Budget 2024: Unlocking India’s Green Hydrogen Ambitions

The Indian government has been emphasizing the importance of clean energy and sustainability for over half a decade now. The concept of “Panchamrit” goals, which promotes non-fossil fuels, is critical to the country’s development and energy security. The Modi government has been working towards achieving these goals, and the upcoming Budget 2024 is expected to play a crucial role in propelling the green hydrogen sector.

Green hydrogen is considered the “fuel of the future” and has the potential to significantly reduce India’s carbon emissions and reliance on fossil fuels. A report by the World Economic Forum and Bain & Company titled “Green Hydrogen: Enabling Measures Roadmap for Adoption in India” highlights the benefits of widespread adoption of green hydrogen, including the creation of a green hydrogen ecosystem and potential energy export market.

The National Green Hydrogen Mission (NGHM) was approved in January 2023, with an aim to develop a green hydrogen production capacity of at least 5 million metric tonnes per annum by 2030. This ambitious initiative is projected to attract over Rs 8 lakh crore in total investments and create more than six lakh jobs. The initial outlay for the Mission was set at Rs 19,744 crore, with specific allocations for various components.

Industry experts believe that while progress has been made, considerable work still needs to be done in certain aspects. Anvesha Thakker, Partner and Industry Lead - Clean Energy, KPMG India, noted that standards, regulations, governance, and institutional strengthening are some of the areas that require attention. Vaibhav Kaushik, founder & CEO of Nawgati, praised projects like NTPC’s blending of green hydrogen with compressed natural gas (CNG) and the development of hydrogen fuel cell buses, which have demonstrated the feasibility of hydrogen applications in the transport sector.

The interim Budget for 2024-25 has significantly increased the allocation for the National Green Hydrogen Mission to Rs 600 crore, marking a 102 per cent rise from the previous year’s Rs 297 crore and a fivefold increase from the revised estimate of Rs 100 crore. The allocated budget will likely be used for providing financial incentives for green hydrogen production, electrolyser manufacturing, and research and development.

However, the production of green hydrogen requires water for the electrolysis process, underscoring the need for access to clean water as a resource. India needs to plan for water desalination plants to address the potential impacts and explore sustainable solutions.

Experts believe that the forthcoming Budget 2024 has vast potential to boost the hydrogen sector and fast-track things. Vaibhav Kaushik expects the budget to propose targeted measures such as grants and subsidies for hydrogen production and infrastructure, as well as tax breaks for indigenous green hydrogen projects. Anvesha Thakker expects the government to address and provide clarity on areas such as building an ecosystem and debottlenecking the demand side.

Charith Konda, energy specialist at Institute for Energy Economics and Financial Analysis (IEEFA), expects budget allocations towards electrolyser manufacturing, green hydrogen, and its derivatives like ammonia production, and finally, towards the development of green hydrogen hubs.

In conclusion, the Budget 2024 has the potential to propel India’s green hydrogen ambitions and fast-track the country’s transition to a low-carbon economy. It is essential to address the challenges and provide clarity on areas such as building an ecosystem, debottlenecking the demand side, and promoting the adoption of hydrogen fuel technologies among consumers and industries.

Historical Context:

The concept of “Panchamrit” goals, which emphasizes the use of non-fossil fuels, has been a key focus area for the Indian government since 2015. The Modi government has been working towards achieving these goals, and the National Green Hydrogen Mission (NGHM) was approved in January 2023. The NGHM aims to develop a green hydrogen production capacity of at least 5 million metric tonnes per annum by 2030, which is expected to attract over Rs 8 lakh crore in total investments and create more than six lakh jobs.

Summary in Bullet Points:

• The Indian government has been emphasizing the importance of clean energy and sustainability for over half a decade, with a focus on non-fossil fuels. • The National Green Hydrogen Mission (NGHM) was approved in January 2023, aiming to develop a green hydrogen production capacity of at least 5 million metric tonnes per annum by 2030. • The interim Budget for 2024-25 has increased the allocation for the NGHM to Rs 600 crore, a 102 per cent rise from the previous year’s Rs 297 crore and a fivefold increase from the revised estimate of Rs 100 crore. • The allocated budget will likely be used for providing financial incentives for green hydrogen production, electrolyser manufacturing, and research and development. • Experts believe that the forthcoming Budget 2024 has vast potential to boost the hydrogen sector and fast-track things, with proposals such as grants and subsidies for hydrogen production and infrastructure, tax breaks for indigenous green hydrogen projects, and budget allocations towards electrolyser manufacturing, green hydrogen, and its derivatives. • The production of green hydrogen requires water for the electrolysis process, underscoring the need for access to clean water as a resource, and India needs to plan for water desalination plants to address the potential impacts and explore sustainable solutions. • The Budget 2024 has the potential to propel India’s green hydrogen ambitions and fast-track the country’s transition to a low-carbon economy, but it is essential to address the challenges and provide clarity on areas such as building an ecosystem, debottlenecking the demand side, and promoting the adoption of hydrogen fuel technologies among consumers and industries.