India’s green hydrogen industry will receive $2.2 billion incentive in order to reduce production costs by 1/5 over the next 5 years.
1. Increase scale of green hydrogen
India’s plans to boost the production of green hydrogen were cited by a senior government official and an industry manager working in renewable energy, according to Reuters. The duo declined to reveal their names as the country’s plan has not been announced yet. The Indian State aid could be announced in the February 1 budget for the fiscal year beginning April 1, said the government official. Yet, official statements from the Indian ministries of renewable energy and finance are still to be heard.
With the anticipated incentives, India expects to increase the scale of the renewable hydrogen industry in the country. Currently, the country is spending between 300 rupees to 400 rupees per kg of green hydrogen, according to the industry manager. India aims to increase green hydrogen annual capacity to 25 million tons having pledged to become carbon-neutral by 2070. Moreover, as part of its green energy strategy, the country has committed to produce 500 GW of non-fossil fuel energy by 2030.
The private sector has big plans on hydrogen as Indian companies such as Reliance Industries, Indian Oil, NTPC, Adani Enterprises, JSW Energy and Acme Solar are already planning how to produce and scale this fuel. Adani, led by the world’s third-richest person, Gautam Adani, said in June that it and France’s TotalEnergies would jointly create the “world’s largest green hydrogen ecosystem”.
Last September, the European Union (EU) and India held the first official forum to unlock cooperation on green hydrogen, in New Delhi. While India, the world’s third-biggest CO2 emitter, announced its national hydrogen strategy last year, the EU launched the European Hydrogen Strategy in 2020 and both blocs pledged to exchange expertise on the way forward.
3. Green ammonia
The Indian government expects industry to invest 8 trillion rupees in green hydrogen and its derivative green ammonia by 2030, said the duo quoted by Reuters. Green ammonia is made by combining nitrogen with hydrogen using renewable energy sources — it can be used by the fertiliser industry or as a fuel or a carrier to transport hydrogen.
According to the industry manager and the government official, the green hydrogen proposal is likely to be called “Strategic Intervention for Green Hydrogen Transition (SIGHT)” and will be split into 45 billion rupees for electrolyser manufacturing for five years and the 135 billion rupees for green hydrogen and green ammonia production for three years. The incentive for making green hydrogen is likely to be 50 rupees per kg for three years — significantly lower than the current 300-400 rupees.
4. Green fuel
Given its properties as fuel, hydrogen has been touted as the Holy Grail in the green transition, especially for transport and hard to decarbonise industries. Essentially, hydrogen is made by splitting water with an electrical process called electrolysis. If the electrolysers, the devices used in the process, are powered by renewable energy, the product is called green hydrogen, a fuel free of greenhouse emissions.
India aims to sell 70% of its production to countries such as South Korea, Japan and in the EU, the industry official said, adding that derivatives, including green ammonia, had an equally strong demand. The United States, with the Inflation Reduction Act, and the EU, via the IPCEI Hy2Use, have already approved incentives worth billions of dollars and euros for green hydrogen projects.