MC Explains: Green hydrogen scheme announced by UP govt and other states’ policies

The Green Hydrogen Policy, 2024 by the UP government is aimed at increasing green hydrogen production in the northern state

Joining states such as Andhra Pradesh and Maharashtra, the Uttar Pradesh government on March 5 approved a green hydrogen policy to attract investments in the state. The Green Hydrogen Policy 2024 by the UP government is aimed at increasing green hydrogen production in the state.

Green hydrogen, a green fuel with almost zero emissions, is one of the main pillars of the central government’s initiatives towards achieving India’s net-zero emissions target by 2070. The fuel is produced by electrolysis of water using renewable sources of energy such as solar, wind, etc.

What has the UP government announced?

According to the policy, the government has set a production target of 1 million tonne per annum (MTPA) of green hydrogen per year by 2028 in the state. The Yogi Adityanath-led government has offered a 10 to 30 percent subsidy on the total capital expenditure of the companies in the sector depending on geographical area and scale of investment.

The green hydrogen policy, which has been set for five years, would provide subsidies and other incentives totalling Rs 5,045 crore to companies investing during the period. The government has also announced a 100 percent exemption in the electricity duty.

Additionally, the UP government said that the first five investments during the policy period, expected in the Meerut division, would be provided with a capital subsidy of 40 percent of the total investment amount with a ceiling of Rs 225 crore per project per year.

What are the other states doing?

Other states have also announced their green hydrogen policies. The Andhra Pradesh government in June notified its green hydrogen and green ammonia policy. The state has set a green hydrogen production target of 0.5 MTPA, and a green ammonia production target of 2.0 MTPA in the next five years.

The Maharashtra government in July approved the green hydrogen policy and sanctioned Rs 8,562 crore to provide subsidies and benefits to companies producing the fuel or manufacturing electrolysers in the state.

Similarly, Gujarat, Rajasthan and Tamil Nadu have also announced subsidies for green hydrogen respectively.

What has the Centre announced?

In January 2023, the Union Cabinet approved the National Green Hydrogen Mission (NGHM) with a total initial outlay of Rs 19,744 crore. Of the total amount, Rs 17,490 crore has been earmarked for incentives on the production of green hydrogen and manufacturing of electrolysers, while Rs 1,466 crore would be for pilot projects, Rs 400 crore for research and development (R&D), and Rs 388 crore towards other mission components.

The Ministry of New and Renewable Energy (MNRE) will formulate the scheme guidelines for the implementation of the respective components.

The Mission states that India will develop a green hydrogen production capacity of at least 5 MTPA with an associated renewable energy capacity addition of about 125 gigawatts (GW) in the country by 2030.

Green Hydrogen Push in India

With India focused on achieving net-zero targets, several energy companies in the country have stepped up to invest in the green hydrogen sphere. Companies, particularly in the hard-to-abate sectors, such as Indian Oil Corporation Ltd (IOCL), Reliance Industries Ltd (RIL), and NTPC Ltd, among others, have taken the lead in the sector.

RIL aims to produce green hydrogen at $1 per kilogram by 2030, to make the fuel economical for consumption in the country. The company is also setting up a fully integrated, automated, giga-scale electrolyser manufacturing facility at the Dhirubhai Ambani Green Energy Giga Complex in Jamnagar. Similarly, other companies are also setting up infrastructure for production of the green fuel.

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