Around the world, policy makers and scientists agree that the long-term solution to environmental degradation and the climate crisis lies in scaling up renewable energy and launching eco-friendly projects such as green hydrogen, green ammonia, and green methanol. These initiatives are seen as vital in reducing harmful emissions of carbon dioxide, sulphur dioxide, and nitrous oxide by moving away from fossil fuels. On paper, the idea is flawless. In practice, however, the future of these projects is clouded with uncertainties.
Pilot projects in many countries, including India, are already underway to test the commercial viability of green hydrogen. The promise of hydrogen is well known. Grey hydrogen—produced from natural gas and crude oil—and brown hydrogen—produced from coal—dominate the market today. Green hydrogen, produced through water electrolysis using renewable energy, offers the potential to cut emissions drastically and fuel transportation, power, and chemical industries. Yet the technology and cost barriers remain formidable.
Electrolyser technology is the critical bottleneck. Alkaline water electrolysers, proton exchange membrane electrolysers, solid oxide electrolysers, and emerging anion exchange membrane technologies each bring different advantages and challenges. Research is also ongoing in microbial electrolytic cells. India has made some progress, such as the Jawaharlal Nehru Centre for Advanced Scientific Research designing nickel-graphite electrodes comparable to platinum. But scaling these innovations is another matter.
India has announced several projects in recent years. GAIL, Indian Oil Corporation, NTPC, and Gujarat Industries Power Company are experimenting with electrolyser-based projects. Reliance Industries has committed Rs. 75,000 crore to green technologies, while Adani and TotalEnergies have pledged US$50 billion over a decade. A pilot project at VOC Port in Thoothukudi recently began producing green hydrogen. Indian Railways has also completed tests on a hydrogen-powered train. All these announcements indicate intent. But the commercial math does not add up.
Production costs expose the gap. While grey hydrogen in India costs about Rs. 150–200 per kg, green hydrogen currently costs Rs. 350–450 per kg. Reliance claims it can reduce the cost to under USD 1 per kg by 2030, but that remains an ambitious target. As long as green hydrogen costs remain two to three times higher than grey hydrogen, industries will hesitate to switch.
The challenges cascade into green ammonia and green methanol projects. Producing one tonne of ammonia requires about 0.824 tonne of hydrogen; one tonne of methanol requires about 200 kg. Since hydrogen accounts for most of the production cost, the price disadvantage of green hydrogen makes green ammonia and methanol economically unviable. India is already a large importer of both products, and domestic green projects cannot compete with cheaper imports produced using grey hydrogen abroad.
The renewable energy requirement compounds the problem. Producing one tonne of green hydrogen requires 50–55 MWh of electricity. India’s renewable capacity is growing, but average utilisation is only 20%. Even if India achieves its target of 500 GW renewable capacity by 2030, effective output may only be around 100 GW—insufficient to power ambitious green hydrogen projects without falling back on fossil-based electricity, which would defeat the purpose.
The government launched the National Green Hydrogen Mission in January 2023 with a ₹19,744 crore outlay and a target of 5 million tonnes per year by 2030. Incentives such as single-window clearance have been announced. Yet investors remain cautious, and projects have been slow to move from paper to implementation. Without breakthroughs in reducing costs, subsidies and incentives alone will not sustain the sector.
The prognosis is clear. India should proceed cautiously. Setting up large-scale green ammonia and green methanol projects before green hydrogen becomes cost-competitive is like putting the cart before the horse. Research, innovation, and pilot projects must continue, but expectations should remain realistic. The demand for green hydrogen is not in doubt. The real question is when and how the cost will fall enough to make eco-friendly green projects viable. Until then, enthusiasm must be tempered with pragmatism.
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*Trustee, Nandini Voice For The Deprived, Chennai
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