India can emerge as a worldwide center for exporting green hydrogen and its related products.
India, currently the world’s third-largest economy in terms of energy consumption, is poised to experience a substantial 35% increase in its energy demand by 2030. To counteract the growing energy import bill, which soared to $185 billion in 2022, and to align with its ambitious net-zero emissions targets, India has set its sights on producing 5 million metric tons per annum (MMTPA) of green hydrogen by 2030, in addition to pursuing other energy transition pathways.
By 2030, if India can utilize green hydrogen for half of its hydrogen requirements, it could potentially reduce greenhouse gas emissions by a staggering 50 million metric tons and reduce its dependence on energy imports. With affordable renewable energy, India can attract valuable international trade in green hydrogen derivatives. To enhance the country’s export potential, it is imperative to establish recognized standards, enhance export infrastructure, and forge strategic partnerships. While becoming a leading exporter offers economic advantages, competition is expected from countries like the USA, Australia, the Middle East, and South America due to their lower production costs, driven by initiatives like the Inflation Reduction Act in the USA.
Green hydrogen is critical for India to achieve its 2070 net-zero emissions goal while ensuring energy security and reducing emissions in hard-to-abate sectors. To expedite the development of a green hydrogen ecosystem, cost parity with grey hydrogen in production and delivery must be achieved on the supply side. On the demand side, industries should be incentivized to adopt green hydrogen in the short term while discouraging carbon-intensive alternatives in the long term. Currently, green hydrogen production in India costs approximately $4–5 per kilogram, roughly double the cost of grey hydrogen. To drive widespread adoption, green hydrogen’s net price must fall to $2 per kilogram or lower. The primary cost drivers are round-the-clock renewable energy (RTC RE) costs (50%–70%) and electrolyser costs (30%–50%). Storage accounts for 30%–40% of total RTC RE costs, making it essential to reduce storage costs and promote innovation in electrolyser technology.
In addition to supply-side interventions, creating dedicated infrastructure for green hydrogen storage and transportation is necessary, especially when the scale is low. Encouraging the formation of hydrogen-based industrial clusters and providing incentives can accelerate green hydrogen adoption. On the demand side, targeted incentives are vital to drive domestic demand, especially among major consumers of grey hydrogen such as refineries and ammonia producers, which account for over 90% of India’s hydrogen demand. Green hydrogen adoption can follow a trajectory similar to renewable energy, with initial subsidies gradually decreasing as cost competitiveness is achieved.
To expand green hydrogen usage, key industries including green transportation providers, steel, cement, chemicals, and power must be engaged. Expanding green hydrogen usage presents a credible pathway for India to meet its decarbonisation goals while addressing energy access and security concerns. Achieving a sustainable future in India requires a dual strategy of incentivising green hydrogen adoption and discouraging carbon-intensive energy sources. Funding the green transition may involve reallocating subsidies from high-emission sources while ensuring basic energy needs are met and making green energies economically viable. To excel in the global green hydrogen sector, collaboration among central and state governments, industry, and academia is pivotal. This collective effort will drive the necessary changes and innovations in this emerging energy technology, positioning India as a leader in the green hydrogen revolution.
