India is positioning itself as a leader in hydrogen energy, with significant initiatives aimed at reducing greenhouse gas emissions and promoting sustainable transport. The National Hydrogen Mission (NHM), launched in January 2023, sets an ambitious target of producing 5 million metric tonnes of green hydrogen annually by 2030. This initiative is expected to cut annual greenhouse gas emissions by 50 million tonnes and create over 600,000 jobs in the process. The government has set an investment target of ₹8 lakh crore (approximately US$ 95.9 billion) to support this transition. [19f9bce1]
Kerala is at the forefront of this movement, spearheading hydrogen mobility solutions. The state has seen its emissions reach 17.2 million tons of CO₂ equivalent in 2021, with the transportation sector contributing significantly to this total. The Kerala Green Hydrogen Valley project aims to establish a complete hydrogen value chain, with the Kerala State Road Transport Corporation (KSRTC) leading efforts to introduce hydrogen buses and the Kochi Water Metro project planning for hydrogen-powered boats. [46b2f3e8]
Despite these advancements, challenges remain. High production costs and the need for infrastructure development are significant hurdles. Each hydrogen refueling station is estimated to cost around $2 million, and the technology for producing green hydrogen via electrolyzers is still developing. The NHM is structured in phases, focusing on demand creation from 2022 to 2026, followed by efforts to achieve cost parity from 2026 to 2030. [19f9bce1]
In the global context, skepticism about green hydrogen persists. A recent analysis by BloombergNEF indicates that green hydrogen prices are currently high, ranging from $3.74 to $11.70 per kilogram, with long-term estimates suggesting costs could drop to between $1.60 and $5.09 by 2050. The report highlights the challenges faced by advocates of green hydrogen, particularly in light of past failures, such as the hydrogen-powered transportation initiatives during the 2020 Tokyo Olympics. [8e8916db]
While Texas is projected to produce the cheapest green hydrogen, with costs expected to fall from $7.22 to $4.82 per kilogram by 2030, analysts express doubt about achieving the ambitious $1 per kilogram target set by the Biden administration by 2031. The high energy requirements for hydrogen production and the need for substantial investment in renewable energy are critical factors that could hinder the widespread adoption of hydrogen technologies. [8e8916db]
In the United States, the Biden administration has recently relaxed stringent rules on a tax credit for hydrogen production, aimed at boosting domestic manufacturing. The tax credit, part of Biden's climate law, now includes provisions for existing nuclear power plants and hydrogen produced from natural gas with carbon capture. This credit can provide up to $3 per kilogram for production, which is essential for reducing carbon emissions in industries like steel and cement. Companies such as Constellation Energy and Plug Power have lobbied for these changes, and John Podesta, senior climate adviser, stated that the revisions provide necessary certainty for hydrogen producers. However, the US Chamber of Commerce has expressed concerns that the rules may still leave projects in limbo, while environmental groups have had mixed reactions, praising some changes while criticizing loopholes for polluting hydrogen production. [41811ab4]
On January 4, 2025, the U.S. Department of the Treasury issued final guidance for the Section 45V Hydrogen Production Tax Credit (PTC), part of the 2022 Inflation Reduction Act (IRA). This guidance is seen as an important step to bolster the U.S. hydrogen market while reducing emissions. The credit offers up to $3 per kilogram of clean hydrogen produced, a significant subsidy from the IRA. The final rules include key safeguards but also introduce flexibilities that may compromise emissions accounting. The 'three pillars' approach requires hydrogen producers to match operations with clean energy generation, but the hourly matching requirement is delayed until 2030. Initial reactions from environmental groups and industry experts are cautiously optimistic, with some praising the compromise while others express concerns about complexity and potential legal challenges. The California governor's office supports the final rules, which are seen as crucial for investment in clean hydrogen projects, including a $12.6 billion hub in California. [4c789b07]
California U.S. Senator Alex Padilla has applauded these new Treasury rules, emphasizing their potential to enhance the economic viability and environmental goals of hydrogen production. The revisions include exemptions for states with renewable power mandates and flexible timing for renewable energy use, which are expected to expedite efforts to replace diesel and natural gas. The ARCHES hydrogen hub in California aims to establish a clean hydrogen market by 2030, creating 220,000 jobs and significantly increasing hydrogen use across industries, aligning with California's roadmap to carbon neutrality by 2045. [f4789390]
As the U.S. hydrogen industry looks ahead, analysts suggest that under a potential second term for Donald Trump, the focus may shift towards natural gas and carbon capture technologies. Billions in investments that stalled in 2024 due to pending Biden administration tax credit rules for green hydrogen could pivot towards blue hydrogen production, with projections indicating a rise in blue hydrogen capacity from 78,000 tons at the end of 2024 to 377,000 tons by the end of 2025. This shift reflects broader challenges within the global hydrogen sector, including project cancellations and sluggish demand. [7398b590]
India's efforts in hydrogen energy could serve as a model for other regions looking to transition to sustainable transport solutions. The establishment of strategic public-private partnerships and international collaborations will be essential for overcoming the challenges and realizing the full potential of hydrogen as a clean energy source. [19f9bce1]