A race is on to lead the world’s shift to green hydrogen, a potentially transformative clean fuel whose real-world application remains nascent. The latest entrant is India, which this month approved a $2.4bn subsidy package to turn its companies into leading producers, consumers and exporters of the gas. Can it succeed?
India is chronically dependent on imported energy such as Russian crude or Middle Eastern gas, a financial burden and strategic vulnerability for a country that will this year overtake China as the world’s largest by population. It hopes renewables will change this, with India’s vast sun-soaked lands well suited to produce solar power, for example. The country aims to build 500 gigawatts of renewable electricity capacity by 2030.
Indian companies see hydrogen as the next opportunity. The Adani Group, the ports-to-coal group owned by Asia’s richest man Gautam Adani, along with France’s Total, plans to invest $50bn to create “the world’s largest green hydrogen ecosystem” in the next decade. Rival tycoon Mukesh Ambani’s oil-to-chemicals group Reliance Industries says it will switch from “grey” hydrogen produced with fossil fuels to the green version by 2025 as part of a $75bn clean-energy overhaul.
State-owned energy companies from NTPC to Indian Oil Corporation also plan to introduce green hydrogen, with foreign ministry official Prabhat Kumar saying last year that it can become “our main source of energy”.
Much of the money in the new programme will go towards subsidising production of the electrolysers, the machines that extract hydrogen from water. India aims to create production capacity of 5mn metric tonnes per year. It will also mandate usage quotas for industries such as fertilisers and oil refining to drum up demand, while creating coastal “hydrogen hubs” to facilitate exports.
It is also focusing squarely on green hydrogen as opposed to the so-called “blue” hydrogen also promoted elsewhere, which is made from fossil fuels but where carbon emissions are captured before entering the atmosphere. Blue hydrogen is currently cheaper, but global demand for truly green hydrogen is expected to grow, says Jagabanta Ningthoujam, a principal with think-tank RMI India.
But the reality so far is that India’s embryonic hydrogen push lags behind its neighbour China and others. Analysts say Beijing is already starting to dominate production of electrolysers, while the US’s tax credits for hydrogen far outstrip New Delhi’s subsidies.
India has other advantages, including benefiting from some of the world’s lowest renewable electricity prices, which is one of the main costs in hydrogen production. It also has a large domestic market. The most plausible early use cases for green hydrogen in India include refining, as companies such as Reliance use the gas to convert crude oil into fuel products. It can also be turned into ammonia, an imported fertiliser.
Elsewhere, hydrogen use remains more distant. Replacing coking coal in the steelmaking process in India is one of the most compelling use cases. But Abhishek Malhotra, an assistant professor at the Indian Institute of Technology Delhi, says he expects it will be at least a decade until Indian steelmakers are ready to start using green hydrogen.
The most ambitious target is for India to become a leading hydrogen exporter. This is less likely in the foreseeable future. But India could start by selling to neighbours such as Bangladesh or Sri Lanka to meet their future green hydrogen needs. State companies such as Indian Oil Corporation are well established regionally, while newcomers such as Adani are also investing. Reliance, too, is a massive exporter of fuel products.
Critics of polluting conglomerates like the Adani Group, for example, accuse it of “greenwashing” for touting its renewable pledges while simultaneously building up one of the world’s largest coal businesses. They do, however, have the scale, financial clout and government backing to move quickly in strategic areas. And Vibhuti Garg, South Asia director at the Institute for Energy Economics and Financial Analysis, says these companies need emerging areas like green hydrogen to stay relevant.
Like others across the sector, Garg welcomes the government’s new policies but remains level-headed about what India can expect to achieve. “The outlay is not sufficient, but it’s sufficient enough to give investors confidence that there’s seriousness from the government,” she said. “For a change, we’re not just thinking for the next four or five years.”
Where climate change meets business, markets and politics. Explore the FT’s coverage here.
Are you curious about the FT’s environmental sustainability commitments? Find out more about our science-based targets here
Support Lumiserver & Cynesys on Tipeee
Visit our sponsors
Wise (formerly TransferWise) is the cheaper, easier way to send money abroad. It helps people move money quickly and easily between bank accounts in different countries. Convert 60+ currencies with ridiculously low fees - on average 7x cheaper than a bank. No hidden fees, no markup on the exchange rate, ever.
Now you can get a free first transfer up to 500£ with your ESNcard. You can access this offer here.