CII Urges Green Hydrogen Mandates to Boost Demand and Cut Costs

Greening mandates backed by incentives should be used to overcome the substantial cost gap between green hydrogen and grey hydrogen, the industry body said.

"The proposed Green Hydrogen Blending could be introduced for sectors like refining, fertiliser and natural gas with cost-offset mechanisms.

The sectors that use grey hydrogen extensively are best positioned to pioneer large-scale demand for green hydrogen," the statement said. Greening mandates could provide certainty to producers, enabling faster cost declines through economies of scale, it added.

The apex industry body called for phased mandates accompanied by cost-offset mechanisms such as carbon credit allocations for emissions saved, cross subsidies, particularly in the fertilizer industry, by offering cheaper natural gas if blended with green hydrogen.

It also called for viability gap funding to reduce the burden on consumers and industry.

Chandrajit Banerjee, Director General CII, said that India should take the next leap in promoting green technologies after it marked a record-breaking year in its clean energy journey in 2025, with non-fossil fuel installed capacity rising to 266.78 GW.

The surge represented a 22.6 per cent increase over 2024 with 49.12 GW of new non-fossil capacity being added over 217.62 GW in 2024.

CII noted that robust demand will accrue from mandating public procurement in government projects with 10-15 per cent of infrastructure-related materials such as steel, ammonia, and from green hydrogen-based production units.

Mandating green procurement would establish predictable, anchored demand, lower green product prices through scale, the statement said.

The industry body urged a rapid shift to green steel and ammonia in export-oriented sectors to preserve India's access to premium markets and catalyse domestic green hydrogen demand, thus improving cost-efficiency and value chain maturity.

- IANS