the nitrous gas stream at high temperature. Achieves 80–97% N₂O elimination. Low capital cost if space is available in existing reactor vessel. Tertiary abatement (LT-deN₂O): Separate reactor treating the tail gas stream at lower temperature. Required when reactor geometry precludes secondary abatement. Combining both achieves near-complete N₂O elimination. Technology is proven with hundreds of global installations. This is the first investment that should appear on any Indian fertiliser plant’s CCTS compliance roadmap.
Indian gas-based urea plants typically consume 9 to 10.5 Gcal per tonne of ammonia; best-practice is approximately 7 to 8 Gcal/tonne — a 15 to 25% improvement gap. Key interventions: condensate recovery systems, variable frequency drives on large compressors, reformer burner management, secondary reformer optimisation, CO₂ removal unit efficiency. GSFC achieved approximately 8% CO₂ reduction with Rs 35 crore in such improvements. These investments take longer to implement and verify than N₂O abatement but deliver sustained GEI reduction and operating cost savings.
Fertiliser plants use electricity primarily for utilities (cooling water pumps, compressors, instrument systems) rather than the core chemical process. Electricity typically accounts for 10 to 20% of total energy input at gas-based plants. Replacing grid electricity with renewable sources reduces Scope 2 GEI under CCTS and reduces CBAM embedded Scope 2 emissions. FACT Cochin has integrated 20 MW of solar. Given fertiliser plants’ continuous operation, baseload RE contracts or battery-backed solar are preferable to simple daytime solar PPAs.
India’s Hydrogen Purchase Obligation requires fertiliser plants to procure a fraction of green hydrogen. At current costs of approximately $4 to $6/kg (falling toward $2/kg by 2030 in optimistic scenarios), every 1% replacement of conventional hydrogen cuts approximately 0.02 tCO₂e per tonne of urea. Blending 10% is becoming technically feasible but commercially marginal today. Full green ammonia transition eliminates Haber-Bosch Scope 1 CO₂ but requires a separate CO₂ source for urea synthesis. Academic analysis suggests green urea can approach cost parity with gas-based urea by approximately 2028 at modest carbon prices when fossil fuel subsidies are excluded. This is the 2030 to 2040 lever — important for long-term planning but not the primary FY2025-27 CCTS compliance instrument.
CBAM Scope 1 and 2 — why fertilisers carry the same coverage as aluminium
CBAM currently covers steel on Scope 1 only; aluminium on Scope 1 and Scope 2; fertilisers on Scope 1 and Scope 2. Fertilisers are therefore in the same, more comprehensive CBAM category as aluminium. For Indian fertiliser exporters to the EU, both direct production emissions — including N₂O at its GWP-adjusted value of 273 tCO₂e per tonne — and indirect electricity emissions must be verified and covered by CBAM certificates.
For a nitric acid plant emitting 5 kg N₂O per tonne of nitric acid produced, the N₂O embedded emission is 5 × 273 = 1.365 tCO₂e per tonne. At an EU ETS price of approximately €65 per tCO₂e, this represents approximately €89 per tonne of nitric acid in CBAM certificate cost from N₂O alone — before CO₂ from Haber-Bosch. After 90% catalytic abatement, this falls to approximately €9 per tonne. The approximately €80 per tonne saving is commercially significant at any meaningful EU export volume, and is additive to CCTS CCC revenue from the same abatement investment.
The first CBAM declaration deadline — September 30, 2027, covering calendar year 2026 — requires EU importers to have product-level emission data from Indian suppliers. Fertiliser plants without N₂O abatement and without verified emission data will face default values with a 30% punitive markup from 2028. The financial case for investing in both abatement technology and MRV infrastructure is now quantified and commercially urgent.
CCTS requires each fertiliser plant to measure, report, and verify its GHG emission intensity for FY2025-26 on a gate-to-gate basis. The data architecture required — emission sources identified, emission factors documented, production volumes certified — is substantially the same data required by CBAM’s embedded emission verification methodology. A fertiliser plant that establishes verified CCTS MRV immediately acquires the data infrastructure needed for CBAM product-level emission reporting. Conversely, a plant that delays CCTS MRV will also lack data to avoid CBAM default values — paying penalties in both systems simultaneously. The single most valuable near-term action is implementing verified, plant-level GHG accounting that satisfies both CCTS and CBAM in one investment.
Frequently Asked Questions
What is N₂O abatement and why does it matter so much for fertiliser plants under CCTS?
N₂O (nitrous oxide) is formed as an unintentional byproduct during nitric acid production, when the platinum-rhodium gauze in the ammonia oxidation reactor converts a fraction of ammonia to N₂O instead of the desired nitric oxide. N₂O has a global warming potential of 273× CO₂ (IPCC AR6). Every tonne of N₂O eliminated removes 273 tCO₂e from the GEI under CCTS. Catalytic abatement achieves 80 to 97% elimination through proven secondary and tertiary technology routes. For a 1,000 t/year N₂O plant, 90% abatement generates approximately 245,700 CCCs worth approximately Rs 19.7 crore at Rs 800/CCC — payback in under 2.5 years. No other available lever in the fertiliser sector delivers this ratio of GEI impact to capital cost.
Has India’s fertiliser sector received final gazette-notified CCTS GEI targets?
As of April 2026, no. The fertiliser sector was in the June 23, 2025 draft notification. The October 2025 gazette finalised only the first four sectors. The January 2026 gazette added Refinery, Petrochemicals, Textiles, and secondary Aluminium — fertiliser remains pending. CEEW’s February 2026 analysis warns that delays risk weaker final targets. Plants should treat the June 2025 draft as their working reference and begin GEI measurement now — the baseline year (FY2023-24) has passed and the FY2025-26 compliance period is running.
Does CBAM apply to N₂O from Indian fertiliser plants, and on what scope?
Yes. CBAM covers fertilisers on Scope 1 (including N₂O at its full 273× GWP) and Scope 2 (indirect electricity). A plant emitting 5 kg N₂O per tonne of nitric acid produced faces approximately €89 per tonne in CBAM certificates from N₂O alone (at €65/tCO₂e). After 90% abatement: approximately €9 per tonne — saving approximately €80 per tonne exported. For any Indian fertiliser plant with EU export exposure, N₂O abatement is simultaneously the highest-return CCTS investment and the highest-value CBAM cost reduction available.