India Unveils Ambitious Green Hydrogen Policy, Targets Global Export Leadership

New Delhi, October 26, 2023 – The Union Cabinet today approved the sweeping ‘National Green Hydrogen Manufacturing and Export Promotion Policy’ (NGHMEP), setting an ambitious target for India to become a leading global producer and exporter of green hydrogen and its derivatives by 2030.

This landmark initiative is poised to inject billions into the economy, foster energy independence, and solidify India's unwavering commitment to climate action, marking a pivotal moment in the nation's energy transition.

Helmed by the Ministry of New and Renewable Energy, the NGHMEP seeks to leverage India's abundant renewable energy resources to produce green hydrogen at competitive costs, positioning the country as a crucial player in the global race for sustainable energy solutions.

Key points

* **Ambitious Production Target:** The policy aims for India to produce 5 million metric tonnes (MMT) of green hydrogen annually by 2030, a substantial leap towards decarbonizing hard-to-abate sectors and meeting domestic demand.

* **Massive Investment & Job Creation:** The government projects an investment of over ₹8 lakh crore (approximately US$100 billion) by 2030, alongside the creation of more than 6 lakh (600,000) direct and indirect jobs across the value chain.

* **Strategic Incentives:** The NGHMEP introduces a comprehensive Production-Linked Incentive (PLI) scheme for the manufacturing of electrolysers – the key equipment for green hydrogen production – and for the production of green hydrogen itself, aiming to reduce costs and boost domestic capacity.

* **Infrastructure Development:** The policy mandates the establishment of dedicated green hydrogen corridors, significant port infrastructure upgrades, and the allocation of vast land banks for large-scale renewable energy projects essential for powering green hydrogen facilities.

* **Carbon Emission Reduction:** By promoting green hydrogen, India aims to mitigate approximately 50 MMT of annual CO2 emissions, contributing significantly to its climate targets under the Paris Agreement.

The detailed policy framework, unveiled by Union Minister for New and Renewable Energy, Mr.

R.K.

Singh, outlines a phased approach to building a robust green hydrogen ecosystem. “This policy is a game-changer, not just for India but for the global energy landscape,” stated Minister Singh during a press briefing. “India is ready to lead the global green energy transition, transforming from a net energy importer to a potential exporter of clean energy.

Our target of 5 MMT by 2030 is not merely aspirational; it is backed by strategic investments, technological innovation, and a clear roadmap for execution.”

The PLI scheme, with an initial outlay of ₹19,744 crore (approximately US$2.4 billion) over the next five years, is designed to support both indigenous electrolyser manufacturing and the production of green hydrogen.

This includes incentives for setting up manufacturing units for electrolysers, along with direct financial support for green hydrogen production based on cost and efficiency metrics.

The government expects this financial push to significantly lower the levelized cost of green hydrogen in India, making it competitive with fossil-fuel-derived hydrogen.

Furthermore, the policy identifies key industrial clusters where green hydrogen production will be incentivized, particularly near major ports in Gujarat, Odisha, and Tamil Nadu, facilitating export opportunities.

The Ministry plans to establish at least two 'Green Hydrogen Hubs' by 2026, offering plug-and-play infrastructure for potential investors.

Dr.

Ananya Sharma, Senior Economist at NITI Aayog, lauded the policy’s forward-looking approach. “The economic multiplier effect of this policy will be immense.

By creating a domestic market and export capabilities, India stands to attract significant foreign direct investment, boost indigenous research and development, and foster a new generation of skilled workforce,” Dr.

Sharma commented. “This is a holistic strategy that addresses energy security, economic growth, and environmental sustainability simultaneously.”

The government also plans to create regulatory sandboxes to accelerate technological innovation and streamline approval processes for green hydrogen projects.

Measures to ensure water availability for electrolysis, including promoting desalinated water and treated wastewater, are also part of the policy’s environmental considerations.

Background

India has been aggressively pursuing its renewable energy targets, having achieved over 170 GW of installed renewable capacity, placing it among the top global leaders.

This strong foundation in solar and wind power provides a natural advantage for green hydrogen production, which relies heavily on clean electricity for electrolysis.

The ‘Make in India’ initiative and the success of various Production Linked Incentive schemes in sectors like electronics and pharmaceuticals have built a framework for manufacturing growth that the NGHMEP seeks to emulate and expand upon.

The global push for decarbonization has spotlighted green hydrogen as a crucial vector for achieving net-zero emissions, particularly in heavy industries and long-haul transportation, where direct electrification is challenging.

India, currently heavily reliant on imported fossil fuels, views green hydrogen as a strategic pathway to reduce its energy import bill, which stood at over US$160 billion in the last fiscal year, thereby enhancing its energy security and geopolitical standing.

Preliminary studies and pilot projects in India have demonstrated the feasibility of green hydrogen production.

Companies like Reliance Industries and Adani Green Energy have already announced significant investments in the green hydrogen space, signaling private sector readiness for large-scale adoption, which the new policy aims to galvanize and accelerate.

What it means

The NGHMEP represents a transformative shift in India's energy paradigm.

If successfully implemented, it will not only revolutionize the country’s energy mix but also establish India as a formidable force in the global green energy market.

Economically, it promises a boom in manufacturing, construction, and service sectors associated with renewable energy and hydrogen production.

The influx of investment and the creation of highly skilled jobs could catalyze regional development, particularly in resource-rich states identified for project hubs.

Environmentally, the policy is a decisive step towards achieving India’s enhanced Nationally Determined Contributions (NDCs) under the Paris Agreement.

Decarbonizing sectors like steel, cement, fertilizers, and refining through green hydrogen will lead to significant reductions in greenhouse gas emissions and air pollution, contributing to better public health outcomes.

Strategically, becoming a leading exporter of green hydrogen can provide India with significant geopolitical leverage, reducing its vulnerability to volatile global energy markets and fostering new trade relationships focused on sustainable development.

However, challenges remain, including the high initial capital cost of green hydrogen projects, the need for continuous technological advancements to reduce production costs, and ensuring sustainable water management practices, particularly in water-stressed regions.

Reactions

Initial reactions from industry stakeholders have been overwhelmingly positive.

Mr.

Sanjeev Gupta, CEO of Surya Renewables, a major Indian conglomerate in the renewable energy sector, expressed strong optimism. “This policy provides the clarity, long-term vision, and financial support that the industry has been eagerly awaiting.

It de-risks investments and signals a clear intent from the government to foster a competitive green hydrogen economy.

We are ready to scale up our operations and contribute to this national endeavor.”

Environmental advocacy groups, while welcoming the policy’s ambition, emphasized the need for robust environmental safeguards.

Ms.

Priya Das, Director of the 'Clean Energy India' initiative, stated, “It’s an excellent move towards a cleaner future.

However, the implementation must prioritize sustainable sourcing of renewable energy and efficient water usage.

We must ensure that the pursuit of green hydrogen doesn't create new ecological challenges, especially concerning freshwater resources.”

International energy experts have also weighed in, with Dr.

Helena Richter, Head of Clean Energy Initiatives at the International Energy Agency (IEA), remarking, “India’s bold step to target green hydrogen leadership aligns with global climate goals and economic aspirations.

Its massive renewable energy potential gives it a unique competitive edge.

This policy could inspire other developing nations to follow suit.”

Opposition parties, while not outright rejecting the policy’s premise, raised concerns about its execution.

Mr.

Vivek Sharma, a spokesperson for a leading opposition party, commented, “While the vision is commendable, the devil will be in the details of implementation.

The government must ensure transparency, fair allocation of incentives, and concrete timelines, rather than allowing it to become another scheme riddled with delays.”

What happens next

Following the Cabinet approval, the Ministry of New and Renewable Energy is expected to release detailed guidelines and scheme documents for the PLI components within the next three months.

This will include specific criteria for eligible manufacturers and producers, application processes, and disbursement mechanisms for incentives.

Industry consultations and investor summits are planned to be held across major cities to engage domestic and international players, outlining the investment opportunities and regulatory framework.

Bidding rounds for projects, particularly for the establishment of large-scale green hydrogen production facilities and electrolyser manufacturing units, are anticipated to commence by early next year.

The government will also intensify its focus on research and development to further reduce the cost of green hydrogen production and improve efficiency.

International partnerships for technology transfer and export agreements for green hydrogen are also high on the agenda, with India actively seeking to forge alliances with countries eager to import clean energy, particularly in Europe and East Asia.

Ongoing monitoring and evaluation mechanisms will be put in place to track the policy’s progress against its ambitious targets, with provisions for adaptive measures to address unforeseen challenges and capitalize on emerging opportunities in the rapidly evolving global green hydrogen market.