Green hydrogen at centre of state‑backed policy initiatives
Reuters reports that China and India are aggressively investing in green hydrogen and clean energy technologies, even as Western countries scale back similar ambitions due to high costs and slower-than-expected progress. What China and India – the world’s two most populous nations – have in common is the power and political will to force a market into existence, by underwriting projects, steering demand and pushing costs down through scale.
SUMMARY
In China, a massive $2 billion hydrogen project in Inner Mongolia is using wind power and electrolysers to produce clean hydrogen for industries like fertilizers, shipping fuel, and low-carbon steel. Beijing is treating green hydrogen as a key “frontier industry” alongside AI and quantum computing, aiming to maintain global leadership in the sector.
India, meanwhile, has launched its National Green Hydrogen Mission with about $2.1 billion in subsidies. The country targets 5 million tons of green hydrogen per year by 2030, driven by energy security concerns and heavy reliance on imported gas. Major firms are already involved in early production.
Both nations are using state-backed policies, subsidies, and guaranteed demand to rapidly scale up production and reduce costs, positioning themselves as future global leaders in clean hydrogen markets.
CHINA: SPEED AND SCALE
China invested $3.7 billion in green hydrogen production last year, more than double U.S. levels, said Rystad Energy’s head of hydrogen, Minh Khoi Le.
By 2031, China will have some 2.6 million tons per year online, representing $26 billion in investment, according to Rystad projections.
Much of 2025’s outlay went into the Chifeng project, operated by Chinese wind turbine maker Envision Energy. It aims to sell green hydrogen and ammonia to markets in Asia, Europe, Latin America and the Middle East, and delivered its first green ammonia cargoes to South Korea’s Lotte Fine Chemical in February.
“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,” said the International Energy Agency’s hydrogen lead, Jose Bermudez.
China last year likely doubled its renewables-based hydrogen production capacity to 250,000 tons – more than half of the global total, and surpassing a 2022 target to produce 100,000 to 200,000 tons annually by 2025 – said Agora Energy China managing director Kevin Tu.
In Inner Mongolia and other places with high winds and strong sunlight, costs can fall to around $2 per kilogram for green hydrogen, close to parity with coal-based hydrogen, Tu said. On average, producing green hydrogen in China costs around $4 per kilogram, he said.
INDIA: AGGREGATING DOMESTIC DEMAND
India has brought the price of producing green hydrogen as low as 279 rupees (around $3) per kilogram, from around $5 in 2023, when the government launched the National Green Hydrogen Mission under the clean energy ministry.
Abhay Bakre, who heads the mission, told Reuters that the cost should drop to near $2 by 2032 as technology improves, processes become more efficient and more components are made domestically.
Projects will begin delivering “large quantities” of green hydrogen as soon as next year, he said, and “scale up very fast” to hit the target of 5 million tons by 2030.
Under the initiative, industrial heavyweights including Larsen & Toubro (LART.NS), opens new tab, Bharat Petroleum Corp (BPCL.NS), opens new tab, GAIL (GAIL.NS), opens new tab and JSW Steel (JSTL.NS), opens new tab produce about 8,000 tons of green hydrogen and its derivatives annually.
New Delhi is kick-starting demand through state-run reverse auctions, where sellers try to undercut each other to win long-term contracts, effectively revealing the lowest price producers can bear.
The government said last month that suppliers and fertiliser companies had signed offtake agreements for 724,000 tons of green ammonia, which could cover one third of the country’s hydrogen requirements.
Maintaining momentum will require “bold, sector-specific domestic initiatives, coupled with strategic international partnerships to unlock export potential”, analysts at the Institute of Energy Economics and Financial Analysis wrote in a report. “With one of the lowest costs of renewable power generation in the world, India is well placed to capture a significant portion of the export market.”
Source: Reuters, April 22, 2026. https://www.reuters.com/…/china-india-place-strategic…/
