New Delhi: In what could be a transformative stride for India’s energy landscape, the central government is reportedly poised to implement a series of fiscal incentives aimed at bolstering green hydrogen production and utilization, as the nation prepares for the upcoming Budget 2024. These incentives are expected to substantially lower the production costs of green hydrogen, propelling India towards its ambitious target to establish parity with the current costs of grey hydrogen.
Industry insiders suggest that the forthcoming union budget 2024 will lay down the groundwork for an increase in subsidies, particularly for sectors that are best positioned to leverage green hydrogen, such as refining and fertilization. The move is designed to amplify domestic demand and foster a robust supply chain for the eco-friendly energy variant.
A key aspect of the government’s strategy includes diverting subsidies from carbon-intensive fuels to green hydrogen projects. This realignment of fiscal policy is expected to serve as a dual thrust towards achieving India’s energy independence and adhering to its international climate commitments.
Investments are also anticipated in creating a comprehensive infrastructure for green hydrogen transportation. The Budget 2024 is likely to outline the development of clusters and pipelines that would not only reduce transportation costs but also enhance the supply chain’s efficiency.
To stimulate innovation and private sector investment, the government may extend tax credits and incentives for research and development in the green hydrogen sector. These measures are intended to match global initiatives and position India at the forefront of renewable energy technology.
Export infrastructure is also expected to see a significant enhancement, with the Budget possibly detailing plans for the development of port facilities and the establishment of international standards for green hydrogen derivatives. Such measures would be critical in transforming India into a key exporter in the global green hydrogen market.
On the domestic front, the Budget may announce direct subsidy schemes and capex support for industries ready to transition to green hydrogen. This support is anticipated to catalyze the adoption across various sectors, boosting in-house demand, and fostering developments in green hydrogen by-products, including the burgeoning green steel industry.
The government’s comprehensive fiscal approach signifies a substantial commitment to transforming India into a green hydrogen hub, aligning with global energy transition trends and setting the stage for a sustainable economic growth trajectory.
This potential fiscal framework in the Budget, reflective of the strategic recommendations from the “Green Hydrogen: Enabling Measures Roadmap for Adoption in India” report by the World Economic Forum and Bain & Company, could herald a new era for India’s energy sector. It suggests a future where India not only meets its energy requirements sustainably but also asserts itself as a pioneer in the global transition to a low-carbon economy. The report, released recently, has been instrumental in highlighting the potential pathways and strategies for India’s transition to a green hydrogen economy, offering a blueprint that the Budget is likely to draw upon.
