India is planning a $2 billion incentive programme for the green hydrogen industry, three sources told Reuters, in a bid to cut emissions and become a major export player in the field.

The $2.2 billion incentive aims to reduce the production cost of green hydrogen by a fifth over the next five years, said a senior government official and an industry manager working in renewable energy. It would do this in part by increasing the scale of the industry, they said.

The current cost in India is Rs 300 to Rs 400 per kg, said the manager.

The United States and the European Union have already approved incentives worth billions of dollars for green hydrogen projects.

Hydrogen can be used as a fuel. It is made by splitting water with an electrical process, electrolysis.

If the devices that do that, electrolysers, are powered by renewable energy, the product is called green hydrogen, a fuel free of greenhouse emissions.

The Indian aid could be announced in the February 1 budget for the fiscal year beginning April 1, said the government official.

All sources declined to be named discussing a budget proposal. The ministries of renewable energy and finance did not respond to queries sent by Reuters.

Indian companies such as Reliance Industries, Indian Oil, NTPC, Adani Enterprises, JSW Energy and Acme Solar have big plans for green hydrogen.

Adani said in June that it and France’s TotalEnergies would jointly create the “world’s largest green hydrogen ecosystem”.

Green ammonia

The Indian government expects industry to invest Rs 8 trillion in green hydrogen and its derivative green ammonia by 2030, said the industry manager and another government official.

Green ammonia is made by combining nitrogen with hydrogen using renewable energy sources; it can be used by the fertiliser industry or as a fuel or convenient means of transporting hydrogen.