India’s top refiner and fuel retailer Indian Oil Corporation (IndianOil) is collaborating with engineering and construction major Larsen & Toubro and renewable energy company ReNew to develop the country’s green hydrogen sector.
The three companies will hold an equal stake in a proposed joint venture to develop the nascent sector and support India's decarbonisation efforts, state-owned IndianOil said in a statement on Monday.
The partnership will initially focus on green hydrogen projects at IndianOil’s Mathura and Panipat refineries, while also evaluating other projects in the country, the company's chairman Shrikant Vaidya said.
“IndianOil is forging this alliance to realise India’s green hydrogen aspirations,” he said.
India's hydrogen strategy is part of its plan to develop alternative sources of energy to move away from its costly dependence on fossil fuel imports and reduce its carbon output.
Under the Paris climate change agreement, India, which is the world’s third-largest carbon emitter, has pledged to reduce its emissions intensity to between 33 per cent and 35 per cent by 2030, from 2005 levels.
State-owned and private energy companies are showing interest in hydrogen production.
In the private sector, Reliance Industries, controlled by India’s richest man Mukesh Ambani, and conglomerate Adani Group are adding green hydrogen projects to their portfolio.
In January, Mr Ambani announced plans to invest about $75 billion in renewables infrastructure, which could transform India into a clean-hydrogen leader in line with Prime Minister Narendra Modi’s mission.
The IndianOil JV’s initial efforts will include using hydrogen mainly in the refining, steel and fertiliser sectors, the company said.
The country’s refining sector consumes approximately 2 million metric tonnes of grey hydrogen every year, with IndianOil owning one of the largest shares of its refining output.
“We consider this partnership as a significant step in India’s quest for alternative energy. The JV will focus on developing green hydrogen projects in a time-bound manner to supply green hydrogen at an industrial scale,” said S N Subrahmanyan, chief executive and managing director of L&T.
IndianOil and L&T also signed a binding term sheet to form a JV with equity participation to manufacture and sell electrolysers used in the production of green hydrogen.
An electrolyser splits water into hydrogen and oxygen using renewable energy such as solar or wind for producing green hydrogen.
The planned JVs will enable India’s transition from a grey hydrogen economy to a greener economy that increasingly manufactures hydrogen through electrolysis powered by renewable energy, the statement said.
Globally, the hydrogen industry is expected to be valued at $183bn by 2023, from $129bn in 2017, according to Fitch Solutions. French investment bank Natixis estimates that investments in hydrogen will exceed $300bn by 2030.
Oil-exporting countries in the Middle East such as Saudi Arabia and the UAE plan to tap into hydrogen and produce the clean, alternative fuel for exports in the future.
