India has Potential to Lead Global Green Hydrogen Market: Alvarez & Marsal Report

In a recent report by Alvarez & Marsal, authored by Santosh Kamath, Managing Director of Energy Transition, the potential for India to lead in the global green hydrogen market has been underscored. 

Titled 'Green Hydrogen: India’s Opportunity for a Strategic Shift in Global Energy Trade,' the report outlines a strategic roadmap for India to capitalize on the burgeoning demand for green hydrogen, a clean and sustainable alternative to traditional fossil fuels.

According to the report, hydrogen is projected to meet 10–20 percent of the world’s energy demand by 2050, making it a pivotal component in combating climate change. With temperatures rising and greenhouse gas emissions reaching alarming levels, the need for a transition to renewable energy sources has never been more urgent.

Currently, the majority of hydrogen production relies on fossil fuels, contributing to CO2 emissions. "Currently hydrogen is produced primarily using fossil fuels, predominantly natural gas. Natural gas-based hydrogen production takes place through a process called steam methane reforming (SMR). This process leads to 9–10 kilograms of CO2 emissions per kilogram of hydrogen produced. The hydrogen produced from the use of fossil fuels like natural gas is called grey hydrogen," the report said.

However, the shift towards low-carbon or green hydrogen, produced through the electrolysis of water using renewable electricity, presents a promising solution. Green hydrogen is expected to play a crucial role in decarbonizing hard-to-abate sectors such as steel, transportation, and manufacturing.

The report highlights India’s potential to become a key player in the global green hydrogen market, with significant opportunities for trade and economic growth. "Our analysis suggests that the UAE, India, and Saudi Arabia can provide low-carbon hydrogen at the lowest cost and are, therefore, expected to be competitively placed for supply to Europe, Japan and South Korea," the report said.

By supporting a large-scale green hydrogen program, India could capture a USD 3-5 billion annual trade opportunity by 2030, reduce natural gas import bills, and boost GDP growth.

To realize this potential, the Indian government has already initiated steps to establish a robust hydrogen ecosystem, including substantial financial support programs totaling INR 19,744 crore (USD 2.3 billion). These measures aim to create domestic demand, reduce production costs, and streamline regulatory processes.

Key policy recommendations outlined in the report focus on creating domestic demand, reducing production costs, and streamlining regulatory processes. These measures include:

Creation of firm demand: Targeting end-use sectors like refineries, fertilizers, steel, and heavy-duty transport to bridge viability gaps through financial support plans.

Reducing production costs: Implementing supply-side interventions such as de-risking projects through credible offtake guarantees, Contract for Differences (CfD) models, and tax reductions on equipment.

Decoupling renewable energy and hydrogen production: Introducing intermediary mechanisms to de-risk renewable energy transactions and reduce capital investment for hydrogen producers.

Streamlining processes: Simplifying regulatory processes to accelerate program rollout and incentivize early movers in the green hydrogen market.

Improving ease of doing business at the state level: Implementing favorable land allocation policies, ensuring timely grant of transmission connectivity, and facilitating state-level banking of energy.

Building long-term partnerships: Encouraging transparent and equitable partnerships between private suppliers and customers to lay the foundation for sustainable growth in the green hydrogen sector.

With India’s abundant renewable energy potential and strategic geographic position, the country is poised to emerge as a global leader in the green hydrogen revolution. By embracing this opportunity, India can not only mitigate climate change but also drive economic prosperity for years to come.