India’s green hydrogen story: Big aspiration, scale potential

India has committed to achieving net-zero emissions by 2070. Green hydrogen will be a critical lever to achieve this aspiration, especially for hard-to-abate sectors, and other industrial segments, that are difficult to decarbonize through direct renewable energy electrification.

Beyond decarbonization, green hydrogen could also help India improve its energy security by reducing its dependence on imports. With more than ample access to renewable energy, India has a natural advantage in setting up a globally competitive green hydrogen ecosystem. Recognizing this potential, the Indian government has set a near-term milestone of creating 5 million metric tons (MMT) of green hydrogen production capacity by 2030. It has also articulated several supportive policy measures in the National Green Hydrogen Mission of 2023.

This favorable policy environment has succeeded in generating significant supply-side traction. Many large-scale players announced they would set up their green hydrogen production, and the total announced supply is expected to exceed the government’s 5 MMT target by 2.5 times.

While the supply-side momentum has been encouraging, demand-side excitement has been muted in comparison, and execution of these planned investments has lagged. As of 2024, commissioned green hydrogen capacity, largely comprised of pilot programs, remains below 0.01 MMT.

The slowed momentum primarily stems from the current high production costs along with nascent enabling infrastructure and high financing costs. Current production costs—$4–$5 per kg of green hydrogen vs. $2.3–$2.5 per kg of grey hydrogen typically (some industries may procure at higher costs)—are not yet competitive. While green hydrogen production costs chart their natural path of reduction with economies of scale and technological advancement, there are immediate segments of demand that can be tapped into. Additionally, viable, differentiated sector-level strategies can help accelerate green hydrogen adoption in the interim.

This report identifies five immediate demand-side strategies that can accelerate green hydrogen adoption:

• Blend small amounts of green hydrogen into the grey hydrogen or piped natural gas supply for several high-volume sectors (including refineries, fertilizers, and piped natural gas), while also considering the technological feasibility and price sensitivity of end customers.
• Encourage green hydrogen substitution among niche segments (including glass, ceramics, and chemicals) for whom the switch from grey to green hydrogen is a cost-neutral move.
• Augment domestic consumption via public procurement, especially for green steel.
• Explore green hydrogen and green ammonia export potential with partner countries that are ahead in the green hydrogen adoption journey.
• Explore export opportunities for green hydrogen-embedded products that have global tailwinds.

In addition to the above strategies, this report also focuses on various catalytic measures required to bridge challenges and navigate potential constraints associated with implementing the above strategies. Enablers such as infrastructure build-out, risk-reducing offtake agreements, financial mechanisms (e.g., viability gap funding and sovereign guarantees), and alignment with global standards can accelerate green hydrogen scalability and market viability.

With these interventions, India can transform its green hydrogen vision into a commercially viable reality.