India Unveils Ambitious ₹1.97 Lakh Crore National Green Hydrogen Mission, Targets Global Leadership

New Delhi, 4 January 2024 – The Indian government today announced the ambitious National Green Hydrogen Mission (NGHM) with an initial outlay of ₹1.97 lakh crore, aiming to make India a global hub for green hydrogen production, utilisation, and export. The Cabinet's approval marks a pivotal moment in the nation's energy transition, underscoring its commitment to achieving net-zero emissions by 2070 and fostering energy independence.

Key points

• ₹1.97 lakh crore initial outlay for the National Green Hydrogen Mission.

• Target to produce 5 million metric tonnes (MMT) of green hydrogen annually by 2030.

• Aim to attract over ₹8 lakh crore in investments and create 6 lakh jobs.

• Significant reduction in fossil fuel imports, saving over ₹1 lakh crore by 2030.

• Policy includes Strategic Interventions for Green Hydrogen Transition (SIGHT) programme for manufacturing electrolysers and producing green hydrogen.

The mission outlines a comprehensive roadmap to scale up green hydrogen production and establish a robust ecosystem for its adoption across various sectors. The allocated funds will be strategically deployed over the next six years to incentivise green hydrogen production, promote indigenous manufacturing of electrolysers, and support pilot projects for its use in hard-to-abate sectors such as steel, heavy-duty transport, and shipping.

Speaking at a press briefing following the Cabinet decision, Union Minister for New and Renewable Energy, R.K. Singh, emphasised the transformative potential of the mission. "This mission is not just an environmental initiative; it is a strategic economic imperative. India will lead the world in green hydrogen, creating jobs, boosting manufacturing, and securing our energy future," he stated with conviction. "We are laying the foundation for a future where India is not just energy independent, but a net exporter of green energy, driving global sustainability efforts."

The mission’s design incorporates a dual incentive mechanism under the Strategic Interventions for Green Hydrogen Transition (SIGHT) programme. This programme will provide financial incentives for the domestic manufacturing of electrolysers, crucial for green hydrogen production, and a direct incentive for the production of green hydrogen itself. The government expects this will significantly bring down the cost of green hydrogen production in India, making it competitive on the global stage.

Further details revealed that the mission envisions the development of green hydrogen production capacities to complement an estimated 125 GW of associated renewable energy capacity. This synergy is expected to lead to a cumulative reduction of nearly 50 MMT of annual CO2 emissions by 2030. The policy also allocates funds for pilot projects in emerging end-use sectors, R&D activities to improve technology and reduce costs, and a comprehensive skill development programme to create a skilled workforce for the nascent green hydrogen economy.

Dr. Asha Sharma, Principal Economic Advisor, Ministry of Finance, highlighted the economic rationale behind the massive investment. "The financial outlay of ₹1.97 lakh crore is a calculated investment for India's future. We anticipate an exponential return through reduced import bills, increased exports, and the creation of a vibrant new industrial ecosystem," Dr. Sharma explained. "This mission is projected to attract over ₹8 lakh crore in total investments and create more than 6 lakh jobs across the value chain by 2030. It will attract significant domestic and foreign direct investment, solidifying India’s position as a preferred investment destination in the green energy sector."

Industry leaders have largely welcomed the announcement. Anil Kumar, CEO of a major renewable energy conglomerate based in Bengaluru, expressed optimism. "This is the 'Make in India' moment for green energy. The policy framework provides much-needed clarity and incentives for private sector participation," he remarked. "We are ready to scale up our operations and invest in new technologies. However, the challenges of developing robust infrastructure for transport and storage, along with rapidly upskilling the workforce, remain significant and will require continuous government support and clear regulatory pathways."

Background

India, currently the world's third-largest energy consumer, heavily relies on fossil fuel imports, particularly crude oil and natural gas, impacting its trade deficit and exposing it to global energy price volatility. Recognising this vulnerability and its commitment to tackling climate change, India set ambitious targets at COP26, including achieving net-zero emissions by 2070 and meeting 50% of its energy requirements from renewable sources by 2030. Green hydrogen, produced through electrolysis using renewable energy, offers a promising pathway to decarbonise hard-to-electrify sectors and enhance energy security. The government had previously announced a Green Hydrogen Policy in 2022, offering waivers on inter-state transmission charges for renewable energy used for green hydrogen production, and facilitating land allocation. The NGHM builds significantly upon this foundation, transforming policy intent into a massive, funded mission under the broader 'Atmanirbhar Bharat' (Self-Reliant India) initiative.

What it means

The National Green Hydrogen Mission is set to be a game-changer on multiple fronts. Economically, it promises to drastically cut India's fossil fuel import bill, potentially saving over ₹1 lakh crore by 2030, while simultaneously creating a new export industry. The projected ₹8 lakh crore investment and 6 lakh jobs will provide a significant boost to manufacturing, technology development, and skill enhancement, driving overall economic growth. Environmentally, the mission is crucial for India's climate action goals, contributing to a massive reduction in carbon emissions and improving air quality. Strategically, by becoming a leader in green hydrogen, India can enhance its energy independence, diversify its energy basket, and gain geopolitical leverage in the rapidly evolving global green economy. It will also foster technological innovation, pushing India to the forefront of clean energy research and development.

Reactions

The announcement has garnered widespread attention and largely positive reactions from various stakeholders. Industry bodies like FICCI and CII have applauded the comprehensive nature of the mission, highlighting its potential to stimulate economic activity and foster innovation. Environmental advocacy groups have expressed cautious optimism, welcoming the emphasis on sustainability but stressing the need for robust environmental impact assessments for large-scale renewable energy projects required to power green hydrogen production. "While the ambition is commendable, the execution must ensure that the renewable energy expansion itself is done sustainably, without adverse impacts on biodiversity or local communities," remarked a spokesperson for the Centre for Science and Environment. Opposition parties, while broadly supportive of the strategic goal, have called for greater transparency regarding the funding mechanisms and the involvement of public sector undertakings. "The intent is noble, but the devil is in the details. We must ensure this doesn't become another white elephant project and truly benefits the nation," stated a senior leader from a major opposition party, requesting rigorous oversight and accountability.

What happens next

Following the Cabinet's approval, the Ministry of New and Renewable Energy is expected to release detailed guidelines and an implementation roadmap for the NGHM within the next few months. A high-level steering committee, comprising representatives from various ministries and industry experts, will be constituted to oversee the mission's progress. The SIGHT programme, along with pilot project solicitations and R&D funding calls, will be rolled out expeditiously. The government plans to engage extensively with the private sector, organise investment conferences, and explore international collaborations to attract necessary capital and technological expertise. Regular monitoring and evaluation frameworks will be established to track progress against key performance indicators and ensure adaptive policy responses to emerging challenges and opportunities.