India’s mission to go green on hydrogen

India’s National Hydrogen Mission launched by the government in August last year is a major policy enabler by the government for production of green hydrogen and ammonia. The aim is to have five million tonnes per year of green hydrogen capacity by 2030. 

The government seeks to reduce India’s dependence on fossil fuels and crude oil and produce green hydrogen as the fuel of the future for the Indian market. This is no easy feat for a country so highly dependent on fossil fuels – it imports 84% of oil and 53% of gas consumption and is the world’s second larger producer of coal. 

While the mission document has been in development over the last year, the Ministry of Power released a preview on 17 February 2022 of its measures to enable a green hydrogen economy, focused on incentives for renewable hydrogen production. Further policy measures are also expected to be released, focusing on the demand-side and incentivising the use of green hydrogen in refineries, fertilisers, steel, shipping and heavy-duty transportation.  

There is a palpable buzz around green hydrogen amongst policy makers, companies and energy think tanks in the country. A new generation of young activists through the Youth for Green Hydrogen network is adding to the enthusiasm for green hydrogen in the country.  

Industry is not waiting around for the policy to be finalised. Reliance Industries is pursuing its target to bring the cost of production to $1 per kilogram by 2030 and invest $75 billion in India to make it a green hydrogen hub, while Adani Green Energy is putting in $20 billion towards green hydrogen and tripling its renewable power generation capacity over the next four years.  

Project plans are underway, and international partnerships led by renewable energy companies are being forged. After establishing the world’s first integrated commercial-scale pilot plant for green hydrogen and ammonia in Rajastan, ACME Group is partnering with Scatec to develop a large-scale green ammonia facility in Oman. ReNew, which already has a capacity of 10.3 GW of renewable energy projects, is teaming up with Larsen & Toubro to jointly develop and operate green hydrogen projects in India. Axis Energy Ventures is going to use part of its 1 GW renewable energy capacity to produce green hydrogen with the Norwegian startup Greenstat Hydrogen. 

Looking ahead, key policy actions to speed up the green hydrogen project pipeline are likely to include: 

1. Continued scaling up of renewable energy capacity. India has already set a target of achieving 450 GW of renewable energy by 2030, and currently has about 100 GW. The measures announced on 17 February are primarily focused on facilitating access and reducing the cost of renewable energy for green hydrogen producers. According to Rystad Energy, the measures announced including the waiving of intra-state transmission fees for green hydrogen and ammonia production have the potential to reduce the cost of green hydrogen by up to 40%. Other facilitating measures include establishing manufacturing zones and fast-tracking of permits for renewable power generation for green hydrogen and ammonia production. 

   The policy allows green hydrogen producers to bank their excess renewable electricity with the power distribution company and take it back when required within 30 days. This rule will need to be clarified going forward to avoid grid instability. 

2. Enabling domestic electrolyser manufacturing. To meet its green hydrogen production targets, India will need at least 10 GW of electrolyser capacity. There is a strong desire among industry players to develop a competitive, domestic electrolyser manufacturing industry. Partnerships with international players such as Ohmium and joint ventures can allow for technology sharing and more rapid scale-up. 
3. Creating a domestic market and decarbonising the economy. The policy is focused on production. Further measures will be needed to scale up markets and demand. This will enable green hydrogen to be produced in strategic locations near end users to decarbonize faster at home.

   The potential for policy measures to facilitate demand is significant. Discussions are underway to introduce mandatory quotas for green hydrogen to replace fossil fuel-derived grey hydrogen in the fertilizer industry and in refineries by 2024. In the maritime sector, the Ministry of Ports, Shipping and Waterways is exploring proposals to run ships fully on clean energy, using a hybrid energy model with a mix of solar, sea water, wind and hydrogen. A replacement target for green fuels in ships would send a clear signal to the shipping and fuel industry. Blending green hydrogen into the gas grid and using it to produce green steel are other options being actively discussed. JSW, one of India’s major steel producers is expected to announce a pilot project for steel production with green hydrogen. 

As always, implementation of the policy will be key, in particular at the state level. Ensuring that there is a consistent mechanism for certifying hydrogen as ‘green’ will also be critical (see the Green Hydrogen Standard). At the global level, the opportunities for the Indian government and private sector leadership globally are also striking. The G20 presidency next year will be a catalyst for action in India and beyond.