Green Hydrogen: A ~USD 125 billion decarbonization opportunity

The Indian government has launched significant production-linked incentives (PLIs) to accelerate the growth of the green hydrogen sector and strengthen local manufacturing capabilities. These incentives are designed to boost both the production of green hydrogen and the domestic manufacturing of electrolysers, which are critical for hydrogen production through water electrolysis. By providing financial support and performance-based rewards, the government aims to make India a global hub for green hydrogen, attract private investment, reduce reliance on imports, and drive the country’s transition toward a low-carbon energy ecosystem. This policy push is expected to create a robust supply chain, encourage technological innovation, and position India as a key player in the emerging global hydrogen economy.

Ammonia, the second-most produced chemical globally, is primarily used as a feedstock for fertilizers supporting food production for around 50% of the world’s population, as well as in textiles, refrigeration, explosives, pharmaceuticals, and emerging uses such as maritime fuel, power generation, and as a hydrogen carrier. Current production is largely fossil-fuel based, consuming ~1.8% of global energy, 20% of industrial gas, and 5% of industrial coal, and generating around 500 MT of CO₂ annually. Less than 1% of ammonia is currently produced from renewable sources, but by 2030, ~25% and by 2050, ~80% of production is expected to come from green ammonia. Green ammonia offers significant emissions reduction potential (70–95%) and can serve both domestic hydrogen needs and export markets, though reconversion to hydrogen reduces power-to-fuel efficiency by ~20%.

Hydrogen is an ultra-clean fuel with true zero emissions, making it ideally suited for long-haul transportation and heavy-load applications where conventional batteries may be less practical. While governments and companies globally have been exploring fuel cell electric vehicles (FCEVs) for several years, the emphasis on using green hydrogen specifically for mobility has gained momentum only recently. Pilot projects are now being implemented across sectors such as maritime logistics and aviation to demonstrate its technical and commercial viability, highlighting hydrogen’s potential to decarbonize hard-to-electrify transport segments and contribute to global sustainability goals.

The global electrolyser market is expected to be split almost equally between alkaline and PEM technologies, with solid oxide electrolysers occupying a niche segment. Alkaline electrolysers are predominantly used in grid-connected projects, while PEM electrolysers offer cost advantages when paired with distributed intermittent renewable energy sources. Notable large-scale projects include the NEOM Green Hydrogen Project in Saudi Arabia and the Sinopec Green Hydrogen Project in China, both using alkaline electrolysers. In 2021, Air Liquide commissioned the world’s largest PEM plant at 20 MW, and since then, several OEMs have announced even larger production facilities, highlighting rapid growth in electrolyser capacity.

The adoption of green hydrogen is set to reshape multiple industries and markets. The imposition of CBAM will pressure the steel sector to shift from grey to green hydrogen despite higher costs, while renewable IPPs stand to benefit from expanded market opportunities and improved project economics. Limited expertise in ammonia sales is expected to drive partnerships and JVs between project developers and fertilizer companies, leveraging existing C&I project execution capabilities for large-scale developments. Oil and gas companies are likely to invest in green ammonia, guided by global trade dynamics and risk considerations, while emerging demand from hydrogen fuel cell vehicles, aviation, and maritime logistics will create new offtake markets for green hydrogen in the near future.