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India’s green hydrogen plan needs capital, low costs to be viable

For India to achieve its net zero goal by 2070, it is imperative to decarbonise not only the electricity sector but others like steel, cement, transport, refining etc. Green hydrogen is one of the most promising ways forward

January 10, 2023 / 12:10 PM IST
In India, Mangalore is becoming the hotspot for green hydrogen projects. 
(Representative image)

In India, Mangalore is becoming the hotspot for green hydrogen projects. (Representative image)

While geopolitics drove many countries in 2022 to shift back to burning fossil fuels, 2023 offers a big reason to rejoice as India looks set to lead the world in energy transition.

The recent announcement of an initial capital outlay of Rs 19,774 crore (US$2.43 billion) under the Green Hydrogen mission is a step in establishing India as a global hub for the production, utilisation and export of green hydrogen and its derivatives. The hydrogen mission is expected to help develop 5 million tonnes of green hydrogen per year, garner investment of Rs 8 lakh crore (US$100 billion), create jobs, reduce import and subsidy burden, and abate greenhouse gas emissions.

Given the high costs so far, few pilots have been carried out. For this technology to become commercially viable, bringing down the costs of electrolysers, and round-the-clock renewable energy is key. Allocation of money for strategic interventions and research and development (R&D) will improve the feasibility of such projects and help garner more investment from the private sector.

Green hydrogen is capital-intensive, and the private sector has been wary of investing in risky technologies. The government pump-priming the green hydrogen sector will boost investor confidence and attract large investments from domestic and international capital. Further, the government’s announcement of the sovereign green bonds framework and the Reserve Bank of India (RBI) discussion paper on climate risk and sustainable finance will help attract capital for green hydrogen and its derivatives.