The $5 billion Japanese government investment in a green ammonia project in Odisha has given India a significant boost, marking the nation's emergence on the international stage as a prominent player in low-carbon exports and international clean energy cooperation.

The funding is part of the financing for the joint venture between India's ACME Group and IHI Corporation of Japan, which is centred on a flagship green ammonia project at Gopalpur in Odisha. The partnership, formalised in September last year, will work towards setting up one of South Asia's biggest green ammonia plants. The Gopalpur plant has the capacity to produce 405,000 tonnes of green ammonia per year, all of which will be exported to Japan. Deliveries will start in September 2030, and the ammonia will be co-fired with coal by Japanese power utilities to reduce emissions, and be used as a raw material for industrial processes and semiconductor cleaning by chemical manufacturers.

Funding comes from two Japanese government programmes. The price difference between fossil-based and renewable ammonia will be covered by the Contract for Difference (CfD) subsidy scheme, which will generate an estimated $3 billion over 15 years. The remaining $2 billion will be provided through the Long-Term Decarbonized Power Source Auction (LTDA), which encourages imports of clean fuels to help accelerate Japan's power sector decarbonisation. All these measures have helped the Gopalpur plant enter into long-term offtake agreements, thereby ensuring the project's financial viability and predictable revenue generation.

The development also represents renewed momentum in the global green hydrogen and ammonia market, which has experienced a downturn in recent years due to financing challenges and uncertain demand. Over the past six months, momentum at the global level has grown in discussions regarding clean fuel procurement, particularly due to geopolitical uncertainties and growing concerns about energy security, said Anil Taparia, CEO of ACME Green Molecules Business. The project was selected through a competitive global bidding process, highlighting the increasing trust and confidence in India's renewable energy project execution and ecosystem.

In addition to Gopalpur, ACME is progressing its green ammonia project in Paradip, Odisha, with a production capacity of 800,000 tonnes per year, which includes a purchase agreement with the Solar Energy Corporation of India (SECI) for 370,000 tonnes per year. The facility is expected to be commissioned by 2029, and it is considered an important step towards creating a strong domestic market and contributing to the success of India's National Green Hydrogen Mission.

Together, the Odisha projects represent India's emergence as a sought-after supplier to economies that are on a path towards decarbonising heavy industry and power generation. The projects have demonstrated strong bankability and secured long-term international offtake agreements, and are likely to attract additional investments, spur supporting infrastructure development in ports, storage and logistics, and promote the replication of the Japanese subsidy model in other markets, paving the way for India to play a crucial role in the global clean energy transition.