Allocation of Rs 300 crores provision for hydrogen infrastructure in Budget 2023 not enough say industry experts

Of the total commitment of Rs 19,700 crore for the National Green Hydrogen Mission, Rs 300 crore has been allocated for hydrogen infrastructure in Budget 2023. Industry experts, including those from rating agency CRISIL, are saying that this amount is not enough to launch hydrogen vehicle models in the near future.

Analysts tracking the sector are of the opinion that the squeeze in fund availability will directly delay infrastructure creation for transportation and storage of green hydrogen and limit OEMs bandwidth to launch H2 models before 2030. This opinion is part of a report by CRISIL assessing the Union Budget 2023.

Rajendra Petkar, Chief Technology Officer and President of ARAI at a recent event in Pune had said that creating the necessary infrastructure for hydrogen cannot be the task of a single OEM, but as it involves substantial investments from government and industry participants ‘a collaborative approach is required’.

“Typically, if the government puts in more money for infrastructure development and scales up the infrastructure, it sends a strong signal to the automakers to start their production for that specific fuel. This we have seen in CNG where the entire fleet of three-wheelers passenger vehicles and even commercial vehicles which have shifted to a greener fuel, once the availability has improved,” said the CTO of another leading automaker.

CRISIL in its assessment says that till such time most of the hydrogen produced is expected to replace grey hydrogen which will find its application in the fertilisers and agriculture sector.

Another side of the same development is that the government has increased capital allocation for the Ministry of New and Renewable Energy to Rs 47,591 crore in the fiscal year 2024 from Rs 34,490 in FY23.

Analysts add that such higher allocation will speed up the transition to clean fuels, but whether such funds will get diverted for green hydrogen is not clear at the moment.

Based on all these factors, CRISIL has revised its forecast for domestic hydrogen consumption which is expected to touch 5MT by 2030. “Our estimates suggest only 1.0-1.5 MT of green hydrogen will be domestically consumed by 2030 and the remaining will be exported, the report further adds.