INTERVIEW: Germany hydrogen rules, Japan auctions to spur ammonia trade: AM Green Ammonia CEO

Regulatory momentum in Europe and Asia is creating concrete demand signals for renewable ammonia trade in 2026, offering a potential inflection point for an industry grappling with sluggish adoption, Indian renewable ammonia producer AM Green Ammonia's CEO Gautam Reddy told Platts, part of S&P Global Energy.

Germany's adoption of renewable fuel of non-biological origin hydrogen mandates and Japan's third long-term decarbonization auction are providing tangible commercial opportunities despite broader concerns over slow demand creation, Reddy said in an interview.

Potential International Maritime Organization adoption of Net Zero Framework could prove a "game changer for the industry and create markets across the globe," he said June 20.

EU's Renewable Energy Directives III contains a series of key provisions to accelerate renewable energy deployment in the EU, setting an overall renewable energy target of at least 42.5% by 2030 at the EU level. It also set binding targets for hydrogen-based renewable fuels of non-biological origin, requiring RFNBOs to account for at least 1% of total energy supplied to the transport sector by 2030, and at least 42% of hydrogen in industry, rising to 60% from 2035. While Germany adopted the RFNBO targets in April, France has yet to implement the mandates.

"We see tangible positive developments in 2026. Germany adopting the RFNBO mandate and Japan awarding LTDA 3 [Long-term decarbonization power supply] auctions are clear data points," Reddy said. "We continue to see EU and Japan as the key markets."

In May, Japan awarded 516 megawatts of hydrogen and ammonia-based decarbonized power capacity in its third long-term decarbonization power supply auction, with hydrogen mono-firing projects winning support for the first time as the country broadens its strategy beyond ammonia co-firing to meet decarbonization targets.

AM Green has started construction of a 500,000 metric tons/year renewable ammonia plant in Kakinada, Andhra Pradesh, targeting commissioning in July 2028, followed by a second 500,000 mt/year phase six to nine months later. The timeline remains on track despite macroeconomic headwinds, including US dollar appreciation against the rupee, which Reddy said would have "some minor impact" on the project cost and timeline, alongside other global economic factors.

AM Green has adjusted its initial expansion plans for projects in India's Kandla and Tuticorin in response to slower-than-expected EU policy implementation, though the company's 1 million mt/year Kakinada project remains unchanged. "While the adoption has been slow, it is going in the right direction. We remain positive on the EU," Reddy said.

Supply scarcity offsets demand lag

While demand creation has lagged initial industry expectations, the pipeline of competing projects capable of meeting strict EU sustainability requirements remains even more limited, creating favorable supply-demand dynamics for developers that reach the final investment decision, according to Reddy.

AM Green achieved FID for its Kakinada facility in 2024, while targeting a mid-2026 commissioning back then.

The RFNBO framework sets strict criteria for renewable hydrogen and derivatives, including requirements for additionality, temporal and geographical correlation with renewable power generation, and proof of sustainability through EU-approved voluntary schemes. The geographical correlation requirement poses challenges for many Indian projects, as it requires renewable energy and the electrolyzer to be in the same or adjacent bidding zones with equal or higher power prices

AM Green's integrated approach includes pumped storage hydropower projects that provide round-the-clock renewable power to its electrolyzers, which the company views as a competitive advantage in meeting RFNBO requirements while controlling input costs.

Buyer interest is now equally driven by energy security and decarbonization priorities, particularly following the Middle East conflict that has heightened supply chain resilience concerns in both Europe and Asia, according to Reddy.

"Energy security and resource diversification have become as important as decarbonization now vis-à-vis green hydrogen and derivatives," he said.