Govt Plans $2-Billion Incentive For Green Hydrogen Industry: Report

The Rs 18,000 crore ($2.2 billion) incentive aims to reduce the production cost of green hydrogen by a fifth over the next five years

The government is planning a $2 billion incentive programme for the green hydrogen industry in a bid to cut emissions and become a major export player in the field, quoting some sources Reuters reported on Tuesday.

According to sources privy to the development, the Rs 18,000 crore ($2.2 billion) incentive aims to reduce the production cost of green hydrogen by a fifth over the next five years. It would do this in part by increasing the scale of the industry, the sources said. The current cost in India is Rs 300 rupees to Rs 400 per kg.

The US and the European Union have already approved incentives worth billions of dollars for green hydrogen projects.

Hydrogen can be used as a fuel. It is made by splitting water with an electrical process, electrolysis. If the devices that do that, electrolysers, are powered by renewable energy, the product is called green hydrogen, a fuel free of greenhouse emissions.

The aid could be announced in the February 1 Union Budget for the fiscal year beginning April 1, said the government official. The ministries of renewable energy and finance did not respond to queries sent by Reuters.

Companies such as Reliance Industries, Indian Oil, NTPC, Adani Enterprises, JSW Energy and Acme Solar have big plans on green hydrogen.

Adani, led by the world's third-richest person, Gautam Adani, said in June that it and France's TotalEnergies would jointly create the "world's largest green hydrogen ecosystem".

The government expects industry to invest Rs 8 lakh crore in green hydrogen and its derivative green ammonia by 2030, said the industry manager and another government official. Green ammonia is made by combining nitrogen with hydrogen using renewable energy sources; it can be used by the fertiliser industry or as a fuel or convenient means of transporting hydrogen.

The green hydrogen proposal is likely to be called "Strategic Intervention for Green Hydrogen Transition (SIGHT)" and will be split into Rs 4,500 crore for electrolyser manufacturing for five years and the Rs 13,500 crore for green hydrogen and green ammonia production for three years, the manager and second official said. The incentive for making green hydrogen is likely to be Rs 50 per kg for three years, the sources added.

India aims to sell 70 per cent of the production to countries such as South Korea, Japan, and in the European Union, an industry official said, adding that derivatives, including green ammonia, had an equally strong demand.