China and India accelerate green hydrogen investments

In the wind-swept grasslands of northern China, massive wind turbines are powering a $2 billion project designed to transition the hydrogen industry away from coal. This initiative in Inner Mongolia uses renewable energy to operate electrolysers that produce the essential molecules for fertilizer, steelmaking, and marine fuel. While Western nations have scaled back their green hydrogen ambitions due to persistent cost constraints, Asian giants are doubling down on the technology to secure their energy futures. India is pursuing even more aggressive targets than its neighbor. Supported by $2.1 billion in subsidies, New Delhi aims to produce 5 million metric tons of green hydrogen annually by 2030. This target is roughly five times the current global market size and nearly double the projected output for Chinese production within the same timeframe. Both nations are leveraging political will to force a market into existence by underwriting large-scale projects and steering industrial demand. The shift comes as the United States and other Western economies face hurdles. In contrast, China invested $3.7 billion in green hydrogen production last year, more than doubling American investment levels. By 2031, Rystad Energy projects that Chinese investment will reach $26 billion, bringing 2.6 million tons of annual capacity online. The rapid expansion has caught the attention of international observers. > If we go back a year or two ago, China was not very visible on this situation of green hydrogen, and then two years later they have almost all the biggest projects in the world. For Beijing, the goal is to maintain industrial dominance as the energy sector shifts toward cleaner alternatives. In its latest five-year plan, the government elevated green hydrogen to a frontier industry alongside quantum computing and artificial intelligence. In regions like Inner Mongolia, high winds and sunlight have already pushed production costs down to approximately $2 per kilogram, nearing parity with coal-based hydrogen. India's motivation is primarily rooted in energy security. The nation currently relies heavily on imported natural gas for hydrogen production, a supply chain that has faced significant volatility due to the pandemic and conflicts in the Middle East and Ukraine. To mitigate these risks, the National Green Hydrogen Mission is working to bring production costs down to $2 per kilogram by 2032 through technological improvements and domestic manufacturing. Several industrial leaders are spearheading India's domestic production efforts, including LARSEN & TOUBRO LTD, BHARAT PETROLEUM CORP LTD, GAIL INDIA LTD, and JSW STEEL LTD. These companies currently produce about 8,000 tons of green hydrogen and its derivatives annually. The government is also utilizing state-run reverse auctions to establish long-term contracts and reveal the lowest sustainable price points for producers. The export market is also a key focus for these regional leaders. For instance, the Chifeng project in China delivered its first cargoes of green ammonia to LOTTE FINE CHEMICAL CO LTD in South Korea earlier this year. Analysts suggest that India is also well-positioned to capture a significant share of the global export market, provided it maintains momentum through strategic international partnerships and sector-specific domestic initiatives.