India and Japan signed their inaugural green ammonia export agreement on Tuesday, a significant step witnessed by Union Minister of New & Renewable Energy, Pralhad Joshi. The Heads of Terms (HoT) agreement, signed by Sembcorp Industries, Sojitz Corporation, Kyushu Electric Power Co., and NYK Line, will facilitate the supply of green ammonia produced in India to Japan, according to the Ministry of New & Renewable Energy (MNRE).

“This agreement marks a major milestone as the first collaboration of its kind between the two nations, highlighting India’s rising importance in the global green energy sector,” the MNRE stated. The initiative will be led by Sembcorp Industries, which will produce green ammonia using renewable energy in India. Kyushu Electric Power aims to incorporate this green ammonia into its energy mix, thereby reducing coal usage at its thermal power plants in Japan.

Sojitz Corporation will act as the business intermediary, linking the producer with the end-user, while NYK Line will oversee the maritime transportation of the green ammonia from India to Japan.

Minister Joshi emphasized the significance of this partnership, stating, “Today is a historic day as we establish the first-ever supply chain for Green Ammonia from India to Japan, setting the stage for future collaborations in the green energy sector.” He also highlighted ongoing efforts, including a tender for 7.5 lakh tonnes per annum (TPA) of green ammonia, with additional tenders for 4.5 lakh TPA in progress.

These efforts align with India’s broader strategy to incentivize the production of over one million tonnes of green hydrogen annually. Green ammonia, produced entirely from renewable energy sources, is a sustainable alternative to conventional ammonia, which relies on fossil fuels. It is seen as a crucial clean energy carrier, capable of storing and transporting renewable energy, reducing carbon emissions, and serving as a fuel, fertilizer, and hydrogen transport medium.

India is among the top six global exporters of green ammonia, alongside Chile, Australia, Oman, Saudi Arabia, and China, according to the Council on Energy, Environment, and Water. Germany and Japan are expected to emerge as leading importers of green ammonia.

Nuvama Research forecasts that India will maintain its cost advantage, with green ammonia projected to be 17% more competitive than China’s and 21% more competitive than Australia’s by 2050. NITI Aayog projects that by 2030, India’s production costs for green ammonia will be 29% lower than China’s and 43% lower than Australia’s.