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India aims to revolutionise its energy landscape by producing 5 million tonnes of green hydrogen annually from 2030 onwards. This ambitious pursuit aligns with India’s domestic consumption figures, with a further aspiration to scale production to an impressive 10 million tonnes.
This goal carries a keen focus on penetrating global markets, notably setting its sights on the European domain. However, within this ambitious endeavour, many challenges arises, compelling a deeper exploration of the road ahead.
As this journey unfolds, it becomes apparent that companies venturing into green hydrogen production in India are stepping into a dual realm—the domestic and the international markets. While both horizons offer immense promise, they simultaneously present distinctive obstacles, demanding astute navigation for sustained triumph.
Navigating domestic terrain
In the domestic space, the initial challenge of cost comes to the fore. The economic feasibility of green hydrogen warrants meticulous scrutiny. As renewable energy costs experience gradual fluctuations, the affordability of green hydrogen encounters a hurdle. The ever-shifting dynamics of renewable energy rates cast a shadow over the potential cost reduction of green hydrogen.
Moreover, the question of demand emerges as a central concern. The concept of a ‘green hydrogen purchase obligation,’ mirroring the established ‘renewable purchase obligation,’ gains traction. However, this notion faces uncertainties due to governmental reassessment and prevailing confidence in natural gas prices. Industry experts advocate for proactive demand generation mechanisms to anchor the market.
Read more: India notifies standard for green hydrogen
Exploring global perspectives
On the international stage, Indian green hydrogen producers confront a distinctive set of challenges. The United States, fortified by the Inflation Reduction Act, extends tax breaks tied to local value augmentation. In Europe, the divergence in emission standards adds another layer of complexity. While India adheres to stringent environmental thresholds, the European Union’s more lenient standards present a paradox—offering an advantage in certain contexts, while complicating market entry in others.
The crucial ‘green hydrogen purchase obligation
The path forward demands action—the implementation of a ‘green hydrogen purchase obligation.’ This could inject market stability, stimulating demand and fostering market evolution. Yet, the government’s hesitancy to embrace this strategy casts an air of uncertainty.
As India’s green hydrogen journey unfold, a landscape emerges—complex, challenging, yet filled with potential solutions.
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