India has approved an incentive plan of 174.9 billion rupees ($2.11 billion) to promote green hydrogen in a bid to cut emissions and become a major exporter in the field, the information minister said on Wednesday.

The move is targeted to help India, one of the world’s biggest greenhouse gas emitters, achieve net-zero carbon emissions by 2070. Reuters reported last month about India’s plans for a green hydrogen incentive programme.

The country aims for annual production of 5 million tonnes of green hydrogen by 2030, cutting about 50 million tonnes of carbon emissions and saving one trillion rupees on fossil fuel imports, the minister, Anurag Thakur, told reporters.

“Our aim is to establish India as a global hub of green hydrogen,” Thakur said. “We will make efforts to get at least 10% of the global demand for green hydrogen (by 2030).”

Hydrogen, made by splitting water with an electrical process called electrolysis, can be used as a fuel. If the devices that do that, electrolysers, are powered by renewable energy, the product is called green hydrogen.

India also plans to build electrolyser capacity of 60 gigawatts to 100 gigawatts to help produce green hydrogen, Thakur said.

The incentive by the government aims to make green hydrogen affordable and bring down its production cost, currently at 300 rupees to 400 rupees per kg, according to industry sources.

Fertiliser, refining and iron and steel units currently consume grey hydrogen, made through fossil fuels, of 5 million tonnes per annum, according to industry sources.

Grey hydrogen costs around 200 rupees per kg to produce, sources added, as gas costs have pushed the prices from 130 rupees per kg.

To promote the use of green hydrogen, Thakur said obligations – such as mandatory targets for green hydrogen consumption – would be required of fertiliser units, petroleum refineries and city gas distribution networks.

The government expects investments totaling 8 trillion Indian rupees ($96.65 billion) in the green hydrogen sector by 2030, Thakur said, adding that incentives will be given for manufacturing of electrolysers and production of green hydrogen.

The United States and the European Union have already approved incentives worth billions of dollars for green hydrogen projects.

Indian companies such as Reliance Industries (RELI.NS), Indian Oil (IOC.NS), NTPC (NTPC.NS), Adani Enterprises (ADEL.NS), JSW Energy (JSWE.NS), ReNew Power (RENE.BO) and Acme Solar (ACMO.NS) have big plans for green hydrogen.

The government’s incentive programme, named the “Strategic Interventions for Green Hydrogen Transition Programme (SIGHT)”, will also need additional government spending of 14.66 billion rupees for pilot projects and about 8 billion rupees towards research and other expenses.

($1 = 82.8000 Indian rupees)

Reuters by Sarita Chaganti Singh, January 10, 2023