TERI releases a roadmap for India’s green hydrogen mission

News, Nov 9, 2024

Green Hydrogen – Path to Decarbonization, a comprehensive policy brief released by The Energy and Resources Institute (TERI), provides a step-by-step plan to strengthen India’s green hydrogen mission and complement its objectives for carbon neutrality. TERI’s report examines the various opportunities and challenges in creating a sustainable green hydrogen ecosystem in India, with a focus on innovation, competitive procurement, and government-backed initiatives.

TERI makes the important observation that, despite its potential to be a key component of India’s decarbonization initiatives, green hydrogen is still more expensive than traditional fossil fuels. According to the report, green hydrogen is much more expensive than the fossil fuel it seeks to replace, but early pilot projects can help stimulate demand in downstream sectors. Market demand has been stymied by this high cost, but TERI contends that targeted pilot projects and competitive procurement could bridge the demand and cost gap, enabling India in becoming the global leader for the production of green hydrogen.

Focusing on innovation and competitive production

The policy brief from TERI highlights how crucial it is to establish a competitive India’s green hydrogen market is fueled by innovation and cost-cutting measures like competitive procurement. Citing India’s solar industry experience, where organized bidding procedures contributed to the creation ofone of TERI, which has the lowest solar prices in the world, sees green hydrogen taking a similar route. In order to manage the competitive procurement of green hydrogen and assist new pilot projects, the suggested strategy entails creating a Special Purpose Vehicle (SPV) based on the Solar Energy Corporation of India (SECI).

A market mechanism can ensure cost efficiency by bringing in private sector innovation and reducing risks for early investors, the report emphasizes, highlighting the importance of beginning with small-scale projects. A system like this could progressively lower costs, making green hydrogen a viable substitute for fossil fuels in a number of industries, according to TERI.

Utilizing green hydrogen pilots to decarbonize important industries

The report suggests the establishment of SPVs devoted to particular industries, such as shipping, heavy-duty transportation, fertilizers, and iron and steel, where green hydrogen could take the place of conventional carbon-intensive processes. For example, TERI recommends building a pilot greenfield plant to produce carbon-free steel in the energy-intensive and highly polluting iron and steel sector. In addition to putting India at the forefront of green steel technology, the report claims that this project, which is backed by government-backed SPVs, could draw investment by lowering project risk through guaranteed purchase agreements.

In order to reduce investment risk and pave the way for larger green fertilizer projects, the report suggests a guaranteed supply of green hydrogen at a competitive rate.

Another industry where TERI sees potential for green hydrogen is heavy-duty trucks, which need long-range fuel solutions that are not feasible with current battery technology. According to the policy brief, fleets of trucks that run on hydrogen would be served by subsidized green hydrogen filling stations along a few high-traffic routes as pilot projects. According to the report, this dual strategy of promoting trucks and hydrogen infrastructure together would be key to ensuring pilot projects reach critical mass.

Leading the way in carbon-free transportation through green shipping and power generation

TERI advises the use of green ammonia, a byproduct of green hydrogen, as a sustainable alternative fuel in the shipping industry, especially for coastal shipping and tourism. Kerala and other states are at The report, which is at the forefront of eco-tourism, imagines a time when all travel vessels are powered by green ammonia and emit no carbon.

Green ammonia and green hydrogen have the potential to be utilized in power generation to counteract seasonal spikes in electricity demand. TERI promotes the use of green fuels to meet the long-term decarbonization needs in the power sector, even though technologies like pumped storage and battery energy storage provide temporary fixes.

Funding and policy assistance: Establishing a framework for environmentally friendly production that is ready for export

TERI suggests creating a Development Finance Institution (DFI) with the specific goal of offering long-term, low-interest credit for green hydrogen-based production facilities in order to support these ambitious projects. According to TERI’s report, this DFI may be essential to fulfilling the strict CBAM (Carbon Border Adjustment Mechanism) requirements set forth by the EU, which mandate that imported goods adhere to particular carbon standards.

India could increase exports and meet its carbon reduction targets by using this financing mechanism to access new markets for eco-friendly goods. According to TERI, exporting environmentally friendly goods that satisfy international standards could improve India’s trade balance and establish the nation as a leader in green manufacturing worldwide.

Obstacles and the future: Getting rid of subsidies

TERI emphasizes the significance of shifting toward self-sustaining models even though it admits that subsidies might be required to launch the green hydrogen market. The brief emphasizes that depending solely on government direct subsidies might not be viable in the long run. TERI advises cutting back on funding for subsidies and looking into alternative options, like lower GST rates on green hydrogen and associated infrastructure.

Additionally, the report recommends that these projects be scaled up gradually after the initial cost discovery is finished. Transforming the entire production system to carbon-free capacities should be the long-term goal, but this can only occur once costs are competitive, TERI says. The government’s ability to strike a balance between market and consumer readiness and the higher costs of green products will determine when scaling up will take place.

Linking subsidies with GST reductions rather than direct payments is one of the brief’s novel recommendations. The government can promote adoption without having a significant financial impact by reducing the GST rates on hydrogen fuel and green hydrogen trucks, according to TERI.

Using green hydrogen to achieve carbon neutrality for India’s future

TERI’s policy brief provides a practical strategy for the adoption of green hydrogen as India works toward its ambitious goal of achieving net-zero carbon emissions by 2070. It proposes a strategic financing mechanism to support pilot projects and industrial scaling, offers a competitive procurement model to make green hydrogen affordable, and lays out doable steps to decarbonize high-emission industries.

The report also mentions India’s history of producing solar energy, hinting at the country’s potential to lead the way in green hydrogen technology. According to the report, India has the potential to develop price-effective green hydrogen production, driven by solar power and a competitive market structure, could be transformative.

The policy brief from TERI emphasizes the necessity of a methodical strategy supported by sector-specific pilot projects, creative funding, and strategic alliances in order to establish a green hydrogen market in India. If properly implemented, the brief’s vision could serve as the cornerstone for India’s shift to a low-carbon economy, supporting both the country’s domestic decarbonization objectives and its ambitions to lead the world in sustainable manufacturing.