India’s Green Revolution was built on urea, the humble white crystals that transformed food security and lifted millions from hunger. But the same fertiliser that once symbolised abundance has now become a heavy burden. It sustains the soil, yet strains the sky and drains our rivers.
India’s urea industry, once the proud engine of the Green Revolution, is now facing a climate and water crisis. A new study shows that moving from fossil gas-based “grey urea” to renewable “green urea” could reduce natural gas use by 96 percent and cut water withdrawals by 40 percent by 2050.
A new study published in the Journal of Cleaner Production by Nikhil Dilip Pawar and colleagues offers a detailed roadmap for decarbonising India’s urea industry. By modelling all 34 existing plants, the researchers compared three possible pathways like grey, blue, and green urea, to assess their impact on greenhouse gas emissions, gas dependence, water use, and costs. The findings are striking: shifting to green urea could make India’s fertiliser industry far cleaner and more resilient. But one key factor will decide the pace of this transition: the price of natural gas.
India is the world’s second-largest producer of nitrogenous fertilisers, with urea dominating at 83% of total production in 2022–23. The fertiliser is indispensable for food security but comes at heavy environmental and economic costs. Urea manufacturing accounts for nearly half of India’s natural gas consumption, a resource that is both imported (46% in 2023–24) and volatile in price.
Each ton of urea produced in India consumes an average of 645 cubic metres of natural gas and withdraws 6.43 cubic metres of freshwater. The 34 urea plants in operation, many over three decades old, emit significant CO2 through steam methane reforming (SMR) and captive power generation. The sector’s carbon intensity, at 0.45 tons CO2 per ton of urea, aligns with global averages but represents a major obstacle to India’s net-zero ambitions.
The fiscal dimension is equally pressing. Fertiliser subsidies account for roughly $22.8 billion annually, and global shifts such as the EU’s Carbon Border Adjustment Mechanism (CBAM) threaten to penalise carbon-intensive fertiliser exports. Against this backdrop, decarbonising urea production is both a climate necessity and an economic imperative.
The study distinguishes between three urea production pathways:
Grey urea: Conventional natural gas–based plants using Steam Methane Reforming (SMR). Process Carbon Dioxide (CO2) from gas is used in synthesis, but combustion emissions are released.
Blue urea: Retrofitted plants that integrate carbon capture and partial electrification, reducing gas consumption and emissions. The process involves adding in-house carbon capture technology to trap what would normally be released by the SMR and CPP (Captive Power Plant) units. This is then fed directly back into the urea synthesis process, reducing the amount of natural gas needed for and lowering synthesis gas production. Any resulting deficit is compensated by adding an electrolyser to the plant, making it a step towards cleaner production while still utilising the existing core facility.
Green urea: Fully renewable-powered plants relying on electrolysers for hydrogen, cryogenic separation for nitrogen, and externally captured CO2 for synthesis. Green urea represents a commitment to complete carbon neutrality by ensuring absolutely no fossil fuel is consumed in the plant. This requires fully replacing fossil fuel-based units like SMR and CPP. The synthesis gas (H2 and N2) for ammonia production is generated using a cryogenic air-separation unit and an electrolyser, with the power for these units coming from renewable sources. Crucially, the process needed for synthesis must be sourced externally, typically by capturing it from a nearby industrial point source (like a cement or power plant) and transporting it to the urea facility via a pipeline.
In the modelling framework used in the study, each plant could continue as grey, be retrofitted to blue or green, or be decommissioned. New capacity additions were restricted to either grey or green plants. The optimisation was run using REMix, a mixed-integer linear programming (MILP) model, under multiple cost and policy scenarios from 2026 to 2050.
Fig.: Simplified process flow diagram of a typical grey core urea plant (current or future plant) along with the technologies necessary to convert it into a blue/green production technique.
The contrast between business-as-usual (BAU) and decarbonisation scenarios is stark. Under BAU, natural gas consumption in 2050 remains at 11 billion cubic metres (BCM) annually, with associated CO2 emissions of 0.8 tons per ton of urea. By contrast, the decarbonisation pathway in the base case cuts natural gas use to just 0.5 BCM, with 93% of urea produced from green sources.
At the highest levels of decarbonisation, fossil gas consumption intensity falls to 24 cubic metres per ton of urea—a 96% decline from today. CO2 intensity approaches zero, representing an 8.19 Mt annual emissions avoidance by 2050.
The only outlier is the low natural gas price scenario, which stalls the transition. Here, grey urea maintains an 80% share, locking the sector into continued fossil dependence. But the addition of a modest carbon tax—$50/tonnene CO2 in 2030, rising to $100/ton by 2040—reverses the trend, reducing gray urea’s share to 14% and halving the sector’s gas intensity.
Beyond emissions, the study reveals an underappreciated benefit: water savings. Urea production is water-intensive, particularly in SMR-based plants. By eliminating SMR, green urea avoids much of this burden. In the base scenario, freshwater withdrawal intensity drops to 3.86 m³ per ton, 40% lower than the current average. For a projected 2050 demand of 18.2 million tons, this equates to saving 47 million cubic metres of water annually.
Water demand is somewhat sensitive to electricity and electrolyser costs, since higher operating costs encourage partial reliance on grey plants. Yet even in unfavourable cost scenarios, decarbonisation delivers measurable reductions compared with BAU.
The economic findings are nuanced. The levelised cost of urea (LCOU) under BAU and decarbonisation pathways are comparable in the base case—around $464/ton. But BAU’s dependence on natural gas exposes it to wild cost swings.
When gas prices surge, as they did globally in 2021–22, LCOU in BAU rises steeply, with gas accounting for over 75% of costs. In contrast, under decarbonisation, the fossil share falls to just 25%, cushioning the shock. Even when gas prices collapse, BAU LCOUs fluctuate dramatically, while decarbonised production remains comparatively stable.
Electrolyser and renewable electricity costs matter, but their impact on green urea’s competitiveness is modest compared with natural gas volatility. In fact, during the 2021–23 gas price spike, modelled LCOUs for green urea were lower than traded urea spot prices for nearly 19 months.
This resilience could be critical for India’s subsidy regime. Stable costs reduce the fiscal risk of subsidy outlays, which balloon when international gas prices rise. Decarbonisation, in effect, hedges India’s subsidy bill against global fuel shocks.
A key insight is where capital should flow. The study shows that most decarbonisation is achieved not by building new greenfield plants but by retrofitting existing grey units. Electrolysers dominate investment costs, representing around 40% in the base scenario. Future green plants account for less than 1% of total investment in most cases, underscoring that the sector’s transition will be retrofit-heavy. Where gas prices remain low, investment shifts heavily towards new grey plants—up to 93% of spending. Carbon taxes again redirect investment towards greener technologies, reducing grey plant dominance to 66%.
The modelling underscores a central policy tension: cheap gas discourages decarbonisation. Without interventions, low gas costs could lock India into decades more of fossil-intensive fertiliser production. Carbon pricing emerges as a powerful corrective. Even a modest tax makes green urea competitive, reduces water and CO₂2 intensities, and diversifies cost structures. Other levers include targeted subsidies for electrolysers, concessional renewable power tariffs, and blending mandates for green ammonia.
Yet structural risks remain. Many Indian plants are more than 30 years old, with seven over 50. Assuming they can all be retrofitted and operated to 2050 may be overly optimistic. Decommissioning schedules and plant-level decarbonisation strategies will require detailed planning and regulatory coordination.
Decarbonising urea is not just about fertiliser—it links directly to India’s hydrogen economy. Green urea production requires electrolysers and renewable electricity, the same building blocks as green hydrogen. By scaling electrolyser manufacturing and renewable integration, urea decarbonisation can catalyse broader energy transition goals.
There are also co-benefits for trade. With mechanisms like the EU’s CBAM penalising carbon-intensive imports, green urea could shield India’s exports from future tariffs while strengthening its environmental credibility.
At the same time, policymakers must reckon with agronomic realities. Indian farmers currently pay a heavily subsidised flat price for urea (Rs. 268 per 50-kg bag, or roughly $65/ton). The decarbonisation strategy must balance production costs with subsidy reforms and farmer affordability.
The study by Pawar and colleagues provides a data-rich, model-driven case for why India must urgently green its urea sector. It shows that large-scale decarbonisation—up to 93% green urea by 2050—is technically feasible, economically resilient, and environmentally transformative.
The barriers are not technological but economic and political. If natural gas remains cheap and carbon pricing is absent, grey urea will persist. But with well-designed policy—carbon taxes, incentives for electrolysers, and robust renewable deployment—India can decouple fertiliser from fossil fuels, saving water, cutting emissions, and stabilising costs.
For a nation where food security and climate security are equally non-negotiable, decarbonising urea production is not just an industrial reform—it is a cornerstone of sustainable agriculture and a test of India’s low-carbon transition.