Green hydrogen: Is it an opportunity for a sustainable future in India?

Автор Abhijeet Singh, Research Manager, Argus Consulting

Exploring the hydrogen policy landscape, current applications, and opportunities for a country aiming to be a hydrogen hub.

Hydrogen is gaining political and business momentum in recent years. Traditionally, hydrogen found its place in the fertilizers, refineries, and petrochemical industries. But it has recently attracted increased attention from policymakers and practitioners worldwide as a versatile and sustainable energy carrier that could play a central role in the transition to a low-carbon economy. Hydrogen could account for around 12pc of the total energy supply in a world where policies are put in place to limit temperature rise to 1.5°C by 2050, according to the International Renewable Energy Agency (IRENA). Interest in hydrogen has been further strengthened by the falling cost of renewable electricity and the realisation of hydrogen’s wider applications in hard-to-abate sectors like iron and steel production, shipping, and aviation.

India is heavily dependent on coal for electricity generation, with 60pc of it coming from coal-fired plants. Many more coal power plants are expected to be built in the next few years and most of them would be super-critical or ultra-super-critical plants. Despite their higher efficiency, carbon dioxide (CO2) emissions from coal-burning remains an environmental concern.

Under the Nationally Determined Contribution (NDC), India set a renewable installed capacity target of 450GW, which was recently increased to 500GW by Indian prime minister Narendra Modi in November 2021. Modi had launched India’s Green Hydrogen Mission on August 15 2021, India’s 75th Independence Day. Subsequently, in February, the Union government announced its policy for green hydrogen and green ammonia production, with an intent to produce 5mn t/yr of green hydrogen by 2030, and a vision to make India a regional hub for hydrogen.

Hydrogen demand in India is roughly 6.9mn t/yr, with refineries accounting for around 53pc of the demand and fertiliser plants making up around 44pc. The government plans to double hydrogen consumption to 12mn t/yr by 2030 and 28mn t/yr by 2050, with refineries and fertiliser plants continuing to be the largest consumers. By 2030, India’s 5mn t/yr target for green hydrogen, or about 40pc of 2030’s target of 12mn t/yr, could bolster the country’s geopolitical clout and improve its energy security.

Government incentives for green hydrogen production

Under the National Green Hydrogen/Green Ammonia policy, interstate transmission costs on renewable power have been waived for 25 years. Furthermore, green hydrogen and green ammonia plants will be granted open access to renewable energy within 15 days of receiving completed applications.

The policy allows green hydrogen/ammonia manufacturers to purchase renewable power from the power exchange or set up their own renewable energy capacity.

As per the policy, green hydrogen/ammonia manufacturers can also bank their unconsumed renewable power for up to 30 days with the distribution company, and take it back when required.

In terms of storage, manufacturers of green hydrogen/green ammonia will be allowed to set up bunkers near ports for the storage of green ammonia for export or shipping use. The port authorities will provide land for the storage of green ammonia at applicable charges.

Government push and regulations for green hydrogen usage

A plan is underway to bring green hydrogen under the Renewable Purchase Obligation (RPO), wherein bulk buyers, such as distribution companies and captive customers, must buy a certain proportion of renewable energy (RE) out of their total power consumption.

Hydrogen purchase obligations (HPOs) for industries like oil refineries and fertilizer plants, which use grey hydrogen, are also planned from 2023 as part of government efforts to create green hydrogen demand. Additionally, the government plans to blend 15pc of green hydrogen with natural gas for city gas distribution.

To make hydrogen-powered vehicles a reality on India’s roads, the Ministry of Road Transport and Highway issued a notification in September 2016 to promote hydrogen-fuelled vehicles in the country. In September 2020, subsequent notifications have been issued on safety norms of hydrogen fuel cell vehicles and their components along with the specifications for an 18pc blend of hydrogen with compressed natural gas (CNG) or hydrogen CNG (H-CNG).

Current applications for hydrogen in India

1. Hydrogen in Refineries

Policies such as BS-VI standards, which require lower amounts of sulphur in transportation fuels, are increasing the demand for hydrogen in this sector. Indian domestic crude oil is predominantly light and sweet, with a specific gravity between 32 and 38 API and a sulphur content of less than 0.5pc. But this only accounts for about 20pc of the total supply of crude oil. India is heavily dependent on crude oil imports, with import dependency hovering at around 80pc. Crude oil from the Middle East region tends to be high in sulphur, so the demand for hydrogen in refineries to produce refined products will continue to be a key driver going forward. The hydrogen demand of the refining sector would be at around 2.62mn t/yr in 2030, according to Argus estimates.

Hydrogen demand (mn t/yr)

Fig 1: Demand for hydrogen from India’s refineries

2. Hydrogen for Ammonia Production

The fertilizer industry in India currently consumes large quantities of fossil fuels, especially natural gas. It is used to produce ammonia, which is the main nitrogen-based feed intermediate for all nitrogen fertilizers. India is the largest importer of ammonia in the world with the majority of it coming from Saudi Arabia and Qatar. India’s annual ammonia consumption for fertiliser production is about 15mn t, and roughly 15pc of this demand,over 2mn t/yr, is currently met from imports, according to government statistics. The gross domestic ammonia production of 15mn t/yr implies a demand of 2.6mn t/yr of hydrogen in 2020. A mandate of implementing a 1pc share of green ammonia is likely to save 0.4mn standard cubic feet/d of natural gas imports in India. 

3. Hydrogen for Methanol Production

India consumed around 2.2mn t/yr of methanol in 2020, importing around 1.9mn t/yr to make up for the shortfall. The bulk of these imports are from the Middle East given its proximity to India, the low cost of freight to transport methanol, which is a liquid, and the low cost of natural gas there. But the usage of hydrogen in methanol production would create demand only in the scenario of a government mandate. Demand is slated to ramp up quickly, reaching 3.9mn t/yr in 2030, with an implied growth rate of 6pc/yr. Imports are expected to keep rising to meet this need. With the abundance of low-cost natural gas from Middle East, the Indian government is aware of the country’s import dependence growing in the coming years. Recently, the Indian Oil Corp (IOC) rolled out M15 petrol — a 15pc blend of methanol with petrol — on a pilot basis in Assam's Tinsukia district. More of such initiatives and mandates could pave the way for the utilisation of green hydrogen in methanol production in India.

4. Hydrogen blending in City Gas Distribution

City gas distribution projects in Indore and Gujarat have been experimenting with blending hydrogen with natural gas. Indian state-controlled utility NTPC has taken up an initiative of blending green hydrogen in Gujarat Gas’ piped natural gas (PNG) network at NTPC Kawas. Similarly, grey hydrogen blending with natural gas has been implemented by Avantika Gas, a joint venture between state-controlled gas distributor Gail and state-controlled refiner HPCL. A 10kg/day pilot-scale plant for producing green hydrogen and blending it with natural gas has been set up by state-owned Oil India in Jorhat, Assam. The plant uses a 100kW anion exchange membrane (AEM) electrolyser network to produce green hydrogen from electricity generated by an existing 500 kW solar power plant.

5. Hydrogen Fuel Cell Developments

India’s biggest private-sector oil firm Reliance Industries (RIL) is investing around $10bn to build four giga-factories — an integrated solar photovoltaic module factory, an energy storage battery plant, an electrolyser factory to produce green hydrogen and a fuel cell plant — over the next three years. 

India’s first green hydrogen microgrid has been established by NTPC in Andhra Pradesh on India’s east coast. This project is seen as the first step in developing large-scale hydrogen projects and establishing microgrids in strategic remote locations in India. NTPC is also developing one such green hydrogen microgrid in a village in Ladakh, which has around 500 households, to produce green hydrogen using solar power and store it in fuel cells for night-time usage.

Indian Railways will open bidding for a hydrogen fuel-cell powered train through its renewable branch. The project will start with the 89 km long Sonipat-Jind section of the Northern Railway.

Potential areas and future directions for green hydrogen in India

Even though India has made some progress on the hydrogen front, it would need to address key challenges to make green hydrogen an affordable reality.

India could explore ways to reduce the cost of green hydrogen production. In this regard, India could look towards fostering collaboration with nations that are ahead in terms of green hydrogen production technology.

Hydrogen could also play a critical role in long-haul vehicles in India. Although the current scale has yet to be commercialized, there are already six fuel cell buses, 50 H-CNG buses, and two hydrogen-fuelled internal combustion engine buses in the Delhi region. The results of these trials could pave a way for identifying the cost of ownership, performance, and infrastructure requirements for hydrogen-powered long-haul vehicles. 

There is also a growing need to focus on hydrogen storage and distribution infrastructure to ensure a predictable supply. The low energy density of hydrogen makes its storage and transportation complicated and expensive. For this reason, research on the possibility of converting hydrogen into ammonia, synthetic methane, and liquid fuels is gaining momentum. On the global front, the Helios project in Neom Saudi Arabia, is implementing Danish technology firm Haldor Topsoe’s technology to convert hydrogen to green ammonia. Similarly, Japanese gas utility Osaka Gas,through its Australian subsidiary, had recently carried out a joint methanation study with Australian energy firm Atco for producing synthetic methane from carbon dioxide and green hydrogen.

Another potential opportunity for India could be exploring biomass-based green hydrogen production. The government has already included biomass-based hydrogen under the definition of green hydrogen, according to the latest green hydrogen policy.

In alignment prime minister Modi’s vision of turning India into a hydrogen hub, India could also look towards exporting its surplus hydrogen to other countries. India could produce low-cost green hydrogen, as cheaper renewable electricity can be produced as a result of the lower cost of land and abundant solar radiance in parts of the country. This move could position India as a sustainable energy supplying nation in the global context and turn India into a hydrogen hub.


Hydrogen holds potential for India and its goals of decarbonisation. It could play a vital role in supporting renewable energy and also help to decarbonise hard-to-abate sectors. The government and the industry have already taken their first steps toward building a hydrogen economy. The most pressing need is to sustain the momentum through coordinated action going into the future. 

There is a need to create synergies on the supply side, with greater focus on investment and commitments by the government and the industry, as well as demand side support through guaranteed markets and subsidy schemes promoting the adoption of hydrogen.

Argus’ consulting team is well-placed to research and advise on the possibility of extending hydrogen use. Argus Consulting has conducted a feasibility study on hydrogen imports and downstream applications for a southeast Asian country subscribers:
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