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Fertilisers · Green Hydrogen · CBAMGreen Ammonia Export Economics: Why India May Hold a Structural Cost Edge in EU Markets Under CBAM
Green ammonia solves only the hydrogen half of urea decarbonisation. The carbon problem remains. If the India-EU Free Trade Agreement is implemented with tariff eliminations as currently anticipated, India’s green ammonia will possess a commercial case that few other products in any CBAM-covered sector can claim. The first advantage is an expected zero or near-zero tariff corridor, subject to ratification and final product-level schedules. The second is a potentially near-zero CBAM certificate obligation under verified low-emission pathways. Grey ammonia from India, by contrast, faces a growing carbon levy that will scale materially into the next decade. 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 structural edge means in numbers.
Several policy variables remain unsettled as of Q2 2026, including the formal ratification and final tariff schedules of the India-EU FTA, detailed CBAM implementation guidance for specific fertiliser sub-categories, and future EU emergency relief measures. The economic models in this article reflect currently published regulatory trajectories.
India and the EU concluded their Free Trade Agreement on 27 January 2026. If ratified on expected terms, ammonia and urea exported from India to the EU face zero import tariff — eliminating the 5.5% duty on ammonia and 6.5% on urea that previously applied under MFN schedules. 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.
RFNBO certification, or GHCI-certified production that also demonstrates sufficiently low verified embedded emissions under CBAM methodology, carries a potentially near-zero CBAM certificate obligation at the EU border. Grey ammonia from India, by contrast, faces a CBAM cost that will rise substantially toward 2034 as EU ETS prices increase and free allocation phases out.
CBAM for fertilisers is facing political pressure within the EU. Industry stakeholders and agricultural ministers have proposed emergency flexibility mechanisms, including temporary suspension triggers for fertiliser products under severe price shocks, but these are not currently part of the settled CBAM architecture. The political environment introduces uncertainty that Indian producers planning multi-decade investments must factor carefully.
AM Green’s Kakinada project has completed FID (August 2024), begun major equipment installation (January 2026), has been pre-assessed by CertifHy as aligned with RFNBO certification requirements, and has a combination of binding offtake agreements, long-term supply arrangements, and strategic MoUs with Uniper (500,000 TPA from 2028), Yara (50% of phase 1), RWE (250,000 TPA from 2027), and Keppel (250,000 TPA). 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.
India currently appears structurally advantaged in green ammonia production. SECI SIGHT Mode 2A auctions demonstrated delivered green ammonia prices as low as Rs 49.75/kg (approximately USD 600/t). SIGHT auction outcomes represent delivered contracted supply prices under specific tender conditions and should not be interpreted as universal production costs across all projects. Combined with expected zero FTA tariffs and potentially near-zero CBAM, Indian green ammonia has a potential landed-cost advantage at EU ports over many competing global 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. AM Green Kakinada’s combination of pumped hydro storage and wind-solar hybrid is specifically designed to meet this requirement.
How the structural cost edge works
The commercial case for Indian green ammonia in EU markets rests on multiple advantages that compound each other. While CBAM and FTA exemptions strengthen the economics, low-cost renewable power and brownfield capital efficiency remain the fundamental advantages driving the transition.
The first advantage — 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, is expected to eliminate or substantially reduce MFN tariffs on ammonia and urea, subject to final tariff schedules and ratification. This addresses the traditional schedules that previously applied: 5.5% on anhydrous ammonia (CN code 2814 10 00) and 6.5% on urea (CN code 3102 10 10). On an ammonia price of approximately USD 515 per tonne, the 5.5% tariff alone adds approximately USD 28 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 advantage. 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, a technical dialogue on verifier accreditation, and carbon pricing recognition.
The second advantage — Near-zero CBAM for green ammonia
Green ammonia — produced from renewable electricity through electrolysis, compliant with India’s GHCI and EU RFNBO temporal matching requirements — has embedded emissions that are effectively near zero. CBAM certificates are required in proportion to verified embedded emissions. While even RFNBO-compliant ammonia is expected to have very low verified embedded emissions, which can reduce CBAM certificate obligations toward near zero, the final exposure remains subject to verified embedded emissions and final CBAM emissions accounting framework boundaries.
The specific contrast with grey ammonia is vital. It is essential to separate pure ammonia exports from urea exports, as CBAM treats them differently. For pure grey ammonia, CBAM exposure is roughly equal to total emissions multiplied by the ETS price (approximately 1.6 to 2.6 tCO₂/t NH₃ × €80/tCO₂), leading to massive future liabilities. For urea, factoring in the initial free allocation phase-in (SEFA adjustment), the effective CBAM cost in 2026 is estimated by Sandbag at approximately €16/t using actual verified data, rising to €42–58/t if default values are used. However, this urea liability will also scale sharply toward the 2030s as free allocations phase out. Green ammonia, by contrast, faces a stable, near-zero compliance burden.
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 export strategies.
CBAM went live for its operational phase on 1 January 2026. Within a week, Commissioner Maroš Šefčovič announced parallel responses to agricultural minister pressure about fertiliser price inflation. First, the Commission proposed temporarily suspending MFN import tariffs on urea and ammonia, stating this would “broadly compensate the impact of CBAM.” Second, industry stakeholders proposed emergency flexibility mechanisms, including temporary Article 27a suspension triggers for fertiliser products under severe price shocks, though these are not currently part of the settled CBAM architecture.
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 emergency debates are parallel mitigation measures, not a structural reversal of the EU’s decarbonisation trajectory for fertilisers.
While fertilisers remain the primary volumetric anchor for green ammonia today, the export economics are increasingly buoyed by entirely separate demand centers. The International Maritime Organization’s decarbonisation mandates have accelerated marine bunkering demand, while power generation and ammonia cracking hubs (converting ammonia back to hydrogen for European/Asian industrial use) are scaling rapidly. Keppel’s 250,000 TPA MoU with AM Green explicitly targets the maritime and power sectors in Singapore and Asia. This diversification fundamentally strengthens the thesis for Indian exporters, ensuring they are not solely reliant on EU fertiliser policy or CBAM dynamics for off-take security.
The RFNBO requirement — the technical condition for EU access
The near-zero CBAM advantage for Indian green ammonia requires meeting the EU’s RFNBO (Renewable Fuel of Non-Biological Origin) standards — which are highly demanding.
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 December 31, 2029, and moves to hourly from January 1, 2030.
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 massive energy storage. This is why wind-solar hybrid plants with pumped hydro or battery storage are the preferred architecture. 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 needed for RFNBO compliance across all hours.
GHCI certification alone is insufficient for RFNBO recognition, but GHCI-compliant projects with additional proof of temporal matching and emissions accounting may be able to demonstrate similarly low CBAM exposure. CertifHy — the European renewable fuel certification body that pre-assessed AM Green Kakinada as aligned with RFNBO certification requirements in June 2024 — is actively engaged in bridging India’s GHCI framework to EU RFNBO requirements. The India-EU technical working group is tasked with advancing this mutual recognition.
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 arrangements (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).
Uniper (Germany) — binding long-term offtake for up to 500,000 TPA of RFNBO-compliant ammonia starting from 2028. Uniper is simultaneously constructing an ammonia cracker in Germany to reconvert the ammonia to hydrogen for European industrial use.
RWE Supply and Trading (Germany) — MoU and subsequent agreement for 250,000 TPA from 2027.
Keppel (Singapore) — MoU for 250,000 TPA, further diversifying the export base beyond Europe and securing demand in the rapidly growing Asian maritime and power sectors.
BASF (Germany) — exploring offtake of 100,000 TPA for chemical manufacturing.
The combined offtake from Yara, Uniper, RWE, Keppel, 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 potential buyers before a single tonne has been shipped.
The project’s brownfield approach is strategically important. It significantly reduces capital expenditure compared to a greenfield site by reusing existing plant infrastructure, permits, utilities and port connectivity. 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.
| 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-assessed (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 | Saudi remains highly competitive on scale and sovereign financing |
| Australia (multiple) | Low-cost solar; high shipping distance to EU | Developing | Australia-EU FTA in negotiation | India holds an edge in geographic logistics to Europe |
| Chile (H2Chile) | Wind + solar hybrid; remote from EU | Early stage | EU-Chile FTA exists | India holds an edge in geographic proximity and cost |
| Oman (multiple) | Low gas cost for transitional blue hydrogen | In progress | No EU FTA | India holds an edge in tariff treatment and green credentials |
| EU domestic (blue/green) | High renewable cost; high capital cost | Compliant | N/A (domestic) | India undercuts on production cost heavily |
The competitive analysis demonstrates that India’s combination of low renewable electricity cost, geographic proximity to Europe relative to Australia and the Americas, expected zero FTA tariff, and RFNBO pre-assessment architecture gives it a structural advantage that is hard for most competitors to replicate simultaneously.
What the economics look like in numbers
Putting all components together, we can derive a simplified landed cost formula:
Landed Cost = Production + Shipping + Tariff + CBAM
Applying this to the projected landscape in 2028 (when AM Green Kakinada Phase 1 reaches full production), the cost comparison between Indian green ammonia, European domestic production, and Indian grey ammonia 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 380–515/t (highly gas dependent) |
| Expected FTA import tariff (ammonia, 5.5%) | USD 0 (India-EU FTA) | N/A (domestic) | USD 0 (India-EU FTA) |
| Projected CBAM certificate | ~USD 0 (near-zero embedded emissions) | ~USD 0 to minimal (EU ETS already paid) | ~USD 33–88/t (in high-carbon-price scenarios after free allocation materially declines) |
| Shipping to EU (Kakinada→Rotterdam) | ~USD 40–60/t | USD 0 (domestic distribution) | ~USD 40–60/t |
| Estimated landed cost at EU port | ~USD 600–720/t | ~USD 900–1,200/t | ~USD 420–575/t + rising CBAM levy = ~USD 450–660/t total (scaling up rapidly) |
*Note: All figures are directional scenario estimates using baseline 2026 exchange rates. SIGHT auction outcomes represent delivered contracted supply prices under specific tender conditions and should not be interpreted as universal production costs across all projects.
To contextualize how these variables might interact toward the early 2030s, the scenario matrix below projects the potential crossover points where Indian green ammonia could achieve cost parity with grey ammonia exported to the EU, under optimistic renewable-cost and carbon-price assumptions.
(Landed Cost)
(Landed Cost + CBAM)
*Footnote Assumptions: EU ETS pricing paths (€80 / €110 / €140); green hydrogen cost decline CAGR of 2–5%; stable shipping rates; and electrolyser capex learning curves of 25–40%. Matrix assumes zero net MFN tariffs post-ratification.
The tables make two 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 high-carbon-price scenarios after free allocation materially declines, the gap narrows steadily and eventually reverses. While CBAM and FTA exemptions strengthen the economics, low-cost renewable power and brownfield capital efficiency remain the fundamental advantages driving the transition.
Frequently Asked Questions
Can BEE itself impose CCTS penalties?
No, BEE administers the scheme. Penalty adjudication is entirely separate. State-level adjudicating officers appointed under the EC Act are the designated authorities to impose financial penalties for CCTS non-compliance. This institutional separation was deliberately designed to avoid the enforcement failure of the PAT scheme.
Does the India-EU FTA exempt Indian fertilisers from CBAM?
No. The FTA eliminates import tariffs on ammonia (5.5%) and urea (6.5%), 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.
Could CBAM for fertilisers be suspended under Article 27a, and what would that mean for India?
Industry stakeholders have proposed emergency flexibility mechanisms, including temporary suspension triggers under Article 27a for fertiliser products under severe price shocks, but these are not currently part of the settled CBAM architecture. As of March 2026, fertilisers remain in CBAM scope. A temporary suspension would narrow the CBAM cost differential between green and grey ammonia, but would not eliminate India’s production cost advantage or the FTA zero tariff.
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). RFNBO certification, or GHCI-certified production that also demonstrates sufficiently low verified embedded emissions under CBAM methodology, carries a near-zero CBAM certificate obligation at the EU border. CertifHy bridges this gap — it is an RFNBO-aligned certification body that pre-assessed AM Green Kakinada.
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 targets 5 MTPA of ammonia by 2030 — equivalent to approximately 1 MTPA of green hydrogen.
Does paying the statutory penalty extinguish the compliance obligation?
The rules clearly impose financial liability for CCC shortfalls. However, as of April 2026, no explicit public clarification has been issued on whether CCC shortfalls are extinguished by payment or carried forward. In many international carbon markets, paying a penalty settles the monetary liability but does NOT extinguish the underlying surrender obligation. This remains a critical regulatory grey area where BEE/CERC clarification is still needed.