The Uttar Pradesh government aims to produce one million metric tons of green hydrogen annually by 2028 to replace the grey hydrogen used in its fertilizer and refinery industries. The current demand for hydrogen in the state is around 0.9 million metric tons per annum.

While green hydrogen, produced by splitting water molecules using renewable energy sources like solar or wind power, is a zero-emission fuel, grey hydrogen is derived from unabated fossil fuels like natural gas.

The government will provide incentives and financial support to develop the core infrastructure across the entire value chain of green hydrogen, according to the policy document posted on the website of the Uttar Pradesh New and Renewable Energy Development Agency (UPNEDA), which will also act as the nodal agency for the program.

The project’s overall capital investment size will determine the subsidy level. The first five investments (barring the Meerut division) will receive financial incentives of up to 40% of the total investment. This subsidy is capped at ₹2.25 billion (~$27 million) per project per annum during the policy period.

“Booster” subsidies will also be provided for firms employing a certain percentage of female workers or a higher number of employees than the stipulated minimum amount. Additional booster subsidies can be availed if the production facility exports green hydrogen. An ecosystem booster subsidy can be availed if a certain percentage of input or raw material is sourced from Uttar Pradesh.

Additionally, for public sector undertakings, government land will be leased at the nominal rate of ₹1(~$0012) per acre per year for 30 years. Private investors, however, will have to pay the lease rate of ₹15,000 (~$181) per acre per year.

Green hydrogen projects that seek to set up dedicated solar energy units will be granted a maximum land allotment of 5 acres per MW of solar capacity installed, capped at 20 MW per kiloton of annual green hydrogen output capacity.

Additionally, to bring down the cost of green hydrogen production, two Centers of Excellence will be set up, and startups engaged in the production of green hydrogen will be incentivized.

Achieving this policy goal would contribute 20% towards India’s target of 5 million metric tons per annum, as outlined in its National Green Hydrogen Mission.

Recently, the Ministry of New and Renewable Energy (MNRE) launched pilot projects aimed at using green hydrogen to decarbonize the transport, steel, and shipping industries.

MNRE also outlined a framework to incentivize the annual production of 200,000 MT of green hydrogen.