India is considering making bilateral agreements with other countries such as Japan to allow them to use green hydrogen-linked CO2 credits in return for investment and purchase deals. The information was reported by Reuters citing two government sources and one industry source.
Earlier this year, India approved a $2.13 billion incentive plan that aims to promote green hydrogen as a means to decrease carbon emissions and become a major hub for the resource.
India-based companies such as Reliance Industries, Indian Oil, and Adani Enterprises all plan to utilize green hydrogen, which is generated through renewable energy.
According to the undisclosed Reuters sources, the trading of CO2 credits has the potential to attract increased investments and secure offtake for India.
If any agreements are reached, foreign companies or financial institutions will enter into investment and purchasing deals with Indian green hydrogen producers, the sources said, adding that India is currently in talks with Japan.
Reuters also saw a document that said Japan and India signed a preliminary agreement on March 17 to set up a joint crediting system for decarbonization under the Paris Agreement.
The preliminary agreement was signed under Article 6 of the Paris Agreement, which provides for voluntary cooperation among nations for the sharing of CO2 credits. This would allow green hydrogen buyers to acquire CO2 credits for green hydrogen production that would otherwise be attributed to the producers.
Japan has already established agreements with 26 countries, including Bangladesh, Kenya, and Saudi Arabia.
Three ministries in India – those of environment, renewable energy, and external affairs – have discussed the proposed bilateral agreements, according to Reuters. The Indian government has also spoken to industry representatives prior to the upcoming green hydrogen summit in New Delhi, the news agency’s sources said.
“The Global North’s capacity and technology, combined with the Global South’s vast potential for green development, can lead to impactful climate action,” Shekhar Dutt, director general of India’s Solar Power Developers Association, told Reuters.
The Solar Power Developers Association, which represents India’s solar sector interests, wrote to the country’s prime minister Narendra Modi this month, requesting actions to utilize the provisions of international treaties and commitments made by developed nations. The aim is to enhance India’s competitiveness in the green hydrogen industry, where the U.S. holds a significant advantage due to extensive government support.
According to Dutt, India could capitalize on the European Union’s objective of importing 10 million metric tons of green hydrogen by 2030 by leveraging the provisions outlined in Article 6 of the Paris Agreement.