India's trade body warns $80 bil investments at risk without renewable hydrogen demand measures

India's hydrogen industry trade body has proposed mandatory purchase obligations for refineries and ammonia plants to stimulate demand for renewable hydrogen production, warning billions in announced investments could be at risk without such measures.

The India Hydrogen Alliance (IH2A) proposed a 10% hydrogen purchase obligation on existing refineries and ammonia plants, and 100% on new plants through 2030, to help meet national renewable hydrogen goals, the group said May 8.

"Without hydrogen purchase obligations and demand support, the combined announced $80 billion hydrogen-related investments are at risk," IH2A's secretariat lead Amrit Singh Deo said. "Refineries and fertilizers should have a common hydrogen use and demand roadmap to aggregate demand and procure green hydrogen..."

The proposal aims to replace conventional hydrogen with renewable hydrogen as feedstock across 47 existing and planned refinery and ammonia plants in India, potentially creating demand for 1.5 million mt/year of renewable hydrogen for domestic use.

India launched the National Green Hydrogen Mission in 2023 with a target of producing 5 million mt/year of renewable hydrogen and a Rupees 197.44 billion ($2.37 billion) incentive directed mostly toward the production of renewable hydrogen, electrolyzers, and pilot projects.

Contract-for-difference framework

Once hydrogen purchase obligations are introduced, India could consider adopting a Japan-style contract-for-difference (CfD) framework to partially fund the renewable hydrogen transition in the refinery and ammonia sectors by 2030, Deo said.

IH2A estimates that an additional budget allocation of $2 billion for a CfD framework could support the transition of all existing refinery and fertilizer plants to the proposed level of renewable hydrogen consumption.

IH2A's membership includes major renewable hydrogen developers such as BP, Reliance Industries, Hero Future Energies, Torrent Power, and the JSW group.

Targeted demand creation

According to IH2A's proposal, implementing a 10% hydrogen purchase obligation across 39 existing domestic projects (17 refineries and 22 ammonia plants) would create demand for 672,000 mt of renewable hydrogen by 2030.

Additionally, mandating 100% renewable hydrogen use for eight new or expanded projects -- five refineries and three fertilizer plants -- would generate demand for another 849,000 mt by 2030.

Platts, part of S&P Global Commodity Insights, assessed UAE hydrogen produced via alkaline electrolysis (including capex) at $5.81/kg on May 8, unchanged from a month earlier.

It assessed Japanese hydrogen produced via alkaline electrolysis (including capex) at $3.92/kg on May 8, down 15.15% month over month.