India & Japan: establishing an ammonia trade corridor

Trade corridor development, co-firing progress

Click to learn more. The recent Japan-India Summit saw a series of economic MoUs exchanged, including for the establishment of a hydrogen/ammonia trade corridor. Source: Ministry of Economy, Trade and Industry, Japan.

At the Japan-India Summit in late August, a series of economic MoUs was signed to strengthen trade flows between the two countries. This included a joint statement on clean hydrogen and clean ammonia, signed by the Ministry of New & Renewable Energy (MNRE, India), and the Ministry of Economy, Trade and Industry (METI, Japan). Commitments in the joint statement include cooperation on R&D, development of policy, regulations, market mechanisms, infrastructure, and the establishment of a hydrogen/ammonia trade corridor between India and Japan. Overall, the agreements contribute to a joint vision for collaboration and trade flow scale-up over the coming decade. India and Singapore signed up to a similar framework shortly after, including hydrogen and ammonia collaboration.

During the dialog, it was also announced that a Japanese government-sponsored project had progressed towards deployment. “A Japanese heavy industry company, a Japanese trading company and an Indian power company [have] conducted the necessary studies to conduct India’s first demonstration of ammonia co-firing at an existing coal power plant in the state of Gujarat”: a reference to the ongoing Adani-IHI co-firing project at the Mundra power plant in India.

Joint Credit Mechanism

One financial area the two countries will cooperate on are Joint Credit Mechanisms, which “allows companies and governments of both to collaborate on technical and financial aspects to implement measures, and allocate the resulting GHG reductions and absorptions according to each country’s contribution.” Credits (or GHG reduction in excess of commitments) can be transferred as “internationally transferred mitigation outcomes”: a mechanism to unlock deeper GHG reductions via the transfer of superfluous emissions reductions to entities struggling to meet their targets.

Producing the molecules to be traded: ACME

Already this month, we have seen the Solar Energy Corporation of India complete its first subsidy program for renewable ammonia, awarding thirteen contracts for the domestic production and delivery of renewable ammonia to Indian fertiliser manufacturers. Of these, ACME Cleantech won six contracts, underpinning the production of 370,000 tons per year of renewable ammonia, including 220,000 tons at ACME and IHI’s under-development mega-project in Gopalpur. Following the Japan-India government dialog, ACME announced that it has signed an MoU for the long-term supply of renewable ammonia from India to Japan.

In February 2024, ACME and IHI signed an offtake agreement for the supply of renewable ammonia from Gopalpur: 400,000 tons per year on a “long-term basis”. Production at Gopalpur is anticipated to begin in 2027, and at full capacity, the project will have a capacity of up to 1.3 million tons per year of renewable ammonia. As noted after the results of the SECI subsidies were announced, it is likely operations in Gopalpur will begin with a combination of domestic and international offtakers for renewable ammonia, based on the agreements and contracts now signed.