India Unveils Hydrogen Plan to Speed Shift From Fossil Fuels

Government to give interstate tranmission charges waiver for 25 years to green hydrogen and green ammonia producers.

India Unveils Hydrogen Plan to Speed Shift From Fossil Fuels
A chemical symbol on a hydrogen powered bus at a green hydrogen refinery. (Photographer: Alex Kraus/Bloomberg)

India unveiled its hydrogen roadmap, offering incentives for investors to produce the fuel at low costs and help the nation shift away from its reliance on fossil fuels.

The first part of the plan announced Thursday offers free transmission of renewable electricity from one state to the other for the production of hydrogen and ammonia, helping drive down costs for an industry that’s already winning support from billionaires like Mukesh Ambani and Gautam Adani.

The government is considering offering subsidies and obliging oil refineries and fertilizer plants to use the fuel in the second phase, which is still being prepared, Power Minister Raj Kumar Singh said Wednesday.

Green hydrogen, made from water and renewable electricity, will likely play a major role in cutting emissions globally, offering a route to decarbonization for heavy industries like steel and cement. Prime Minister Narendra Modi’s government aims to make India -- one of the largest importers of oil and coal -- a global hub for production and export of hydrogen, even though the fuel is still a long way from being commercially viable. 

“The mission aims to aid the government in meeting its climate targets and making India a green hydrogen hub,” the power ministry said in a statement. It will also help meet a target of producing 5 million tons of green hydrogen by 2030, it said.

In addition to free inter-state transmission for 25 years for projects set up before the middle of 2025, the government will help producers tap the networks of provincial utilities in a non-discriminatory way. It will also facilitate the banking of clean electricity with state distributors for 30 days, a system under which clean power producers can store surplus output with another utility to be used later, the statement said. 

Manufacturers of green hydrogen and ammonia will also be allowed to set up bunkers near ports for storage for exports, it said.

Policy support such as being undertaken by India is critical to bring down prices and help spur adoption of hydrogen. The strategy may catapult India, the world’s third-biggest emitter of greenhouse gases, into an international leader in the development of the fuel, according to BloombergNEF. Finance Minister Nirmala Sitharaman said this month the government plans to sell sovereign green bonds to help finance some projects. 

“The implementation of this policy will provide clean fuel to the common people of the country,” the ministry said. “This will reduce dependence on fossil fuel and also reduce crude oil imports.” 

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