Green Hydrogen & Ammonia - COE Chakra

Green Hydrogen & Ammonia Sectoral Insights

India’s green hydrogen sector is undergoing a structural transition, shaped by its central role in achieving the 2070 net zero target and decarbonising hard-to-abate industries. Green hydrogen is positioned to close the 30–35% emissions gap that renewable energy and electrification alone cannot address. Current demand of around 10 MMT, almost entirely grey hydrogen, highlights the scale of transition required. By 2030, the National Green Hydrogen Mission aims for 5 MMT of domestic production, supported by incentives for both generation and electrolyser manufacturing.

Policy and regulatory interventions are building the foundation for scale. Direct production support, transmission charge waivers, and port-linked infrastructure allocation are strengthening project viability. State-level policies in Gujarat, Maharashtra, and Tamil Nadu are reinforcing this momentum by offering land, subsidies, and green power integration. Bilateral treaties with the EU, Japan, and Australia are also opening trade corridors for exports. India’s strict emission intensity norms, at ≤2 kg CO₂ per kg of hydrogen, are setting benchmarks for credibility in global markets.

Demand is diversifying across refining, fertilizers, city gas distribution, chemicals, and steel. Blending offers immediate low-barrier entry points, with offtake in refineries and non-urea fertilizers already under discussion. Exports of green ammonia, methanol, and embedded products such as green steel present significant near-term opportunities, especially to Europe and Asia where policy-driven imports are accelerating. Public procurement, particularly in steel for railways and infrastructure, is expected to play an anchoring role in early demand creation.

Domestic electrolyser production is scaling rapidly under the PLI scheme, with over 16 GW already announced by companies such as Adani, L&T, and Greenko. Alkaline systems are expected to dominate in the near term, supported by localised electrode manufacturing, while PEM and solid oxide systems remain limited by cost and material risks. India’s renewable energy advantage and manufacturing scale position it as a globally competitive hub.

Commercial viability remains dependent on cost reduction and financing innovation. Current production costs of USD 4.2–5 per kg is well above grey hydrogen, but parity is expected post-2030 as renewable power and electrolyser costs decline. Blended finance, offtake-linked contracts, and sovereign-backed guarantees are identified as critical enablers to close this gap. Global case studies in the US, EU, and Middle East highlight that early-stage projects achieve viability through long-term offtake agreements and subsidy-backed capital structures.

Challenges persist across infrastructure, storage, and transport. Limited domestic pilots in pipelines, ammonia conversion, and LOHCs underscore execution risks. Electrolyser supply chains are vulnerable to imported iridium, platinum, and nickel, raising concerns about cost stability. Broader risks include permitting delays, demand-side uncertainty, and integration challenges in fertilizer and steel value chains. These underscore the importance of coordinated policy support, industrial coalitions, and standardised certification frameworks.

India’s pathway is now defined by a combination of policy ambition, industrial demand creation, and cost leadership. A deep pipeline of announced projects, export-linked opportunities, and state-supported hubs is positioning the country as a credible participant in the global hydrogen economy. The opportunity lies in disciplined prioritisation of large-scale, low-cost, and offtake-secured developments that align financial viability with long-term sustainability goals.

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• Sectoral Insights Green Hydrogen Ammonia April 26  (2665 KB)