India’s net-zero ambitions hinge on green hydrogen, S&P Global report finds

India’s target of achieving net-zero emissions by 2030 depends heavily on significant advancements in the green hydrogen sector, according to a report by S&P Global. The report warns that delays in progress could push the timeline back by as much as a decade.

Green hydrogen is a key element in India’s energy transition strategy, which focuses on energy efficiency, renewable energy, low-emission fuels, and sustainable mobility. To meet its ambitious goals, India must ramp up investment and policy support for the green hydrogen economy.

Although the government has introduced a policy framework featuring subsidies, mandates, taxes, and incentives to promote green technologies, past investment has favored fossil fuels, with only 5% allocated to green energy over the last five years. Establishing a carbon market framework and climate finance taxonomy is crucial to drive funding for green technologies.

Challenges persist as traditional oil and gas companies have delivered 8.3% higher capital returns than renewable energy firms over the last five years. Gas, which currently accounts for just 6% of India’s energy mix, is expected to play a crucial role in transitioning away from coal, with the government targeting a 15% share by 2023.

The report also emphasizes the importance of securing critical minerals, building manufacturing ecosystems for clean energy technologies, and addressing power sector inefficiencies to support the energy transition. Expanding energy-efficient technologies, promoting decentralized renewable energy, and fostering public-private partnerships will be vital in achieving India’s clean energy targets.

To unlock clean energy investments, India needs to create favourable conditions for green bonds and innovative financing, while strengthening financial institutions’ capacity to manage green projects and attract private capital.