India's green hydrogen dream: A billion-dollar path to net-zero by 2030
This article is authored by Nirav Choksi, CEO & co-founder, CredAble.
The manifestations of the climate crisis such as heatwaves, tropical cyclones, and air quality deterioration are being experienced across the globe.
The necessity for geopolitical recalibration in tackling the climate crisis has resulted in private organisations, regulators, and governments worldwide accelerating their race towards the global net-zero ambition of decarbonising by 2050.
With over 75% of India’s districts identified as hotspots for extreme climate events, the country aims to align its energy transition efforts with global net-zero targets. Given how India’s emission intensity will only increase in the absence of a concerted effort from multiple sectors of the economy—the country has set ambitious targets and is taking bold measures to address the associated risks of climate events.
With economies worldwide stepping up their plans to slow down and halt global warming—green hydrogen (GH2) is becoming the key focus of the international climate agenda.
As a source of clean energy, green hydrogen has gained prominence and is at the heart of the global race to achieve economy-wide net-zero emissions. Green hydrogen's emergence as a low-carbon feedstock and energy carrier is a game-changer for India. With a ₹400 crore research and development (R&D) budget, India aims to foster a robust research ecosystem, accelerating the commercialisation of green hydrogen. This will fortify a positive transformation in the energy sector for enhanced sustainability and self-sufficiency. India is projected to become a key regional exporter of green hydrogen, offering competitive pricing and aiming for a significant slice of the global 200 million-tonne hydrogen demand by 2030.
India joins the ranks of global economies such as the European Union, Australia, and Japan in building a hydrogen roadmap to achieve green economic growth. The transition to a green hydrogen-based economy not only uplifts air quality but also tackles carbon emissions. The key drivers for advancing the green hydrogen economy are environmental sustainability, self-reliance, and long-term energy security. To realise rapid economic growth, India is likely to witness a massive surge in energy demand. Considering how sectors such as industry, power, and transport contribute the lion’s share of emissions to the economy, India has taken significant strides toward decarbonising its energy-intensive sectors using green hydrogen. The likely surge in energy demand can be met by the production of hydrogen from renewable power sources.
Additionally, in the case of industries like cement and steel—green hydrogen stands out as a preferred solution for achieving cleaner operations. Moreover, the extensive energy requirements of these industries go beyond what can be fulfilled by alternative renewable sources such as solar and wind.
Embracing green hydrogen for energy production promises substantial advantages as India navigates its transition to cleaner and more sustainable fuel sources.
The recent launch of the ‘National Hydrogen Mission (NHM)’ is expected to help scale up green hydrogen production and further bolster the government’s future-focused policies in meeting climate targets and making India a green hydrogen hub. The National Hydrogen Mission is charting a course to secure 25% of the country's hydrogen demand from green hydrogen sources by the year 2030.
The Indian government approved an incentive plan of $2 billion to promote green hydrogen. The plan includes a set of incentives aimed at enhancing the cost-effectiveness of green hydrogen and making India a major exporter in the field. Currently, green hydrogen costs Rs. 300-400 per kg in India. These incentives are specifically designed to reduce green hydrogen's production cost by a fifth in the next five years.
Green hydrogen is manufactured by splitting water molecules using renewable energy—a fuel that is free of greenhouse emissions. India aims to become a global hub for the production of green hydrogen, by producing approximately five million metric tonnes by 2030.
India is expected to scale up the production and export of green hydrogen-based commodities by leveraging low-cost intermittent renewable electricity produced at scale. At present, the high cost of electrolysers which are used to split water into hydrogen and oxygen is expected to be a roadblock. Consequently, creating demand for green hydrogen domestically will be a challenge unless the costs are lowered organically. As such, the transition to green hydrogen will take time and significant investments in technology and manpower.
The good news is that as we are on the brink of a green hydrogen revolution, investors are pinning their hopes on startups in this space. In 2024, an impressive 83% surge in investments in renewable energy projects (reaching approximately $16.5 billion) is expected.
To ensure competitiveness up to 2030, the green hydrogen supply chain must attain significant economies of scale and embrace innovation. The key catalyst for encouraging investments in supply chain expansion is the establishment of a robust and predictable demand for green hydrogen.
Today, India’s green hydrogen market is currently in the nascent stages of development. The country’s ambitious renewable capacity deployment targets coupled with the ever-increasing energy demand from the key industries are ideal for making a switch to the green hydrogen economy.
Add to that, India’s commitment towards innovation in this sector along with the continued support for industrial decarbonisation and the initiative to develop hydrogen valleys will be crucial steps in making green hydrogen more affordable and viable for various applications. This will further help India inch closer towards a sustainable future.
This article is authored by Nirav Choksi, CEO & co-founder, CredAble.
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