CSE's First-of-its-Kind Environmental Rating of the Indian Fertilizer Industry

The Indian fertilizer industry is one of the most important industrial sectors of the country. In this unique rating and study, Centre for Science and Environment (CSE) and its Green Rating Project (GRP) have managed to bring before us – once again -- a comprehensive and extremely detailed analysis of a key industrial sector and its environmental performance in the country,” said Prakash Javadekar, Union minister for environment, forest and climate change, while releasing the GRP report on the fertilizer sector.   

‘Grain by Grain’ – as the report is titled – is the complete assessment of the environmental performance of the fertilizer industry in India. This is the 7th rating project undertaken by GRP, which has been hailed as one of the most credible and transparent instruments in India for assessing the environmental performance of Indian companies. GRP has, earlier, rated the pulp and paper, automobile, chlor-alkali, cement, iron and steel and thermal power sectors.

“The Green Rating Project was started in 1997 to act as an independent watch-dog on the environment performance of Indian companies. It is one of the very few public-disclosure projects in the world in which a non-governmental organization rates the environmental performance of industries and makes the results public. The ratings recognize the good performers and push the bad ones to improve. The rating process is robust and transparent and the outcomes of our ratings have been used by companies as well as policymakers to improve policies and practices,” said CSE director general Sunita Narain in her opening address at the release function.

In an extensive 18-month long process, the fertilizer sector was rated on more than 50 parameters. The rating covered all the 28 operational plants in the country. Fifty-seven per cent of the plants voluntarily participated in the rating by disclosing information and by allowing GRP team to verify them on the site. The remaining plants were rated on the basis of information available in the public domain and stakeholder surveys. NFL and IFFCO, the biggest public sector companies, refused to voluntarily participate in the rating.

The Greenest Fertilizer Plants

“The fertilizer sector as a whole has turned out a better performance than any of the other sectors rated by GRP,” says Chandra Bhushan, deputy director general of CSE and head of the Green Rating Project. “The overall score achieved by the sector was a respectable 42 per cent, and we have awarded it the

Three Leaves prize. What is worrying is that there is a significant gap in performance between the companies we have rated the best and those that have floundered.”

The top rated plant is Grasim Industries Ltd’s Indo Gulf Fertilizers unit at Jagdishpur, Uttar Pradesh. This plant, with 61 per cent score, has received the coveted Four Leaves award for its superior performance in energy use and GHG emissions, its good EHS (environment, health and safety) measures, and social responsibility, and above all, its transparency in sharing information.

The next three winners have all received the Three Leaves award – these are the Hazira (Gujarat) unit of Krishak Bharati Cooperative Ltd (KRIBHCO), the Panambur (Karnataka) unit of Mangalore Chemicals & Fertilizers Ltd, and the Babrala (Uttar Pradesh) unit of Yara Fertilizers India Pvt Ltd (see Annexure:Green rating of the fertilizer sector for details).

What does the GRP Rating tell us about the Future of India’s Fertilizer Industry?

Says Chandra Bhushan: “India’s fertilizer industry has performed well in curtailing its energy use and GHG emissions. In fact, someof the Indian companies match the global best levels. However, our rating finds that this sector has slipped on its water consumption and water pollution parameters – plants are also getting affected simply because of lack of water; their water sources are getting depleted and disappearing very fast.”

Bhushan adds that another major concern is the age of the plants – most of India’s fertilizer plants are getting old. “Though the sector still manages to perform reasonably well in meeting health and safety standards, most plants need to upgrade their onsite and offsite disaster management plans and communicate them to the concerned authorities and the local community.”

Some of the other key findings of the GRP exercise are as follows:

Incentives determine performance. The fertilizer sector is strictly controlled. As they are incentivised to improve energy efficiency, plants have done really well in that area. However, since there are no incentives offered for controlling water consumption and environmental pollution, companies shy away from investing in pollution control measures or in technologies to reduce water use. In fact, owing to the manner in which urea has been priced, there is a disincentive to invest in environmental protection.

No incentives are offered for innovation. There has been no product innovation in this sector other than a few plants selling bio-fertilizers. Bulk urea use, therefore, is being promoted in the country, leading to imbalance in soil quality and pollution.

The industry contributes to two major environmental challenges – imbalance in the nitrogen cycle and climate change. The efficiency of fertilizer use in India is poor: nitrogen use efficiency is a mere 35 per cent for lowland rice and under 50 per cent for upland crops. Nitrogen pollution of surface and groundwater in the country has reached alarming proportions. Imbalanced application of these fertilizers is leading to widespread soil sickness. To add to this, production and use of fertilizers is a significant contributor to GHG emissions.

“Massive innovation is required to move this sector to sustainability,” says Bhushan. Firstly, production must shift from fossil fuels to renewables sources of energy. Secondly, Indian agriculture must graduate from the present practice of bulk application of fertilizers to a more precise supply of essential nutrients. Nitrogen-use efficiency must go up to over 70 per cent. 

Bhushan points out that these actions are not impossible to achieve – there are technologies being developed to do both. “But the sector cannot move to these technologies without competition. The government needs to change its policy and introduce a measure of decontrol in the industry. Decontrol will make the industry more competitive. Competitiveness and innovation will be vital for the growth of the industry in the coming years,” he adds.

“The bottom line is that the fertilizer industry in India stands at a cross-roads today,” said Sunita Narain. “The biggest issue it is grappling with is the future of nitrogenous fertilizers itself. India is the second largest producer, importer and consumer of these fertilizers (mainly urea), and with nitrogen pollution reaching alarming levels, the industry needs to rethink the way it produces and sells fertilizers.”

List of the Companies and their Ratings 

Green Rating of Fertilizer Sector