Kandla e-Methanol Plant: Proposed Green Fuel Project Explained

Overview

India laid the foundation stone for its first port-based e-methanol production and bunkering facility at Deendayal Port Authority in Kandla, Gujarat, marking a strategic leap toward establishing domestic green shipping corridors. The ₹2,300 crore joint venture delivers a nameplate capacity of 150 tonnes per day to supply low-carbon maritime fuel along high-density international shipping lanes.

By synthesizing green hydrogen with captured carbon dioxide, the facility creates a scalable alternative to fossil bunker fuels without requiring expensive cryogenic handling infrastructure. This initiative positions Kandla as an anchor hub in global maritime decarbonisation, leveraging regional renewable energy capacity to supply green fuel at competitive international benchmarks.

As of September 2026, the foundation stone was laid for India's first port-based e-methanol plant at Deendayal Port Authority (DPA) in Kandla, Gujarat. The commercial rollout follows an initial Memorandum of Understanding signed between Assam Petro-Chemicals Ltd (APL) and DPA on 29 January 2026.

The project requires a total capital expenditure of ₹2,300 crore and is structured as a 76:24 joint venture between Deendayal Port Authority (76%) and Assam Petro-Chemicals Ltd (24%). Production will scale across two modular phases: Phase I deploys 50 tonnes per day (TPD) capacity by January 2027 with a ₹1,200 crore investment, while Phase II adds 100 TPD by March 2027 with an outlay of ₹1,100 crore.

E-methanol is an ultra-low-carbon synthetic fuel produced by combining green hydrogen with captured biogenic or industrial carbon dioxide ($CO_2$). The chemical synthesis transforms intermittent renewable electricity into a stable, transportable liquid carrier.

The production cycle operates through three distinct stages:

1. Green Hydrogen Generation: Water is split into hydrogen and oxygen inside electrolysers powered entirely by dedicated solar or wind electricity.
2. Carbon Dioxide Capture: Biogenic $CO_2$ from industrial fermentation or biomass combustion, or point-source industrial emissions, is captured and purified.
3. Catalytic Methanol Synthesis: Green hydrogen and carbon dioxide react catalytically under elevated temperature and pressure ($CO_2 + 3H_2 \rightarrow CH_3OH + H_2O$) to produce liquid e-methanol.

Unlike gaseous hydrogen or cryogenic methane, e-methanol remains liquid at ambient temperature and pressure, avoiding expensive boil-off mitigation and heavily insulated tanks. It integrates directly into existing maritime distribution networks with minor retrofitting.

Deendayal Port Authority in Kandla holds a decisive geographical and infrastructural edge over other coastal ports designated under national clean energy programmes. While the Ministry of New and Renewable Energy also designated V.O. Chidambaranar Port (Tuticorin) and Paradip Port as green hydrogen hubs, Kandla's immediate proximity to western India's massive renewable energy generation gives it a clear cost advantage. Cheap renewable electricity directly reduces the levelised cost of water electrolysis, making local green hydrogen production commercially viable.

Furthermore, Kandla sits directly adjacent to high-density international shipping routes, notably the Asia-Europe International Trade Corridor and Singapore–Rotterdam trade routes. International merchant vessels can refuel without making costly detours away from primary navigation lanes.

The port authority has already laid the operational groundwork on-site:

• Dedicated Green Hydrogen Base: Commissioned a 1 MW indigenous electrolyser plant producing nearly 140 metric tonnes of green hydrogen annually.
• Land Allocation: Dedicated approximately 3,400 acres of port land exclusively for green hydrogen and green ammonia ventures.
• Bunkering Readiness: Attained a Port Readiness Level (PRL) of 6 (advancing toward 7) supported by a dedicated 3.5 MTPA liquid cargo handling jetty.

The Kandla project serves as an operational testbed for national green shipping frameworks. In May 2023, the Ministry of Ports, Shipping and Waterways issued the Harit Sagar Green Port Guidelines, mandating emission benchmarks, environmental reporting, and alternative fuel bunkering infrastructure across all Major Ports.

These efforts integrate with long-term statutory and developmental targets:

• Maritime India Vision 2030: Aims to scale the share of renewable energy at major ports to over 60% by 2030 through rooftop solar, wind installations, and electrified cargo handling.
• Maritime Amrit Kaal Vision 2047: Focuses on establishing green shipping corridors, expanding port-led industrialisation, and deploying comprehensive bunkering facilities for hydrogen derivatives.
• National Green Hydrogen Mission (NGHM): Provides capital support and strategic backing to anchor commercial bunkering infrastructure at designated major ports.

Decarbonising international shipping requires evaluating life-cycle emissions, energy density, handling complexity, and infrastructure retrofitting costs across competing marine fuels.

Compared to green ammonia, which presents severe toxicity and corrosion hurdles, e-methanol offers a practical drop-in alternative for dual-fuel vessel engines while avoiding the high capital costs of cryogenic LNG bunkering.

Establishing a commercial e-methanol bunkering terminal at Kandla delivers compounding benefits across energy security, domestic employment, and global environmental governance.

Delivering Global Cost Competitiveness

The Ministry of Ports, Shipping and Waterways projects the Kandla facility to produce green methanol at US$750 per tonne, significantly undercutting prevailing global market benchmarks of approximately US$1,300 per tonne. This cost advantage attracts foreign merchant fleets seeking compliance with tightening environmental norms.

Meeting Global Decarbonisation Mandates

The 2023 IMO Strategy on Reduction of GHG Emissions from Ships mandates net-zero greenhouse gas emissions from international shipping by or around 2050. The framework establishes indicative interim targets:

• Reducing international shipping GHG emissions by at least 20% (striving for 30%) by 2030 compared to 2008 levels.
• Slashing emissions by at least 70% (striving for 80%) by 2040.

Supplying port-side e-methanol enables Indian ports to capture high-value bunkering trade as shipowners transition away from high-carbon fossil fuels.

Socio-Economic Multipliers

The project generates over 3,500 direct and indirect employment opportunities across green power generation, chemical plant operations, pipeline maintenance, and bunkering logistics.

Despite the strategic rationale, scaling green e-methanol bunkering across India's coastline encounters structural commercial and operational bottlenecks:

• High Electrolyser Capital Expenditure: High upfront costs for electrolyser stacks and balance-of-plant components keep capital intensity elevated across early manufacturing phases.
• Biogenic Carbon Feedstock Sourcing: Ensuring uninterrupted supplies of captured biogenic $CO_2$ from distilleries or biomass plants requires complex inland supply chain corridors.
• Fuel Price Disparities: Conventional Very Low Sulphur Fuel Oil (VLSFO) remains significantly cheaper on an energy-equivalent basis, requiring carbon pricing mechanisms or subsidies to bridge the commercial gap.
• Fleet Dual-Fuel Readiness: International shipping fleets must undertake capital-intensive fleet replacement or engine retrofits to consume methanol, moderating immediate spot bunkering demand.

Scaling India's maritime green fuel infrastructure requires targeted fiscal, technological, and regulatory interventions:

1. Developing Dedicated Green Shipping Corridors: Partner with major trading terminals in Europe and East Asia to guarantee bilateral demand for zero-emission fuels along high-volume routes.
2. Aggregating Carbon Feedstock Supply Chains: Establish regional $CO_2$ capture networks linking agricultural biomass clusters and industrial plants in Gujarat to Kandla via rail and pipeline logistics.
3. Implementing Green Bunkering Standards: Streamline port safety regulations, fuel certification protocols, and vessel bunkering guidelines under the Harit Sagar framework to facilitate seamless bunkering operations.
4. Deploying Demand-Side Guarantees: Introduce initial port fee concessions and green bunkering incentives to bridge the operating cost differential between clean fuels and fossil bunker oils.

• Deendayal Port Authority in Kandla is developing India's first port-based e-methanol production and bunkering hub with a ₹2,300 crore capital outlay.
• The project is executed as a 76:24 joint venture between Deendayal Port Authority and Assam Petro-Chemicals Ltd, adding 150 tonnes per day capacity across two phases.
• E-methanol synthesis combines green hydrogen from renewable water electrolysis with captured biogenic or industrial carbon dioxide.
• Kandla's projected production cost of US$750 per tonne undercuts international market prices of ~US$1,300 per tonne, aided by Gujarat's vast renewable energy resources.
• The initiative operationalises the Harit Sagar Guidelines (2023) and supports the IMO 2023 GHG Strategy targeting net-zero shipping emissions by or around 2050.