IEW 2025 INTERVIEW: Diverse hydrogen pathways necessary to build market, supply chains, infrastructure

The adoption of conventional as well as low-carbon fuels through various pathways is crucial for building the necessary market, supply chains, and infrastructure to ensure a smooth energy transition in India, RK Malhotra, president of the Hydrogen Association of India, told S&P Global Commodity Insights Feb. 11.

Set up in 2009 with a representation of primarily the Indian oil refining firms, the Hydrogen Association has since added members from the new energy industry and aims to promote the growth of hydrogen and its applications in the country.

"India should look at all colors of hydrogen because by the time the green hydrogen costs come down, we would have our infrastructure for supply and distribution in place," Malhotra, a former director of refiner Indian Oil, said.

"So, why wait for green hydrogen? The cost of gray hydrogen is about $1.5/kg-$2/kg today and some industries can start using it if it is made available."

The industry attributes different colors to hydrogen to distinguish the different production pathways—hydrogen produced using renewable energy is 'green' hydrogen, while that produced via conventional methods using fossil fuels is 'grey' hydrogen.

Platts, part of Commodity Insights, assessed Queensland hydrogen produced via alkaline electrolysis (including capex) at $6.08/kg Feb. 10, down 7.18% from a month ago. Platts assessed Japan hydrogen produced via alkaline electrolysis (including capex) at $6.08/kg Feb. 11, down 7.18% from a month ago.

Circular economy

Malhotra said the government could incentivize a wider basket of carbon technologies, such as coal gasification and carbon capture, which could help break the price barrier and establish a circular economy to eventually help with energy transition.

"With captured carbon you can have a variety of chemicals which you can produce, sometimes combining with hydrogen, and recover that cost which you are incurring on carbon capture," he said.

"You will have coal being utilized in a cleaner way. The CO2 that comes out of coal gasification, can be used for conversion to useful products. So that's the way to go about it and have a smoother energy transition."

The Indian government announced the National Green Hydrogen Mission in 2023 with an outlay of Rupees 197.44 billion ($2.37 billion). Following this, it issued four tenders for the production of renewable hydrogen and electrolyzers, which have concluded.

It issued one for renewable ammonia for fertilizer firms which is under process.

However, planning body NITI Aayog's carbon capture, utilization and storage report in 2022 has not been converted into a policy yet. It currently falls under a mission, Rajnath Ram, the agency's adviser for energy, told Commodity Insights on Feb. 10.

Coal to hydrogen plan

Malhotra said a report was prepared under his chairmanship on generating hydrogen from coal which was submitted to the government about two and half years ago. Ministry of Coal had constituted the committee.

"We reported that coal-to-hydrogen is feasible even with Indian coal, which is high in ash content," he said. "There are technologies now available and we can do it."

Discussions primarily focus on green hydrogen, as both the government and companies aim for a technological leap, which hampers the broader adoption of existing technologies and resources capable of producing low-carbon fuels.

"Sometimes mindset is that if we give incentives for blue hydrogen or gray hydrogen in the beginning [of the start of the market], people will drift away from green hydrogen," he said.

He added that not all support can come in the form of incentives for producers, as the need of the hour at the current, early stage of transition is to create infrastructure such as storage and transportation systems.

Refining firms

Oil refining firms have been expecting mandates for converting part of their conventional hydrogen use into renewable hydrogen, which they are preparing for, according to Malhotra.

"We use a lot of hydrogen in our refineries for hydrocracking, hydrotreating, hydro-desulfurization, et cetera, so in a way, we are the largest producers of hydrogen and users of hydrogen -- right now, we are doing it from natural gas mostly," he said.

"But once the government says that you [must] use a certain percentage of green hydrogen, although it will be costly, it may increase the [end] product cost marginally," he said. "A slow transition in certain percentages such as 5%-10% in stages, may be feasible."

He said that the increases could be offset by carbon credits generated from renewable hydrogen operations refineries are planning to commence. India is expected to launch its compliance and offset carbon market late 2026 or early 2027.

"Depending on what price the carbon credits can be sold, maybe that will cover up for some of the cost of producing green hydrogen. So maybe it can come down to about $2/kg or $2.5 kg," he said without specifying a time frame.

The slowing global sentiment for renewable hydrogen projects and policies may not necessarily touch India in the same way as it has its own dynamics for renewable hydrogen and other fuels, Malhotra said, pointing to the plunge of renewable power costs in recent years.