India: The new global green hydrogen powerhouse? (II/III)

This is part two of a three-part series. You can find part one here.

India’s growing population and fast-paced economy are skyrocketing demands for energy, enabling infrastructure, and new manufacturing capacity. Today, India is the world’s third-largest carbon dioxide emitter after China and the United States. Continued reliance on fossil fuels would exacerbate existing socioeconomic imbalances, as worsening pollution and rising carbon emissions would severely impact the Indian populace through extreme events and pollution-related diseases, particularly among the most vulnerable; these events would also have significant adverse economic impacts. 

Considering these circumstances, a critical question emerges: how can India balance sustaining growth and achieving prosperity for all while accelerating the transition to a low-carbon economy? 

India’s hydrogen strategy 

As discussed in the previous commentary, current Indian green hydrogen production is marginal; the Ministry of New and Renewable Energy is supporting a 5 normal cubic meter per hour production plant powered by solar energy in Gurugram, Haryana, and a 6 kg per hour plant based on biomass gasification at IISc Bangalore, Karnataka.44 Oil India, a State-owned enterprise, commissioned the first hydrogen pilot plant with an installed capacity of 10 kg per day at its Jorhat Pump Station in Assam in 2022. In January 2023, NTPC and Gujarat Gas started the first green hydrogen blending project in the natural gas network in Surat, Gujarat.45 

India’s green hydrogen strategy proposes a clear path for developing a robust national hydrogen industry by addressing the aforementioned challenges. The first phase (2022/23-2025/26) prioritizes demand and supply creation. On the demand side, growth areas are expected in the refining, fertilizers, and city gas sectors thanks to the definition of green hydrogen standards, which require that a certain percentage of green hydrogen is used in a specific sector. On the supply side, growth will be based on incentivizing the creation of indigenous value chains through pilot projects and scaling up electrolyzer manufacturing capacity. Incentives will also be used to reduce green hydrogen production costs. If successful, by the second phase (2026/27-2029/30), green hydrogen is expected to become cost-competitive with fossil fuels, and commercialization efforts will focus on new sectors, such as steel, mobility, and shipping. 

For example, by 2035, the Central Government aims to substitute all ammonia imports used for fertilizer production with domestic green ammonia. Green hydrogen and ammonia refueling hubs will be deployed in shipping and port operations, leveraging the Sagarmala Program to develop and modernize Indian ports.46 The National Hydrogen Strategy mandates that green ammonia bunkers and refueling facilities be established in at least one port by 2025 and all major ports by 2035. Additionally, the Shipping Corporation of India must retrofit at least two ships to run on green hydrogen or other green hydrogen-derived fuels by 2027. Kandla Port on the west coast and Tuticorin Port on the east coast have been designated as India’s first green hydrogen and green ammonia refueling hubs.47 

Regarding pilot projects, economies of scale and infrastructure optimization will be developed by establishing green hydrogen hubs and cluster-based production. Regions with large-scale green hydrogen potential are being selected; for example, Gujarat has been chosen and will become the world’s biggest green hydrogen hub.48 Success will require an integrated and coordinated approach between the Central Government, the States, the Regional Government Agencies, and the private sector. Building on the positive experience of the Gati Shakti Program and the National Infrastructure Pipeline (i.e., the Indian Master Plan for connectivity and energy infrastructure in the country), the India Hydrogen Alliance exemplifies a successful cooperative model between industry, academia, and government to accelerate the transition to a low-carbon economy.49

India’s green hydrogen diplomacy 

To help transform India into a green hydrogen export champion, Modi’s government is pursuing “hydrogen diplomacy,” a strategy to secure export markets for India’s cost-competitive green hydrogen. During the recent G7 summit in Japan, New Delhi and Tokyo established a strategic partnership on green hydrogen focused on technology development.50 In May, the Australia-India Green Hydrogen Taskforce51 and the Quad – a strategic alliance between Australia, India, Japan, and the United States – were announced to create an integrated green hydrogen supply chain for the Indo-Pacific region, lower production costs, and accelerate technological innovation.52 

Furthermore, India is pursuing partnerships with Gulf and Mediterranean countries to gain greater access to lucrative European markets. Major agreements were concluded with Gulf countries such as Oman53 and the United Arab Emirates.54 During the Middle East and North Africa (MENA) Climate Week in October 2023, a Memorandum of Understanding was signed with Saudi Arabia. The agreement established a general framework for cooperation on grid interconnecting and balancing, fostering renewables and green hydrogen co-development, and creating resilient supply chains for critical materials.55 In Morocco, the Adani Group has committed to building up to 10 GW of solar and wind power dedicated to green hydrogen production for the European markets.56 

New Delhi is also negotiating with the European Commission on a deal to supply up to 10 million tons per year of green hydrogen to the region;57 this transaction will become a cornerstone of the broader EU-India Clean Energy and Climate Partnership, dating back to 2016.58 In September 2022, the first EU-India Green Hydrogen Forum was held in New Delhi. Through this framework, India could play a pivotal role in supporting the overall goals of the EU Global Gateway strategy – a €300 billion connectivity, infrastructure, and sustainability plan launched in 2021 to counter China’s Belt and Road Initiative (BRI);59 the EU could leverage the plan to invest in green hydrogen capacity in India. 

The BRI is a global infrastructure development strategy adopted by the Chinese Government in 2013; the strategy allows Beijing to gain geopolitical leverage by investing in more than 150 countries and international organizations.60 With investments of $965 billion ($366 billion of which is devoted to energy projects), the BRI is the world’s most extensive infrastructure plan.61 In 2022, the G7 established the Partnership for Global Infrastructure and Investment (PGII), a Western-led $600 billion global infrastructure investment plan, including the €300 billion Global Gateway. During the 2023 G20 Summit, New Delhi and G7 countries, under the PGII framework, agreed to create a new India-Middle East-Europe Economic Corridor (IMEC) to promote integration and connectivity between Europe and India through new railway and maritime trade routes. IMEC includes plans to export green hydrogen to the EU via pipelines between the UAE, Saudi Arabia, Jordan, and Israel, with shipping used for the remaining sections.62 However, the Israel-Hamas war and the rising tensions in the region could delay the project.63 

In June 2023, the EU-India Global Gateway Conference announced plans to deploy enabling infrastructure and increase renewable energy capacity in India. It reiterated the importance of creating shared Indo-Pacific value chains to accelerate the region’s transition while improving integration with European programs and policies. The participants recognized that EU collaboration will be paramount to financing and providing technical assistance for deploying green technologies in the Himalayan States (such as Bhutan and Nepal) and Bangladesh. The first step of the partnership requires identifying 120 cleantech investment projects, including green hydrogen, starting from Northeast India.64 

Finally, the European Investment Bank (EIB) signed a Memorandum of Understanding with the India Hydrogen Alliance to provide €1 billion to finance green hydrogen projects and spur the creation of large-scale hubs across India. Specifically, the EIB will develop a credit program to assist the Indian Government in financing critical public-sector green hydrogen projects, with increasing private-sector involvement.65 

Europe and India are also close collaborators from a technology innovation perspective. In February 2023, the two regions launched the EU-India Trade and Technology Council (TTC), whose first meeting was held in May 2023 in Brussels. The TTC provides a crucial forum for deepening the partners’ strategic partnership on trade and technology. It is a coordination platform to address key trade, trusted technology, and security challenges. In particular, the TTC established, among others, a working group on green and clean energy technologies to bring new and sustainable technologies, including green hydrogen, to the market.66 For example, Germany’s Fraunhofer Institute for Solar Energy Systems and India’s Government Department of Science and Technology established a long-term collaboration focusing on hydrogen and other clean technologies.67 

These initiatives are vital pillars underpinning the broader EU Hydrogen Strategy and the REPowerEU energy plan, which require the EU to produce 10 million tonnes of renewable hydrogen domestically and import 10 million tonnes of renewable hydrogen in the EU by 2030. From this perspective, India could become a key green hydrogen export partner.

Conclusion

As witnessed during the G20 presidency, India could pioneer a new economic development model based on technological innovation, side-stepping the carbon-intensive approaches of the past. But on the geopolitical and climate chessboard, great opportunities come with great challenges. Accelerating the transition to a low-carbon economy should not be perceived as a risk hindering growth but as an opportunity to reduce socioeconomic imbalances and achieve industrial leadership. Is India ready?