India’s Green Hydrogen Adoption in Holding Pattern: WEF Advocates Subsidy Boost to Drive Affordability

India’s Green Hydrogen Adoption in Holding Pattern: WEF Advocates Subsidy Boost to Drive Affordability

India aims to achieve the ambitious targets set by the National Green Hydrogen Mission, striving to produce a minimum of 5 million tonnes of green hydrogen annually by 2030. However, the current production costs of green hydrogen, standing at approximately $4-5 per kilogram, are twice as high as those of grey hydrogen. The major components of these costs include 50-70% for round-the-clock renewable electricity and the remaining 30-50% for electrolyser expenses.

A recent report titled “Green Hydrogen: Enabling Measures Roadmap for Adoption in India,” jointly conducted by the World Economic Forum and Bain & Company, emphasizes the necessity of reducing the production cost of green hydrogen to $2 per kg. The report suggests that the existing subsidy of $0.50 per kg is inadequate, urging an increase to facilitate early adopters in offsetting costs.

Launched in 2022, the national program, with an allocation of Rs 19,744 crore, aims to decarbonize challenging sectors, decrease import dependence, and collectively reduce greenhouse gas emissions by at least 50 million tonnes. While grey hydrogen relies on carbon combustion, green hydrogen is produced through electrolysis of water using renewable energy sources.

To enhance the adoption of green hydrogen, the mission must offer incentives, support pilot projects in sectors like steel, mobility, and shipping, and promote research and development. Additional goals include installing 60-100 gigawatts of electrolyser capacity, providing 125 gigawatts of renewable energy, and creating 600,000 new green jobs.

Despite the mission’s aspirations, on-the-ground progress for green hydrogen in India remains limited. Interviews with key players reveal a prevailing “wait-and-watch” approach, with substantial green hydrogen production expected to commence around 2027 and beyond.

The report’s experts recommend reducing green hydrogen costs by decreasing renewable electricity expenses and investing in advancements in electrolyser manufacturing, infrastructure, and innovative research and development. Electrolysers, critical for green hydrogen production, should witness a significant cost reduction through increased subsidies, considering the current $54 per kW subsidy provided by the Centre.

Currently, plans for 8 GW of electrolyser capacity fall short of the baseline requirement of 35-40 GW necessary to meet the 5 million tonnes annual target by 2030. The report advocates for the development and testing of indigenous electrolyser technology to bridge this gap.

India can leverage the unregulated international market for green hydrogen derivatives like methanol and ammonia, positioning itself as an export hub. The report suggests addressing storage and transport costs by establishing green hydrogen production clusters with nearby collaborative environments for production and offtake and investing in a national pipeline network.

In a recent move, India introduced standards for green hydrogen production, setting a target of less than 2kg carbon dioxide emissions per kg of hydrogen produced over a 12-month average. The report emphasizes the importance of precise definitions, emission thresholds, and a methodology for monitoring and measuring carbon emissions to accurately define “green steel” or “green cement” and achieve Net Zero emissions by 2070.