India is planning a $2 billion incentive package for the green hydrogen industry, three sources told Reuters, with the aim of reducing emissions and becoming a major export player in this field.

The ₹180 billion ($2.2 billion) incentive aims to reduce the cost of producing green hydrogen by a fifth over the next five years, a senior government official and a industry working in renewable energy. It would do this in part by increasing the scale of the industry, they said.

The current cost in India is ₹300-400 per kg, the official said. The United States and the European Union have already approved incentives worth billions of dollars for green hydrogen projects.

Hydrogen can be used as fuel. It is made by dividing water by an electrical process, electrolysis. If the devices that do this – the electrolyzers – are powered by renewable energy, the product is called green hydrogen, a fuel without greenhouse gas emissions.

Indian aid could be announced in the February 1 budget for the fiscal year starting April 1, the government official said. All sources declined to be named to discuss a budget proposal.

The ministries of renewable energy and finance did not respond to questions sent by Reuters.

Indian companies such as Reliance Industries, Indian Oil, NTPC, Adani Enterprises, JSW Energy and Acme Solar have big green hydrogen plans.

Adani, led by the world’s third-richest person, Gautam Adani, said in June that it would jointly create with France’s TotalEnergies “the largest green hydrogen ecosystem in the world”.

Green ammonia too

The Indian government expects the industry to invest ₹8 trillion in green hydrogen and its derived green ammonia by 2030, the industry official and another government official said. Green ammonia is made by combining nitrogen with hydrogen using renewable energy sources. it can be used by the fertilizer industry or as a fuel or convenient means of transporting hydrogen.

The green hydrogen proposal will likely be called “Strategic Intervention for Green Hydrogen Transition (SIGHT)” and will be divided into ₹45 billion for the manufacture of electrolysers for five years and the ₹135 billion for the production of green hydrogen and green ammonia for three years, said the director and the second official.

The incentive to make green hydrogen should be ₹50 per kg for three years, they said.

India aims to sell 70% of production to countries like South Korea, Japan and the European Union, an industry official said, adding that derivatives including green ammonia had equally strong demand.

The government estimates that global demand for green hydrogen will exceed 100 million tonnes by 2030, up from just under 75 million tonnes currently, according to other industry sources.

In February, the government announced plans for India to produce 5 million tonnes of green hydrogen per year by 2030, a figure which the top government official said could be doubled, depending on international demand. .

The government also expects the country to reach an electrolyser manufacturing capacity of 15 gigawatts in phases by 2030. This would be nearly 10 times the current global capacity.

The American company Ohmium International has commissioned India’s first green hydrogen plant in Bangalore. Reliance Industries, Larsen & Toubro, Greenko and H2e Power last year announced plans to build gigawatt-scale plants.

Indian oil refineries, fertilizer and steel plants use 5 million tons of hydrogen made from natural gas, called gray hydrogen, every year. The process produces carbon dioxide.

Rising gas prices pushed India’s gray price of hydrogen to around ₹200 per kg from ₹130 a year ago.