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Fertilisers · Green Hydrogen · CCTS & CBAMIndia’s Hydrogen Purchase Obligation: The Draft Trajectory Is Not Yet Notified — But SECI Has Already Auctioned 7.24 Lakh Tonnes of Green Ammonia at Near-Parity Prices, and the Decision for Every Urea Plant CFO Is Already Here
India’s Green Hydrogen Consumption Obligation (GHCO) for the fertiliser sector has not been formally notified under a statutory mandate as of April 2026. The 2021 draft cabinet note proposed a trajectory from 0.15% in FY2023-24 to 10% by FY2029-30. The India Hydrogen Alliance submitted in May 2025 for 10% HPO for existing plants and 100% for new plants by 2030. But while the mandate waits for formal notification, the market has already moved: SECI completed reverse auctions under the SIGHT programme in August and September 2025, awarding 7,24,000 TPA of green ammonia to 13 fertiliser plants at Rs 49.75 to Rs 64.74 per kilogram — the lowest discovered price is just 10.1% above India’s current grey ammonia price of Rs 45 per kilogram. For the first time in history, Indian green ammonia has been commercially contracted at near-parity with grey. At current SECI prices, a 10% green hydrogen blend generates Rs 72 crore per year in CCTS CCC value against Rs 15 crore in green premium cost for a 1 Mt urea plant — a net positive of Rs 57 crore per year. The HPO, at today’s prices, is not a cost. It is a commercial positive. This article maps the draft trajectory, quantifies the GEI and CCTS impact of 10% green blending, and explains why the fertiliser subsidy framework — not the green premium — is the structural barrier that HPO design must overcome.
India’s Green Hydrogen Consumption Obligation (GHCO) — referred to as HPO in industry discourse — has not yet been formally notified under a statutory mandate as of April 2026. The statutory authority exists: the Energy Conservation Act 2001 (amended 2022) and the National Green Hydrogen Mission (January 2023, Rs 19,744 crore outlay) both provide the legal and policy basis. The draft cabinet note from 2021 proposed a specific trajectory for fertiliser and refinery sectors. The IH2A’s May 2025 formal submission proposed 10% HPO for existing plants and 100% for new plants by 2030. Formal notification is expected before FY2026-27. Planning for it now, before notification, is the correct posture for any urea or ammonia plant CFO with a 3 to 7-year horizon.
The SECI SIGHT programme has already de facto created an HPO demand signal without waiting for the formal mandate. In August and September 2025, SECI ran reverse auctions for 7,24,000 TPA of green ammonia for 13 fertiliser units across India. Prices were discovered between Rs 49.75 and Rs 64.74 per kilogram. The lowest discovered price of Rs 49.75 per kg is just 10.1% above India’s current grey ammonia price of Rs 45 per kg. ACME Cleantech won more than 50% of the capacity. This near-parity milestone — driven by SIGHT incentives, India’s low-cost renewables, and falling electrolyser costs — restructures the entire HPO economics question. For a urea plant consuming 300,000 TPA of ammonia, a 10% green blend at Rs 5/kg premium over grey costs approximately Rs 15 crore per year — within the rounding error of normal operating cost variation.
The CCTS GEI interaction with green hydrogen blending is commercially important. Grey hydrogen from natural gas steam methane reforming emits approximately 9.5 kgCO₂ per kg of hydrogen. Green hydrogen from electrolysis with renewable electricity emits below 2 kgCO₂ per kg (India’s MNRE standard). A 10% green blend in a urea plant consuming 120 kgH₂ per tonne of urea reduces emissions by 90 kgCO₂ per tonne of urea — a 3.6% GEI reduction from the estimated 2.5 tCO₂e/t baseline. At Rs 800 per CCC, this generates Rs 72 per tonne of urea in CCTS regulatory value — Rs 72 crore per year for a 1 Mt plant. Against a green premium cost of Rs 15 crore per year, the net return from 10% HPO compliance is approximately Rs 57 crore per year positive.
The fertiliser subsidy paradox is the structural barrier. India’s urea retail price is fixed at Rs 242 per 50 kg bag — an administered price unchanged in real terms for decades. When a urea plant’s input costs increase through green hydrogen blending, the additional cost flows either to the government subsidy budget or to the plant operator as margin compression. The HPO therefore requires simultaneous subsidy framework redesign — precisely what the SIGHT programme provides. SIGHT incentives cover part of the green premium at source, so the fertiliser plant absorbs only the residual, making the HPO cost-neutral or net-positive at the plant level while the government’s incremental cost (approximately Rs 1,500-2,000 crore per year for 10% HPO sector-wide) is just 1% of the Rs 1.7 lakh crore annual urea subsidy budget.
The CBAM connection for fertilisers is present but limited at current calibration. CBAM covers nitrogenous fertilisers and urea from January 1, 2026. India exports approximately 0.4-0.6 MMT of urea and other nitrogenous fertilisers to the EU annually. For non-urea fertilisers where India imports grey ammonia directly (approximately 86% of India’s ammonia is import-dependent), substituting green ammonia reduces the CBAM-relevant embedded emissions in the exported product. As the EU Commission finalises the embedded emissions calculation methodology for fertilisers through its 2026-2027 implementing acts, the verified emission reduction from green ammonia feedstock will crystallise as a CBAM certificate cost reduction for EU-exporting Indian fertiliser producers.
The draft GHCO trajectory — what the 2021 cabinet note proposed
The Green Hydrogen Consumption Obligation as originally envisaged in the 2021 draft cabinet note proposed a graduated trajectory for fertiliser producers and petroleum refiners that closely mirrors the Renewable Purchase Obligation framework — a small initial mandate growing progressively, creating regulatory certainty for investment in green hydrogen production capacity. The trajectory, while never formally notified as a statutory mandate, has guided both industry planning and the NGHM’s demand creation framework. The IH2A’s May 2025 formal submission to the government aligned with the 10% by 2030 target for existing plants — and went further, proposing 100% green hydrogen for all new builds and expansions from 2030 onwards.
Across 17 refineries and 22 ammonia plants in the IH2A mapping, a 10% HPO aggregates to approximately 672,000 MT of green hydrogen demand — meeting 45% of the NGHM’s 1.5 MMT domestic consumption target by 2030. India’s installed electrolyser base as of May 2025 was less than 40 MW, producing approximately 10,600 MTPA of green hydrogen — less than 1% of the 1.5 MMT domestic target. The gap between stated ambition and current installation is exactly the problem that mandatory HPO is designed to solve by providing committed demand that makes production investment bankable.
The SECI SIGHT auctions — near-parity achieved, and what it means
In August and September 2025, SECI ran reverse auctions for 7,24,000 TPA of green ammonia for 13 fertiliser units across India under the SIGHT programme (Mode 2A, Tranche 1). These were the first large-scale commercial contracting of green ammonia for Indian fertiliser production, with 10-year fixed-price supply contracts. The price discovery was historic.
| Off-taker | Plant | Volume (TPA) | Developer | Price (Rs/kg) | vs grey (Rs 45/kg) |
|---|---|---|---|---|---|
| IFFCO | Paradeep, Odisha | 1,00,000 | ACME Cleantech | Rs 49.75 | +10.6% — lowest bid ever in India |
| IFFCO | Kandla, Gujarat | 1,00,000 | ACME Cleantech | Rs 54.73 | +21.6% above grey |
| Coromandel International | Kakinada, Andhra Pradesh | 85,000 | Jakson Green / OCIOR | Rs 50.75 | +12.8% above grey |
| 10 other fertiliser units | Various across India | Balance of 7,24,000 TPA | 7 developers total | Rs 49.75–64.74 | 10–44% above grey |
The critical number is Rs 49.75/kg — just 10.1% above grey ammonia’s Rs 45/kg. This compares with the previously cited international benchmark of Rs 110/kg, which represented a 145% premium over grey. The near-parity achievement was driven by competitive auction structure, SIGHT incentives, India’s low-cost renewable energy resources, and falling electrolyser costs — Chinese alkaline electrolysers now below $400/kW versus $800-1,200/kW for Western models. The entire industry’s resistance to the HPO was built on 2022-era price assumptions. The 2025 SECI auctions have definitively invalidated those assumptions.
For a non-urea fertiliser producer who can directly substitute green ammonia for imported grey ammonia: a 10% green blend at the lowest SECI price (Rs 49.75/kg versus Rs 45/kg grey) adds Rs 4.75/kg premium on 10% of ammonia consumption. For a plant consuming 300,000 TPA of ammonia total — 30,000 TPA green at Rs 4.75/kg premium — the annual incremental cost is approximately Rs 14.25 crore. Against a typical DAP or complex fertiliser plant’s annual revenue of Rs 1,500-2,500 crore, this is less than 1% of revenue. For urea producers, the calculation flows through the subsidy mechanism rather than being borne directly — but the plant-level incremental burden is the same order of magnitude. The HPO at 10% green blend and current SECI prices is not a margin-threatening obligation. It is a procurement diversification that happens to generate CCTS regulatory value.
What the HPO means for CCTS GEI — the quantified model
The Rs 57.7 crore net positive return is the finding that restructures the entire HPO policy conversation. If the CCTS GEI calculation for fertilisers correctly reflects hydrogen feedstock emission factors — which it should, given IPCC-aligned methodology — then a 10% HPO at today’s SECI prices generates more CCTS value than it costs in green premium. Every urea plant CFO who has been treating the HPO as a future compliance burden to minimise is running the wrong model. The correct model is: how do I accelerate green hydrogen procurement to maximise CCTS CCC generation before my competitors establish their green ammonia supply agreements?
The fertiliser subsidy paradox — why the HPO needs SIGHT, not just mandate
India’s urea is sold at a fixed retail price of Rs 242 per 50 kg bag — an administered price largely unchanged in real terms for decades. The government pays the difference between the cost of production and this retail price. For FY2025-26, the fertiliser subsidy budget exceeded Rs 1.7 lakh crore. When a urea plant blends green hydrogen and earns CCTS CCCs, the CCC revenue flows to the plant operator — but the plant’s urea selling price remains fixed at the administered rate. The government’s subsidy budget absorbs the green premium as an additional cost without any visible consumer benefit. This creates a transfer from the government subsidy budget to the plant operator’s CCC account — a distributional outcome that may not survive political scrutiny without the SIGHT mechanism to explicitly account for and cover the green premium.
The SIGHT programme correctly identifies the solution: subsidise the green premium at source, at the producer level, rather than passing additional cost through the urea subsidy mechanism. When SECI auctions green ammonia at Rs 49.75/kg and grey is at Rs 45/kg, the Rs 4.75/kg premium is borne partly by SIGHT production incentives (covering the cost gap between green production and grey market price) and only marginally by the fertiliser plant. This means the HPO can be made economically neutral or net-positive for the fertiliser plant — neither increasing the urea subsidy budget visibly nor compressing the plant’s margins — if the SIGHT incentive correctly closes the green-grey gap. The government’s incremental cost for 10% HPO compliance across the fertiliser sector is approximately Rs 1,500-2,000 crore per year in additional SIGHT payments — just 1% of the Rs 1.7 lakh crore annual urea subsidy budget, for a 3.6% GEI reduction across the entire sector. The 2025 SECI auctions prove this calibration is commercially achievable. What remains is formal notification of the HPO mandate to make the demand signal mandatory rather than voluntary — and the plant-level CCTS GEI benefit calculation to be confirmed in BEE’s forthcoming Detailed Procedure for the fertiliser sector.
Frequently Asked Questions
Has India’s Hydrogen Purchase Obligation been formally notified for the fertiliser sector?
No. As of April 2026, the Green Hydrogen Consumption Obligation has not been formally notified under a statutory mandate. The 2021 draft cabinet note proposed a trajectory rising from 0.15% in FY2023-24 to 10% by FY2029-30. The IH2A submitted a formal proposal in May 2025 for 10% HPO for existing plants and 100% for new plants by 2030. SECI has partially operationalised demand through SIGHT auctions (7,24,000 TPA green ammonia to 13 plants in August-September 2025) but participation is currently voluntary. Formal HPO notification is expected before FY2026-27. Fertiliser company CFOs should plan for it now, incorporating CCTS GEI impact, green ammonia sourcing agreements, and the subsidy interaction into 3-5 year financial models.
What did the 2025 SECI green ammonia auctions achieve, and what is the current green-grey price gap?
SECI awarded 7,24,000 TPA of green ammonia to 13 fertiliser plants in August-September 2025 at Rs 49.75 to Rs 64.74/kg. The lowest bid — Rs 49.75/kg from ACME Cleantech for IFFCO Paradeep — is just 10.1% above India’s grey ammonia price of Rs 45/kg. This compares with the previously cited international benchmark of Rs 110/kg (145% premium over grey). Near-parity has been achieved for the first time in India, driven by SIGHT incentives, low-cost renewables, and Chinese electrolyser costs below $400/kW. ACME Cleantech won more than 50% of the total capacity. The government expects the shift to save approximately $2.5 billion in foreign exchange over the next decade.
How does a 10% HPO green hydrogen blend affect a urea plant’s CCTS GEI, and is it commercially positive?
A urea plant consumes approximately 120 kgH₂ per tonne of urea. Grey H₂ (SMR) emits 9.5 kgCO₂/kg; green H₂ (electrolysis + RE, MNRE standard) emits below 2.0 kgCO₂/kg. A 10% green blend (12 kgH₂ from green sources) reduces emissions by 90 kgCO₂/t urea = 0.09 tCO₂e/t — a 3.6% GEI reduction from the ~2.5 tCO₂e/t baseline. At Rs 800/CCC, this generates Rs 72/t urea in CCTS value — Rs 72 crore/year for a 1 Mt plant. At the lowest SECI price (Rs 4.75/kg premium over grey), the green feedstock cost for 10% blend is approximately Rs 14.3 crore/year. Net return: +Rs 57.7 crore/year. The HPO at current prices is commercially positive, not a cost burden — provided BEE’s CCTS Detailed Procedure correctly reflects hydrogen feedstock emission factors in the fertiliser GEI calculation.