IH2A proposes $5 billion hydrogen transition fund

The India Hydrogen Alliance (IH2A) has submitted a proposal to the Ministry of Finance, Government of India, to increase the budgetary support for the National Green Hydrogen Mission (NGHM) and create a $5 billion National Hydrogen Transition and Development Fund.

The $5 billion National Hydrogen Transition and Development Fund, similar to the EU Green Hydrogen Fund, should support large-scale hydrogen projects and H2 hub development, H2 supply chains beyond electrolyser manufacturing, sectoral hydrogen transition plans, skilling and hydrogen infrastructure development in the country, stated IH2A.

IH2A’s proposed National Hydrogen Transition Funding mechanism is akin to the EU Green Hydrogen Fund which supports green hydrogen projects of national importance and hydrogen hubs.

IH2A has recommended that the proposed National Hydrogen Transition and Development Fund should support co-development of at least five large National H2 Hubs (beyond the two Hubs planned in the existing NGHM), together with state government and project developers (both private and state-owned), and offer offtake-linked incentives for anchor industrial offtake entities and contracts-for-difference (CfD) funding.

The fund should also provide CAPEX support for greenfield hydrogen infrastructure such as H2 pipelines and storage facilities that will lower the cost of green hydrogen supply to offtake users.

State governments should be supported in developing domestic hydrogen equipment and supply chain equipment manufacturing clusters, for balance-of-plant equipment (beyond electrolyzers)

The fund should also support a sectoral hydrogen transition plan with CAPEX incentives and offtake incentives, in Steel and Chemicals, in line with the SIGHT Mode 2 guidelines for fertilizer and refinery sectors.

Additionally, the fund should support the creation of a National Hydrogen Transition Skilling programme to create more hydrogen engineering design and engineering services professionals, working with engineering colleges and research institutions

“The Government of India has taken the first step towards demand aggregation and offtake incentives in fertilizer and refinery sectors, with the Mode 2A and 2B Guidelines under the NGHM SIGHT Scheme. The time is right to raise public funding to match the needs of a large economy that has high ambitions for accelerating the hydrogen transition. A $5 billion India Hydrogen Transition Fund would put India at par with the EU, from public funding perspective, which is still short of India’s real requirement as the entire value chain needs to be developed in the country,” said Jillian Evanko, president and CEO, Chart Industries, and founding member of IH2A.

“India needs more hydrogen hubs, accelerated sectoral decarbonization in steel and chemicals, hydrogen infrastructure and domestic equipment manufacturing and specialized skill development. These should be five key priorities for developing the hydrogen economy in India in 2024. We look forward to working with all stakeholders to making this a reality.”

On funding the National Hydrogen Transition and Development Fund, Amrit Singh Deo, Secretariat Lead,IH2A, said, “A $5 billion hydrogen transition fund can be put together by pooling multilateral funding and government energy transition sources, such as allocating proportion from the energy transition constituted by the Ministry of Petroleum and Natural Gas, and tapping sovereign green bonds.”

Last year, IH2A submitted a plan to develop five $5 billion green hydrogen hubs as economically viable projects. Subsequently, the IH2A Hydrogen Equipment Manufacturing, Exports and Services report estimated a $50 billion domestic manufacturing opportunity for India, over 2024-30 period, on the conservative side, being deployed over 135 domestic hydrogen projects, producing 1 MT green hydrogen production (a fifth of the 5 MMT national target as per the National Green Hydrogen Mission).