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Business News/ News / India/  India plans to reduce green hydrogen costs, seeks cheap finance
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India plans to reduce green hydrogen costs, seeks cheap finance

According to Niti Aayog CEO Amitabh Kant, India intends to reduce the cost of producing green hydrogen to $1 per kilogramme, down from $5-$6 today.

Green hydrogen will be used to decarbonize “hard-to-abate” sectors like refiners, fertiliser makers and steel producers, Niti Aayog CEO Amitabh Kant said.Premium
Green hydrogen will be used to decarbonize “hard-to-abate” sectors like refiners, fertiliser makers and steel producers, Niti Aayog CEO Amitabh Kant said.

India seeks to reduce the cost of producing green hydrogen to $1 per kilogramme from $5-$6 at present in order to encourage industry to utilise greener energy, Niti Aayog CEO Amitabh Kant said in an interview with Bloomberg Television. India also wants access to cheaper financing to help fund the transformation. 

In February, the world's third-largest carbon emitter unveiled a plan to become a centre for the production and export of green hydrogen, a fuel generated from water and renewable electricity, though the fuel is still far from commercial viability.

“Unless cheap finance is available to be able to rapidly enhance both renewable and non-renewable, this transition will be difficult to speed up for a long period of time," said Niti Aayog CEO Amitabh Kant. “Finances at low costs are critical."

In January, Mukesh Ambani - the chairman of Reliance Industries - announced intentions to invest $75 billion in renewable energy infrastructure, including power plants, solar panels, and electrolyzers. It's becoming increasingly likely that the idea incorporates converting all of that renewable energy into hydrogen, which would be one of the most significant endorsements for the next-generation fuel.

According to analysts, Reliance Industries is likely to choose hydrogen to sidestep India's wholesale energy market, which is controlled by financially distressed companies and plagued by late payments.

New Delhi wants global funders including the World Bank to structure guarantee programs to help access funds at low rates, Amitabh Kant said. Green hydrogen will be used to decarbonize “hard-to-abate" sectors like refiners, fertiliser makers and steel producers, he said.

India, one of the world's largest importers of fossil fuels, is also looking to reduce its dependency on oil, since its import bill is set to nearly treble to $300 billion in the next decade, according to Amitabh Kant.

Prime Minister Narendra Modi announced intentions in November to make India a net zero carbon emitter by 2070 and a 50 percent renewable energy consumer by the end of the decade, prompting policy changes.

It needs about $25 billion to create a domestic supply chain with national installed electrolyser capacity of 25 GW producing 5 MT of Green Hydrogen by 2030, according to the India Hydrogen Alliance, which counts Reliance Industries Ltd. and JSW Steel Ltd among members.

India will continue to focus on electrifying two and three-wheelers as well as public buses, Amitabh Kant said. The government will not push for electrification of four wheelers in the Indian market given private sector interest, he said.

As it is, the cost of electrifying transport is expected to fall after India’s recent tender for more than 5,000 electric buses got bids at prices cheaper than diesel and combustion buses, Amitabh Kant said.

(With agency inputs)

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Published: 06 Jun 2022, 01:41 PM IST
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