India has kickstarted its push to become a major green hydrogen production hub with the allocation of additional state funds to stimulate the development of production capacity and equipment manufacturing.

The Indian government unveiled its National Green Hydrogen Mission (NGHM) in January, aiming to make the country energy independent and to decarbonise critical sectors. The mission will facilitate demand creation, production, utilisation and export of green hydrogen, with mobilisation of more than $987bn of investment by 2030.

Of the $2.43bn outlay meant for the NGHM, around $2.16bn will go towards incentives for the production of green hydrogen and the manufacture of electrolysers.

$2.43bn – Budget allocated for hydrogen

The NGHM received a further boost through support in the country’s union budget announced in February, with a proposed allocation of $4.32bn for priority capital investments towards the energy transition and net-zero objectives.

“We have a target to reach an annual production of 5mn t of green hydrogen by 2030,” said Nirmala Sitharaman, India’s finance minister, while presenting the union budget for 2023–24. “[The] recently announced National Green Hydrogen Mission will facilitate the transition of the economy to a low-carbon intensity and reduce dependence on fossil fuel imports. It will also make [the] country assume technology and market leadership in this sunrise sector.”

Bet on green hydrogen

India’s focus on green hydrogen can be seen in its end-of-year economic survey for 2022–23, which notes that “green hydrogen will be crucial for India's economic development, energy security and achieving decarbonisation of harder-to-abate sectors”. The survey, tabled by India’s parliament at the end of January, highlights fertilisers, refining, methanol, shipping, iron and steelworks, and long-haul transport as sectors that can be decarbonised via green hydrogen.

Industry-led coalition the India Hydrogen Alliance (IH2A) has sought government support for the development of green hydrogen hubs.

In a proposal submitted to the Indian government last year, IH2A suggested development of five hubs in the coastal states of Maharashtra, Andhra Pradesh, Karnataka, Kerala and Gujarat. It suggests clustering 25 green hydrogen production units in these five hubs to cater to multi-sector demand from the industries located in these states.

Adani setback

Green hydrogen has stirred substantial interest from Indian private and state-run companies during the last 12 months. Even before the NGHM was published, some of the largest business entities in India—Adani Group, Reliance Industries, state-owned Oil & Natural Gas Corporation, National Thermal Power Corporation and Indian Oil Corporation—expressed their interest in investing in green hydrogen production.

However, recent controversy surrounding multibillion-dollar conglomerate Adani, which has announced plans for major projects, could delay private investment in the industry.

Adani plans to develop a fully integrated green hydrogen ecosystem in the country through a subsidiary, Adani New Industries Limited (Anil). In a red-herring prospectus filed with India’s stock exchange in the first half of January, Adani announced plans to invest up to $50bn over the next ten years, targeting an initial production capacity of 1mn t/yr by 2030 before rising to 3mn t/yr by an unspecified date.

But the company has been embroiled in controversy in recent weeks after a report by US-based Hindenburg Research accused the firm of fraud and market manipulation. This has led to a sell-off of shares in most Adani Group subsidiaries that is estimated to have halved the group’s total market value.

Adani’s flagship $5bn green hydrogen project, developed under a joint venture (JV) with French energy major TotalEnergies, has been put on hold amid the controversy, the French company’s CEO, Patrick Pouyanne, told a recent company results call. Pouyanne says he expects audits to exonerate Adani and its CEO, Gautam Adani.

Anil is expected to go ahead with the 2GW project despite TotalEnergies’ decision to pause the JV.

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Author: Yogender Malik