India unveils green hydrogen targets in bid to become export hub

India unveils green hydrogen targets in bid to become export hub
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Updated 18 February 2022

India unveils green hydrogen targets in bid to become export hub

India unveils green hydrogen targets in bid to become export hub

India plans to produce 5 million tonnes of green hydrogen a year by 2030 as it seeks to exploit low renewable energy costs to become a global exporter of the sustainable fuel.

The target was announced by India’s power ministry on Thursday as it revealed the first part of its national hydrogen policy.

Green hydrogen is produced by splitting water with electrolysers powered by renewable energy. It is the most sustainable way to produce hydrogen with almost no emissions.

Saudi Arabia is planning the world’s biggest green hydrogen project at Neom, the futuristic city being built on the Kingdom’s Red Sea coast with production slated to begin in 2026.

Both Saudi Arabia and India have big plans for production of blue hydrogen, created using fossil fuels with the carbon captured to be stored or used.

Last week, Mukesh Ambani, the billionaire chairman of Reliance Industries, said he is planning to invest $75 billion in renewable energy infrastructure, including solar panels and electrolysers for producing green hydrogen.

It has been speculated that Ambani will convert the entire output of the renewable energy into hydrogen so as to avoid selling into India’s wholesale power market, which is controlled by financially fragile utilities that are notorious for late payments.

“Reliance is preparing itself to capture the entire value chain of the green hydrogen economy,” Gagan Sidhu, director at the Centre for Energy Finance at New Delhi-based think tank CEEW, told Bloomberg. “They clearly have seen the writing on the wall.”

Less than a week later, Reliance announced plans to become one of the world’s biggest producers of blue hydrogen. However, rather than natural gas, Reliance will be making its blue hydrogen with petroleum coke, an oil refinery by-product that contains more carbon dioxide than coal.

With so many countries vying for leadership of the clean hydrogen space, it is heating up to be a highly competitive market. India is the 27th country to have announced a hydrogen strategy, a figure that doubled last year as the clean fuel’s potential to drive decarbonization across multiple industries became clearer.

In the Middle East, Abu Dhabi is aiming for a 25 percent share of the market by 2030, while Oman, Morocco and Egypt are also aggressively pursuing the clean hydrogen market. Outside the region, Russia is targeting 20 percent of the hydrogen market by 2030.

Because hydrogen can be produced by any country with an electrolyser and renewable energy resources, it is unclear yet how big the market for transporting the fuel between countries is going to be. 

However, the winner is likely to be the nation with the lowest renewable energy costs, the scale to produce enough hydrogen at a competitive price and a strategic location close to major consuming markets. On all three of those measures, Saudi Arabia looks a strong contender.