More demand needs to be created for green hydrogen mission to be successful: Report

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For India to achieve its ambitious goal of creating 5 million metric tons (MMT) of green hydrogen production capacity by 2030, unlocking demand for the renewable fuel at scale is critical, a report released on June 19 has said.

India can achieve its 5 MMT green hydrogen target through measured blending, strategic sector selection, leveraging public procurement, and aligning with export opportunities, From Promise to Purchase: Unlocking India’s Green Hydrogen Demand' report says.

Bain & Company, the Confederation of Indian Industry (CII) and Rocky Mountain Institute (RMI) have brought out the report.

The demand for green hydrogen from oil refining could reach up to 2 MMT, fertilisers 0.9 MMT and piped natural gas 0.1 MMT by 2030.

Niche sectors such as chemicals, glass, and ceramics could contribute approximately 0.07 MMT, while public procurement of green steel could unlock up to 0.6 MMT of demand, it says.

Green hydrogen exports could generate between 0.8–1.1 MMT, and green steel exports could create an additional 0.1–0.2 MMT of demand for green hydrogen.

The European Union’s Carbon Border Adjustment Mechanism (CBAM) is likely to make imports of Indian green steel competitive with grey and black steel by 2030.

India exports 3.3 MT of steel to the EU, a figure that is projected to increase to 4.5 MT by 2030.

"If 50–70 percent of India’s conventional exports transition to green steel, it will generate 0.13–0.18 MMT of green hydrogen demand by 2030," the report says.

Sachin Kotak, Partner and APAC leader of Bain & Company’s Oil and Gas practice, said, “While the supply side is gaining traction—with total announced capacity expected to exceed the government’s 5 MMT target by 2.5 times—demand-side interventions will be essential to translating this ambition into reality."

"Blending green hydrogen with grey in refining and fertilisers, with natural gas in PNG, enabling cost-parity substitution in strategically selected industries, leveraging public procurement to anchor domestic markets, and boosting export-oriented plays can potentially unlock scalable demand and position India as a leader in decarbonising hard-to-abate sectors while strengthening energy independence."

Blending helps reduce carbon emission as green hydrogen, which is a cleaner fuel, is mixed with piped natural gas for distribution and use. The blending reduces emissions from PNG by partially replacing it with a cleaner fuel.

Even as a base scenario, implementing all these strategies could generate a minimum of around2.1 MMT of green hydrogen demand by 2030.

Green hydrogen and ‘high-volume’ sectors

The report said blending green hydrogen into existing grey hydrogen or piped natural gas supply offers an immediate pathway to stimulate demand in high-volume sectors such as refining, fertilisers, and residential heating.

Blending 10 percent green hydrogen in refining, for instance, can generate 0.5 MMT of demand by 2030, with only a marginal 0.5 percent increase in costs. As green hydrogen costs reduce to $2.5–3 a kg, increasing the blend rate to 40 percent could unlock up to 2 MMT of demand by 2030.

Similarly, in fertilisers, a 20 percent blend, enabled by declining production costs, could create 0.9 MMT of demand by 2030, the report found.

"This, along with several mitigating measures including, carbon credits and cross-subsidies, can help minimise the impact of the transition.” In the piped natural gas (PNG) sector, a 5 percent blend could generate 0.05 MMT by 2030. If technical feasibility allows, this could be expanded to a 10 percent blend, supporting up to 0.1 MMT of demand by 2030, it said.

The National Green Hydrogen Mission 

The government’s National Green Hydrogen Mission is focused on developing and promoting green hydrogen as a clean energy source. It aims to establish India as a global hub for green hydrogen by 2030, with a production target of 5 million tonnes per annum.

Green hydrogen is generated from electrolysis of water, with the entire process run on renewable energy.

In the industry, the colour is assigned based on the source of electricity that is used to generate the hydrogen molecule. Brown hydrogen is for coal, grey for natural gas and blue if it is produced from natural gas with a process of steam methane reforming.