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India to become a Global Green Hydrogen Leader: Attainable or wishful?

Updated: Jul 13, 2023

As climate change concerns across the globe are intensifying and the pressure to shift towards low-carbon, self-reliant pathway is mounting, countries are looking at green hydrogen (GH2) as the mighty change agent to attain their climate goals. India being the third largest emitter of greenhouse gases (GHG) in the world, is emerging as a key player in tapping the potential of GH2 to substantially reduce its emissions. With studies claiming that climate change can decrease India’s GDP up to 9% and decline its production of major crops by up to 40%, India has all the compelling reasons to capitalize on every opportunity to combat climate change. One of the most promising ones for India is to become a lead producer and exporter of GH2 and its derivatives. But there are several challenges to be overcome and strategies to be designed to build the necessary infrastructure and technologies that will enable and enhance the energy market for this potent clean energy fuel in India.

This blog explores the current scenario of the Indian energy market, the policies, and schemes for GH2 in place, implementation challenges and the road ahead.

What is the current scenario of the Indian Energy Market?

As the globe’s most populated nation, India has unabated energy demands. In the last two decades, India’s energy consumption has almost doubled, and it ranks third in the world of energy consumption with a staggering 1.229 trillion kwh energy per year! At this rate, International Energy Agency predicts that, India would need a power system as big as the size of European Union to fulfill its energy demand for the next 20 years! Over 80% of India’s current energy needs come from three primary sources: coal, oil, and solid biomass, mainly firewood. Mainly, the transportation and industry sectors are chiefly dependent on fossil fuels. To meet this unprecedented need, India imports over 40% of its prime energy requirements, worth more than 12 lakh crore every year!

Perceiving this crisis, India is compelled to shift towards a renewable energy economy and has allotted about 19,700 crores in its recent budget for achieving this. In fact, India ranks fourth in the world for its renewable energy capacity and has become the fastest in renewal energy capacity addition among major economies that had added over 100 gigawatts of renewable energy capacity by end of 2021 with a vision of 500 gigawatts by 2030.

This shows that it has tremendous potential to lead the world in renewable energy and a promising future for GH2 that can potentially decarbonize sectors such as ammonia, refineries, iron & steel, methanol, and heavy-duty trucking.

What initiatives have been taken by the Indian Government for adoption of green hydrogen?

The Government has taken a series of aggressive policies, strategies, and measures over the recent years to promote the adoption and production of GH2 in India. The world bank has approved $ 1.5 billion in financing to accelerate India’s development of low-carbon energy. Some of the significant ones are:

National Green Hydrogen Mission:

  • This mission was launched in 2022 to make India the global hub for production, usage and export of GH2 and its derivatives across multiple sectors. Fulfilling the targets of this mission, India can achieve its energy independency target 2047 by replacing fossil fuels with Gh2 across sectors including mobility, shipping, and aviation and attain decarbonization of economy.

  • The mission aspires to make India as a global leader in enabling technologies and manufacturer of electrolyzers for GH2. By 2030, India is planning to build capabilities to produce about five million metric tonnes of GH2, generate investments over 8 lakh crore, create 6 lakh jobs and and make it affordable and widely accessible to the public.

  • The Ministry of New and Renewable Energy (MNRE) is responsible for its implementation. MNRE will coordinate with other ministries and department and work towards aligning with the global trends in technology, applications, policy, and regulation in the GH2 arena.

  • The mission envisages a single platform for statutory approvals and other important tasks for ease of doing business; It will give renewable purchase obligation incentives for manufacturers; it will give producers of GH2 and the renewable energy plant a priority access to the grid; waive charges for 25 years for any inter-state transmission.

Harnessing Green Hydrogen by Niti Ayog:

Niti Ayog is a leading think tank in India that has published this report which proposes to set up green hydrogen corridors in association with states. The report recommends that the government should focus on reducing the cost of GH2 and should reduce the taxes and custom duties on production of GH2. For these grants, loans and investment should be provided to support entrepreneurs through investment networks and incubators. Also, incentives and grants should be provided to start-ups that work on domestic green hydrogen solutions.

Green hydrogen mobility projects:

Green hydrogen mobility project, a test project in which five fuel cell-infused buses will ply around Leh and another project called the Kawas Green Hydrogen Blending with Natural Gas project that aims to reduce the amount of natural gas consumed by blending it with Gh2 were launched in July 2022.

Hydrogen fuel trains, buses, and refueling hubs:

Proposals for developing a hydrogen fuel cell-based hybrid power train has been given by the Indian railways Organization for Alternate Fuels. By end of 2023, hydrogen fuel cell technology will be sued to power 8 trains on narrow-gauge heritage routes.

NTPC Ltd under the Ministry of Power has issued a global request for expression of interest to supply 10 hydrogen fuel cell-based electric buses and vehicles each in Leh and Delhi. In addition, the Solar Energy Corporation of India plans to issue a mega tender to aggregate demand for fertilizer plants and refineries. Further, Kandla port on the west coast and Tutucorin port on the eats coast have been designated as India’s first GH2 and green ammonia refueling hubs.

The First Low-Carbon Energy Programmatic Development Policy Operation for 2023-2026:

This policy has been launched by MNRE which comprises of several targets, including deploying 3 Mt/year of GH2 capacity, and launching a national carbon market.

What are the major challenges for transitioning to green hydrogen?

Although green hydrogen has a tremendous potential to change India’s future energy market and bring it closer to its climate change goals and attain decarbonization, there are numerous challenges that could make the energy transition path a herculean task:

  • Unfavourable cost economics: The cost of electrolyzers and renewable energy needed to produce GH2 add up to the major production costs of GH2 of more than 65% of the entire cost. Also, the cost of capital, infrastructure, treatment and supply of water, storage, and distribution, converting hydrogen to suitable derivatives.

  • Lack of harmonized standards and regulations: Compared to other fuels, government has provided very limited policy and regulatory support to hydrogen. States lack rules defining incentives for establishing GH2 plants and investors are special about the availability of low-cost renewable energy for a span of 20-25 years.

  • Supply chain complexity and safety concerns: The complexity of sourcing and supplying hydrogen is another challenge mainly due to its delicate characteristics of Hydrogen has high flammability, low density and embrittlement which has made storage and transportation quite difficult.

  • Limited natural resources – Water and Land: According to study by EY, India needs at least 115 GW of renewable energy power and 50 billion liters of demineralized water by 2030 to meet its five million metric tonnes target. A renewable energy power plant of 150 MW capacity requires around 750 acres of land. The land and water scarcity therefore makes it a major challenge for large scale adoption of GH2.

What is the way forward for India to become a green hydrogen leader?

Despite the mounting challenges, GH2 could be one of the key players in the renewable energy market for India’s low-carbon future as India has abundancy of natural resources and ability to produce low-cost renewable energy. If robust measures are taken to overcome the barriers and certain capacities are built to attain its climate goals, India can strive to become a leader in the global GH2 market. Some of these measures are:

  • Developing low-cost renewable energy plants and upscaling the production and deployment of high-performance electrolyzers in sufficient volumes and reasonable costs to create a competitive global market for GH2. For this huge investment should be made into R&D to ensure efficient, inexpensive, long life electrolyzers.

  • Developing a robust domestic electrolyzers manufacturing ecosystem and reduce its imports and ensure supply chain resilience in the energy sector.

  • Bolstering its national efforts by augmenting its international cooperation and engagement on knowledge & technological exchange with other counterparts in the international market. This will ensure that the performance, efficiencies, safety, and reliability of GH2 is improved.

  • Developing technologies to utilize sustainable water such as industrial/municipal wastewater or seawater for electrolysis.

  • Augmenting its infrastructure and capacities for storage, utility, and safe transportation of GH2. Hydrogen hubs near demand centers can lower GH2 transportation costs.

  • Building a robust governance framework that enables inter-ministerial communication and promotes capacity building and skill development.

  • Launching policies for tax and duty waivers for encouraging exports and states should start launching policies specifying incentives for duties and tax exemptions, subsidies, infrastructure facilities and banking.

It will be critical for India to launch such measures to accelerate its growth on the global GH2 market. This will be a direct pathway to be able to achieve its net-zero emissions goal by 2070 and become energy self-sufficient by 2070.

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The entire Green H2 supply chain from production to user points is at present challenging. Technology is evolving and costs prohibitive. All stakeholders - big or small must pitch in. Institutions and Industry must work together and that's the only way forward. Opportunities are aplenty to collaborate - for Research, Production and evolution of applicable Standards. Localized Centres of production and usage could be a way forward...The next five years could be very interesting for all.

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