In the vast and windy grasslands of Chifeng in Inner Mongolia, China, impressive white wind turbines stand tall, overseeing a hydrogen industry that Beijing aims to shift away from coal. This initiative is part of a substantial $2 billion project designed to utilize renewable energy for powering electrolysers that create hydrogen for fertilizers, marine fuel, and low-emission steel production.
India, too, shares aspirations in the “green hydrogen” sector, with even more ambitious and definitive plans. Supported by subsidies of around $2.1 billion, New Delhi aims to produce 5 million metric tons of green hydrogen annually by 2030—this figure is five times the current global market size and nearly double what analysts project China will produce by then.
The efforts of these two populous nations come at a time when Western countries have re-evaluated their early green hydrogen targets due to unexpected cost challenges. Despite their differing reasons, both China and India exhibit the determination and political backing needed to create a thriving market by funding projects, directing demand, and lowering costs through large-scale production.
India is attracting private investors by combining subsidies with commitments from refineries, fertilizer plants, and steel companies, making their projects financially viable from the start. The driving force for India is a quest for energy security, as the country’s hydrogen is mostly produced from imported natural gas, which has faced numerous disruptions from events in the Middle East, Ukraine, and the pandemic.
Conversely, China utilizes its giant state-owned companies and engages private firms in large-scale industrial projects to maintain its lead in the hydrogen sector as the market shifts towards cleaner energy sources. In a recently released five-year plan, Beijing highlighted green hydrogen alongside cutting-edge industries like quantum computing and AI, indicating an intention to attract more investment in this area.
China has already invested $3.7 billion in green hydrogen production last year, which is more than double that of the U.S. projections suggest that by 2031, China’s production could reach 2.6 million tons annually, amounting to an investment of around $26 billion. Much of this funding has gone into the Chifeng project, led by Envision Energy, a manufacturer of wind turbines. The project aims to supply green hydrogen and ammonia to markets across Asia, Europe, Latin America, and the Middle East.
In the past year or so, China’s visibility in the green hydrogen sector has dramatically increased, solidifying its place as a leader in global production. The country reportedly doubled its capacity to produce renewables-based hydrogen to 250,000 tons, which is more than half of the world total.
In India, the cost of producing green hydrogen has dropped significantly. The government previously set the price around $5 per kilogram but aims to reduce it to about $2 by 2032 as technology advances and local production increases. India anticipates that projects will soon begin to deliver considerable amounts of green hydrogen, quickly aiding the goal of 5 million tons by 2030.
The National Green Hydrogen Mission, established under the clean energy ministry, involves industry giants like Larsen & Toubro and Bharat Petroleum, producing around 8,000 tons of green hydrogen annually. To stimulate demand, the government has initiated state-run reverse auctions, where producers compete to offer the lowest prices for long-term contracts.
Recently, agreements were made for suppliers and fertilizer companies to purchase 724,000 tons of green ammonia, which may meet a third of India’s hydrogen needs. To maintain progression, analysts suggest that bold, tailored domestic initiatives and strategic international collaborations are essential to unlock the export potential. With some of the lowest renewable energy generation costs globally, India is in a strong position to capture a significant share of the export market.
