The green hydrogen industry is likely to get a boost as the Indian government is planning a $2-billion incentive programme, people in the know told news agency Reuters. This would cut emissions and make India a major exporter in the field. The Rs 18,000-crore ($2.2 billion) incentive aims to lessen green hydrogen's production cost by a fifth in the next five years, a senior government official and an industry manager who works in renewable energy told the news agency.

At present, green hydrogen costs Rs 300-400 per kg in India, the industry manager told the news agency.

The different shades of hydrogen

Hydrogen can be used as a fuel. It is made by splitting water (H2O) into two molecules — hydrogen and oxygen — via electrolysis, which is electrical process. If the devices (electrolysers) used for the same, are powered by renewable energy, then the product is green hydrogen — a fuel that is free of greenhouse emissions.

Grey hydrogen, on the other hand, is produced from methane (CH4), splitting it with steam into carbon dioxide (CO2) and hydrogen (H2).

Blue hydrogen is the same process as grey, but it comprises additional technologies that are required to capture carbon dioxide produced when the hydrogen splits from methane and store it for a long term. However, not all of the carbon dioxide can be captured and for storing it long term, not all means are effective. However, by capturing a large part of the carbon dioxide, the impact on the climate due to hydrogen production can be significantly reduced.

Green plans of companies

Companies such as Reliance Industries, NTPC, Adani Enterprises, Indian Oil, Acme Solar, JSW Energy have big plans for green hydrogen.

US-based Ohmium International commissioned the first green hydrogen factory in India in Bengaluru. Last year, Larsen & Toubro, Greenko, Reliance Industries and H2e Power announced plans to construct gigawatt-scale factories.

Also Read: Views | India’s Long-Term Low Emission Development Strategy: A pragmatic roadmap

In June, Adani Enterprises announced that the company with TotalEnergies for France would create the largest green hydrogen ecosystem in the world.

The Greenko group signed an MoU with Singapore's Keppel Infrastructure in October to export green energy from 2025, enabling the two companies to work towards a 250,000-tonne per annum contract to be supplied to Keppel's new 600Mw power plant in Singapore.

Green hydrogen demand in the near future

According to NITI Aayog's 'Harnessing Green Hydrogen Report,' hydrogen demand can potentially grow more than fourfold between 2020 and 2050, amounting to around 29 million tonnes by 2050.

Source: NITI Aayog's Harnessing green hydrogen report

The report also states that purely based on cost-competitiveness, green hydrogen is expected to dominate the hydrogen market in the long run.

"Even in the 2030 timeframe, green hydrogen can play a significant role for both existing brownfield consumption and new greenfield investments. Almost 94 percent of hydrogen demand in 2050 can be met by green

hydrogen, up from 16 percent in 2030. The cumulative value of the green hydrogen market in India could be $8 billion by 2030 and $340 billion by 2050," the report stated.

Source: NITI Aayog's Harnessing green hydrogen report

India's outlook on green hydrogen

Earlier this month, even Union Minister for Petroleum and Natural Gas Hardeep Singh Puri said India is uniquely positioned to lead the global economy on green hydrogen.

"When I newly became a minister, during my first conversation with (my American counterpart), she said '1 for 1 for 1.' I was a little lost — it meant 1 kilo of green hydrogen for 1 dollar for 10 years. Sounds very ambitious," he said.

Elaborating, he said, "...what does one require to produce green hydrogen? "You need to bring the cost of power down. We have brought it down from Rs 7 to Rs 1.99 solar, and for wind — from 23 cents it is down to 3 cents. And you need an electrolyser," he said.

The Indian aid for green hydrogen could be announced in the upcoming Budget next year, the government official told Reuters.

Last month, CNBC-TV18 reported that green hydrogen and climate action would be a big priority area in the upcoming Budget. The government is considering a Rs 31,000-crore outlay for the green hydrogen mission, which could be announced in the Budget. This could include an outlay for electrolysers and the rollout of green hydrogen for different sectors, it was reported last month.

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According to Nuvama 'ESG Way' series report of the green hydrogen sector update, India is targeting at becoming one of the largest producers by added 5 MTPA capacity of green hydrogen by 2030, replacing the present grey hydrogen production in fertilisers and refineries. The report also found that India's present green hydrogen cost can be halved if the renewable energy cost is halved and electrolysers become one-fourth. India also has the potential of becoming an export hub for green ammonia, according to the report.

Green ammonia and India's plans for green fuel

Ammonia is a gas that is used to make fertilisers. It can also be used as a fuel or a convenient means to transport hydrogen. When the process of making ammonia is carbon-free and completely renewable it is called green ammonia. It is made by combining hydrogen and nitrogen, using renewable sources.

The government is expecting the industry to invest Rs 8 lakh crore in green hydrogen and green ammonia by 2030, the industry manager told the news agency.

The green hydrogen proposal would likely be called SIGHT — Strategic Intervention for Green Hydrogen Transition. The same would be split into Rs 4,500 crore and Rs 13,500 crore for electrolyser manufacturing for five years and for production of green hydrogen as well green ammonia for three years, respectively, the sources said, adding that the incentive for producing green hydrogen would likely be Rs 50 per kg.

India is aiming at selling 70 percent of the green fuel to Japan, South Korea, the European Union, the source said, adding that the derivatives such as green ammonia had just as much of a demand. The government has estimated the green hydrogen global demand to exceed 100 MT by 2030, from the present just under 75 MT, the sources said.

Earlier this year, the government had said India would make 5 MT of green hydrogen annually by 2030, which the sources said could be doubled, depending on international demand. The government is also looking at achieving a 15 GW electrolyser manufacturing capacity in phases by 2030, which would be almost 10 times the present global capacity.

Indian fertiliser and steel plants as well as oil refineries use 5 MT of grey hydrogen annually. Higher gas prices have pushed the grey hydrogen price in India to around Rs 200 per kg from the previous year's Rs 130 per kg. The European Union and the United States have already approved billions of dollars worth of incentives for green hydrogen projects.

Also Read: 10 things India can do to achieve net-zero emission goals, according to Mckinsey

Disclosure: Network18, the parent company of CNBCTV18.com, is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.

(Edited by : Shoma Bhattacharjee)