Economic impact of green urea transition in India

Paper: GS – III, Subject: Economy, Topic: Agriculture Inputs, Issue: India’s Urea Dependency and the Need for a Green Urea Mission.

Context:

This Article discusses multidimensional consequences of existing Urea production and consumption ecosystem in India and the need to reform. The West Asia conflict has highlighted India’s vulnerability in energy and fertiliser supply chains. India remains heavily dependent on imported natural gas for urea production. The issue raises the need to shift from conventional urea to green alternatives for long term sustainability and self-reliance.

Key Takeaways:

Background:

  • Urea is a key nitrogen fertiliser essential for agricultural productivity.
  • Urea production involves ammonia formation using hydrogen and nitrogen, followed by reaction with carbon dioxide.
  • Conventional urea is produced using natural gas-based hydrogen, making it fossil fuel dependent (Called Grey hydrogen).
  • India consumes large quantities (overuse) and Government provides heavy subsidies on urea to farmers.
  • This has led to high import dependence, fiscal burden and environmental damage.

India’s urea dependence:

  • Urea accounts for about 56 percent of total fertiliser use in India.
  • India imports most of its natural gas (raw material to produce urea) and a significant share of urea.
  • Nearly 90 percent of urea production is directly or indirectly import dependent.

Fiscal and environmental costs:

  • In the last few decades, urea subsidy has risen sharply, creating pressure on public finances.
  • Excessive use is leading to soil degradation, water pollution and greenhouse gas emissions.
  • Subsidy driven pricing encourages inefficient and excessive consumption.

Production and alternatives:

  • Currently hydrogen is derived from natural gas, but it can be produced through electrolysis using renewable energy (called green hydrogen)
  • India already has technologies such as electrolysis and carbon capture, making this transition feasible.

Case for green urea (made from green hydrogen):

  • Green urea can be costly in short term but can become cost competitive by 2028 and cheaper than grey urea by 2030.
  • Integrating green hydrogen and carbon capture programmes with fertiliser production is necessary.

Policy and reform needs:

  • A Green Urea Mission is required to shift production, optimise consumption and reduce subsidies. Fertiliser sector reforms should promote efficiency, diversification and gradual decontrol.
  • Transition to green urea can reduce import dependence, fiscal burden and environmental damage. It offers a pathway to energy security, food security and sustainable agriculture.

Source: (The Indian Express)

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