India’s initiatives on green hydrogen could help global decarbonisation

  • India looks to lead from the front on producing green hydrogen through state incentives and private investment that would help reduce hard-to-abate emissions of greenhouse gases.
  • The role of green hydrogen in the deep decarbonisation of leading economies has been a key point of discussion at the UN climate summit in Egypt.
  • India might have an early mover advantage as top industrialists have announced investments worth billions of dollars to build a green hydrogen ecosystem.

India has announced its long-term low-emission development strategy, that focuses on climate justice, sustainable lifestyles, and equity, at the ongoing UN climate summit in Egypt, joining a select group of fewer than 60 nations to do so.

Hailed by the Egypt presidency, the strategy once again reiterated the country’s intention to develop a green hydrogen ecosystem to lower emissions in hard-to-abate sectors like steel, fertiliser, and refining, among other long-held climate goals.

The nation’s green hydrogen mission, announced in 2021, will see a rapid expansion in production, making India a green hydrogen hub, the long-term strategy said. The South Asian nation plans a massive expansion of green hydrogen production to curb dependence on crude oil imports and wean its rapidly expanding economy from planet-warming fossil fuels.

The central government has set a target of an annual production capacity of 25 million tonnes by 2047. The number could be revised upwards as the technology evolves and the demand outlook improves.

Helmond hydrogen fueling station, a potential use of excess wind energy converted using Hydrogenics power to gas energy conversion solution. Photo by Green Energy Futures/Flickr
A hydrogen fuelling station in the Netherlands. Representational Image. Photo by Green Energy Futures/Flickr.

Green hydrogen is expected to play a prominent role in decarbonising heavy industries, including oil refineries, steel mills and fertiliser plants. India’s current output of green hydrogen is low and comes from just a handful of pilot projects.

Green hydrogen is produced by breaking down water in an electrolyser using only renewable energy, resulting in no carbon emissions. The hydrogen can then be combined with nitrogen to make green ammonia, avoiding hydrocarbons in the process. Green ammonia is used to store energy and make fertilisers. Green hydrogen could become an alternative to coal in steel mills and fossil fuels in long-haul transport like shipping and trucking.

Currently, the bulk of hydrogen produced in the world uses natural gas, which is known as black hydrogen. There is also grey hydrogen made from low-carbon technologies, but its share in the global market is negligible.

India has set a target of five million tonnes of green hydrogen by 2030. Over the next decade, the country plans to add 175 GW of green hydrogen-based energy.

Step in the right direction 

India’s hydrogen policy is a step in the right direction, said Srinivas Krishnaswamy, chief executive officer at the Vasudha Foundation, an environmental think tank. “Green hydrogen can help to reduce emissions from hard-to-abate sectors such as steel and fertilisers. It can also help in greening long-haul freight and transportation,” he said.

India’s pipeline of electrolyser factories puts it almost at par with the expected global capacity by the end of 2022, which is about 7 GW, according to Bloomberg New Energy Finance. Ever since Prime Minister Narendra Modi announced the National Green Hydrogen Mission from the ramparts of Red Fort in Delhi in August 2021, India has seen significant developments on both the policy and industry fronts.

Top industrialists, including Mukesh Ambani and Gautam Adani, have announced massive plans to make India a green hydrogen hub. The state-run Indian Oil Corporation earlier this year said it would partner with clean energy producer ReNew Power and engineering giant Larsen and Toubro to produce green hydrogen. Several other private firms have also announced forays into green hydrogen. In September, Korean steelmaker POSCO signed an agreement with renewable Greenko ZeroC to make green hydrogen.

Developing nations have smelled an opportunity to produce green hydrogen as the cost of renewable energy, particularly solar, has become cheaper than coal-fired electricity in countries such as China and India, experts said. “Green hydrogen is critical for global decarbonisation,” said Noam Boussidan, platform curator on energy at the World Economic Forum, an international lobby group. “Trucking, shipping, and steel, in particular, will benefit from enhanced production of green hydrogen.”

The developed world, and the European Union, in particular, intends to import most of its requirement of green hydrogen, which is admittedly at a nascent stage as technologies are still emerging and costs remain prohibitively high.

Challenge of demand generation 

“If we are to have a robust market for green hydrogen, we need to generate demand from end users, especially public procurement for industries like steel and cement that are currently carbon intensive,” said Tareq Emtairah, director at the department of energy of the United Nations Industrial Development Organisation. He adds, “It is also true that most carbon-intensive industries will be coming up in the Global South.”

Although green hydrogen is now considered as a viable way to cut carbon emissions, major challenges remain in scaling up the technology and making it cost-effective. It is also not certain the demand will grow proportionately, and the fuel may not become the first choice in transport and industry, experts said.

“We must make a realistic assessment of the current green hydrogen situation,” Boussidan pointed out. According to market researcher Precedence Research, the global green hydrogen market was valued at $1.83 billion in 2021 and is expected to hit over $89.18 billion by 2030, expanding at a compound annual growth rate of as high as 54% from 2021 to 2030. The Asia-Pacific region is the fastest growing area in the green hydrogen market, Precedence said.

Until hydrogen manufacture becomes emissions-free, markets should also look at grey hydrogen made from low-carbon technologies, said Bernhard Lorentz, global leader of climate strategy at Deloitte, an international consultancy. “There is still high risk in the sector, and bankability (ability to procure loans) of hydrogen projects is still an issue,” Lorentz said.

One way to increase the acceptability of hydrogen initiatives among large lenders is certification, said Boussidan of UNIDO. “There could be separate benchmarks for green and grey hydrogen,” he said.

In India, the world’s third-largest emitter of greenhouse gases, the situation is slightly different from the rest of the world. The rapid decline in the cost of renewable energy has emboldened the government to scale up the country’s carbon-free hydrogen ambitions.

India, is the world’s third-largest emitter of greenhouse gases. While green hydrogen is considered a viable way to cut carbon emissions, major challenges remain in scaling up the technology and making it cost-effective. Photo by TripodStories- AB/Wikimedia Commons
India is the world’s third-largest emitter of greenhouse gases. While green hydrogen is considered a viable way to cut carbon emissions, major challenges remain in scaling up the technology and making it cost-effective. Photo by TripodStories- AB/Wikimedia Commons.

It is learnt that the federal government is expected to allocate around Rs. 60 billion each for its production-linked incentive schemes for electrolysers and green hydrogen from the Rs 200 billion green hydrogen mission. “We will have a PLI for electrolysers, and a PLI for manufacturing green hydrogen,” energy minister R.K. Singh said last month. “But the PLI for manufacturing green hydrogen will only be required for the initial capacities, maybe four to five million tonnes. After that, green hydrogen will stand on its own feet.”

The ministry of new and renewable energy is said to have moved a cabinet note detailing green hydrogen consumption obligations, subsidies, and standards. These would be major enabling provisions to develop the domestic green hydrogen industry and its adoption in India by bringing down market prices.

Solar power is the main pillar of India’s green energy basket. Photo by Thomas Lloyd Group/Wikimedia Commons.
Solar power is the main pillar of India’s green energy basket. Photo by Thomas Lloyd Group/Wikimedia Commons.

India’s green hydrogen policy, unveiled in February this year, has promised to offer cheaper renewable power, financial waivers for interstate power transmission for 25 years for projects commissioned before June 2025, cheap land in energy parks, and manufacturing zones for local hydrogen industry.

Private investment pouring in 

The most encouraging sign in the nascent green hydrogen sector has been the interest shown by India’s business tycoons and big industrial houses. Large conglomerates like Reliance Industries and the Adani Group have started investing heavily in green hydrogen.

Reliance has said it will not only produce green hydrogen but also build factories to make electrolysers, announcing a massive investment plan of $20 billion to be made in the next 5-7 years. Similarly, L&T has announced plans to manufacture electrolysers. It has recently made a pact with the Indian Institute of Technology Bombay to carry out research on furthering green hydrogen technology.

Indian Oil Corporation, one of the country’s largest transport fuel retailers, also announced its plans to build a green hydrogen plant at its Mathura refinery in Uttar Pradesh. GAIL plans to build India’s largest green hydrogen plant, as does state-owned power utility NTPC.

“We really believe that in the next decade, we will bring the cost of green hydrogen at a dollar per kilo and make sure that we transport and disburse it also at less than a dollar per kilo thereafter,” Mukesh Ambani had said at the Asia Economic Dialogue event in February.

Hydrogen produced with renewable resources costs anywhere between $3 per kg and $6.55 kg, compared with fossil-based hydrogen which costs about $1.80 per kg, according to the European Commission’s July 2020 hydrogen strategy.

In India, the production cost of green hydrogen is around Rs 500 per kg. The government expects to reduce the cost of manufacturing green hydrogen by 40-50% through its policy initiatives.

The recent developments could see India emerging as a key base for hydrogen electrolyser production with 8GW capacity by 2025. The investor interest is so high that western companies are also entering into India’s green hydrogen market through joint ventures, according to Rystad Energy, an analyst group.

The 8GW number is arrived at by totaling plans of nine companies across seven factory projects, three joint ventures and three solo investments. India’s Greenko is building a 2GW factory in partnership with Belgium’s John Cockerill and Nevada-based Ohmium, Rystad said.

Reliance is building electrolyser factories in partnership with Denmark’s Stiesdal, and L&T with Norway’s Hydrogen Pro. Gautam Adani, India’s richest man has committed financing to a one GW factory as the first step in its recently announced plan to produce three million tonnes of hydrogen by 2030, which would require 16GW of electrolyser capacity, Rystad said.

There is little doubt that Indian companies are pushing hard to develop a local industry by tapping into the financial heft of local conglomerates and technical know-how from the Western world.

“It is still early days but given that big companies such as Reliance and Adani have announced investments and a number of start-ups such as Ohmium are coming up to manufacture electrolysers, I think India can produce a large amount of green hydrogen,” said Krishnaswamy of Vasudha Foundation.

Experts are now saying that hydrogen will act as a disruptive force in the carbon-intensive industrial sector and will set the pace for India’s energy transition journey. It will also play an important role in achieving India’s net zero ambitions, they said.


Banner image: The green hydrogen and its role in decarbonising economies, have been a discussion point at the UN climate summit in Egypt. Photo by IISD/ENB.

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