Green Hydrogen to Become Cost-Competitive by 2030

The global energy landscape is undergoing one of its greatest transformations in decades. With climate change risks mounting, countries around the world are racing to decarbonise, particularly in sectors that are hard to electrify. Among the promising solutions, green hydrogen—hydrogen produced via water electrolysis powered by renewable energy—stands out as one of the most versatile tools in the clean energy toolbox. But until now, its high production costs have been a major barrier to industrial-scale uptake. The good news is that by 2030, green hydrogen is expected to become cost-competitive with traditional forms of hydrogen in many applications. In this article, we examine how this shift may occur, its implications for the industry, particularly in India, the drivers that will facilitate it, the challenges that remain, and the policy and business models that can ensure a smooth transition.

Understanding Green Hydrogen and Its Cost Challenges

What is green hydrogen?

Simply put, green hydrogen is hydrogen made by electrolysing water using electricity from renewable sources (solar, wind, sometimes hydro). Because the power used is “green”, the hydrogen production emits very little or no CO₂—unlike grey hydrogen (made from fossil fuels without carbon capture) or blue hydrogen (fossil fuels with capture & storage). The environmental upside is huge, especially for decarbonising steel, cement, fertilisers, heavy transport, and chemicals.

But the costs today are still significantly higher. As of 2024-2025, industry estimates put the levelised cost of green hydrogen (LCOH) in India in the range of USD 3.5-5 per kilogram. By comparison, grey hydrogen typically costs around USD 2.3-2.5/kg in many places, depending on the feedstock and local factors.
Source: Council on Energy, Environment and Water
India’s green hydrogen story by Bain

Key factors driving the high cost include:

The cost of renewable electricity: solar, wind, etc. While costs have decreased significantly, power still accounts for a substantial portion of the cost of hydrogen production via electrolysis.
Electrolyser capital costs (CAPEX): building electrolyser units (alkaline, PEM, SOEC) with high durability and efficiency is expensive.
Plant load factor: if the electrolyser is under-utilised (because renewable supply is variable, or because of grid access/curtailment), the cost per kilogram rises.
Transmission, storage, and transport: once hydrogen is produced, moving it, storing it (or converting to a carrier like ammonia), and handling losses all add to costs.
Policy, regulatory and financing costs: permits, environmental clearances, taxes, duties, interconnection costs, etc., sometimes make projects take more time or cost more in overheads and risk premiums.

Currently, in India, some of these costs are mitigated through subsidies, state policies, and incentives; however, a gap remains for green hydrogen to match or surpass grey hydrogen in many industrial contexts. Source: Green Hydrogen Production Pathways for India: RMI

Global and Indian 2030 Targets

Governments worldwide are making ambitious targets for green hydrogen. The global community is increasingly viewing hydrogen as essential to achieving net zero or deep decarbonization, particularly for hard-to-abate sectors. For example, many EU countries, the US, Japan and others have set policies or subsidy regimes to bring down the cost of green hydrogen and scale up electrolyser production, infrastructure, and renewable power generation.

In India, the National Green Hydrogen Mission (NGHM) reflects this ambition. India has committed to producing 5 million metric tonnes (MMT) of green hydrogen annually by 2030. As per some studies (like the World Economic Forum), hydrogen ambition believes the potential could be even higher – up to 10 MMT/year, if policy, infrastructure, demand, and renewables scale rapidly.

A key goal of the NGHM is also to push the cost down aggressively. India aims for the green hydrogen production cost to fall to about USD $2/kg by 2030 (or equivalently ~€1.37/kg in some reports) through a combination of incentives, scale, lowering input costs (especially renewable electricity), and local manufacturing of electrolysers. Source: SORT Consultancy

These targets aren’t just aspirational; there are policy measures already underway to back them up: capital subsidies, incentives for electrolyser manufacturing, waivers of certain transmission & open access charges, environmental clearance simplification, etc.
Source: https://rmi.org/green-hydrogen-production-pathways-for-india/

Key Drivers for Cost Reduction

Achieving cost competitiveness by 2030 is challenging but not impossible. Several trends and drivers work in favour of dropping costs.

Falling renewable electricity costs. Solar and wind power costs have been declining steeply. As renewable energy becomes more abundant and cheaper, using it to power electrolysers becomes less expensive. Regions with high solar/wind potential (e.g., parts of India, Australia, the Middle East, and parts of Africa) have distinct advantages.
Scale (economies of scale) in electrolyser manufacturing and deployment. Producing a small number of units is expensive. But mass manufacturing, standard designs, better supply chains, and localising components (in India, for example) can reduce CAPEX significantly. Lower component costs, improved fabrication methods, and better supply chain logistics will help.
Technological improvements and efficiency gains. Different electrolyser technologies (alkaline, proton exchange membrane / PEM, solid oxide / SOEC) each have different trade-offs in cost, efficiency, and durability. Over time, more efficient systems, longer lifetimes, faster start-stop performance, better catalysts, etc., will reduce costs.
Better infrastructure for storage, transport, and integration. Producing green hydrogen is only part of the story. Once produced, hydrogen must be stored (liquefied, compressed, or converted to carriers like ammonia or methanol), transported, or used on demand. Infrastructure improvements (pipelines, refuelling stations), optimisation of logistics and losses, and integrated industrial clusters (so that hydrogen production is close to demand) will reduce downstream costs.
Policy and financial enablers. This includes subsidies or fiscal incentives, favourable regulation, carbon pricing, regulatory simplification, and incentives for the demand side (e.g. mandates, procurement). Finance cost (interest rates, risk premiums) is also critical – cheaper financing, green debt, guarantees, etc., reduce capital costs.
Demand aggregation and certainty. When industries commit to purchasing green hydrogen or procurement mandates are introduced, producers have more predictable revenue, which lowers risk. Industrial clusters where many users are co-located can reduce the costs of transport and infrastructure.

Industrial Sectors Poised for Adoption

Which industries are likely to lead in adopting green hydrogen as costs fall? Several stand out:

Steel and Cement: These are intensely carbon-emitting, hard to decarbonise through electrification alone. Hydrogen can substitute coal or coke in direct reduced iron (DRI) processes or smelting. Green hydrogen in steel is already being piloted globally.
Fertilisers: Current production of ammonia and urea (key inputs for fertilisers) uses grey hydrogen. Switching to green hydrogen (or green ammonia) can significantly cut the carbon footprint. India has a large fertiliser usage, and the proximity of fertiliser plants to hydrogen production facilities offers synergy.
Refining and Chemicals: Many refining processes use hydrogen. Also, chemical feedstocks (methanol, for example) can be derived from green hydrogen plus captured CO₂ or via green ammonia markets.
Heavy Transport / Shipping / Aviation / Buses & Trucks: Battery electrification works for light vehicles and short distances, but for long-haul, heavy loads, or long-duration applications, hydrogen (or hydrogen-derived fuels) may be more feasible.

In India, some early industrial clusters are being conceptualised or developed around green hydrogen production, integrated with high-emission industries, especially steel, chemicals, and fertiliser. These clusters help reduce transport costs, consolidate infrastructure, share resources, and better use renewable power where it’s abundant.

Economic and Environmental Benefits

If green hydrogen becomes cost-competitive by 2030, the benefits could be wide and deep.

On the environmental front, replacing grey hydrogen (or coal, coal-derived fuels) with green hydrogen in heavy industry could sharply reduce CO₂ emissions. For India, which has pledged net zero by 2070, green hydrogen could be central to achieving this in sectors where direct renewable electrification is difficult.

Economically, local manufacturing of electrolysers, green hydrogen plants, and infrastructure (storage, transport, refuelling) can generate jobs across engineering, manufacturing, construction, and operations. Export opportunities are also significant: as global markets demand low-carbon fuels and feedstocks, countries that can produce green hydrogen or derivatives (green ammonia, methanol) cheaply will have a competitive advantage.

For India, this means less dependence on fossil fuel imports, improved energy security, and strategic positioning in global hydrogen trade. The government has already indicated interest in exporting green hydrogen derivatives.
Source: World Economic Forum

Challenges to Overcome by 2030

While the outlook is promising, there are substantial challenges that must be addressed:

Infrastructure gaps. Transporting hydrogen, especially over long distances, storing it, building pipelines, establishing refuelling infrastructure for transpor,t etc., is capital-intensive and complex.
High financing costs and risk. Many hydrogen projects are in early stages; investors perceive risks (of technology, regulation, markets) remain high. Access to low-cost capital is not always easy.
Standards, safety, certification, and regulatory frameworks. Hydrogen handling is different from existing fuels; safety protocols must be established and trusted. Also, certifications for “green” hydrogen (to distinguish from grey/blue) will matter for trade, demand, and subsidies.
Public perception and hydrogen literacy. The public, and even many policymakers, may have limited awareness of what hydrogen is, its safety, potential, and risks. Misconceptions about safety (flammability, etc.) could slow adoption unless addressed.
Intermittency and grid integration of renewables. Renewable energy supply can be volatile; unless energy storage, grid balancing, or hybrid systems are well designed, capacity utilisation for electrolysers may suffer, raising per-kg costs.
Land availability, water resources, and proximity to demand. Large green hydrogen plants need land (for solar/wind) and water. Proximity to industrial demand centres reduces transport costs. Also, environmental/social constraints around land use must be managed.
Policy consistency and execution risk. Targets and policies are good, but delays in approvals, subsidies, and infrastructure deployment can derail timelines.

India’s Specific Story: Similarities and Differences vs Global Trends

India’s hydrogen story shares a lot with global narratives but also has unique features. Similarities include the high cost today, the importance of renewable energy (solar/wind) costs, and the need for policy, financial incentives, and scaling up electrolyser manufacturing.

Differences include:

India has particularly strong solar energy potential, which, if fully harnessed, can drive down input power costs more aggressively than in many regions.
The cost of land, regulatory complexity, water availability, transmission losses, etc., vary by state, so some states are more suited than others. Some states are already offering subsidies or favourable policies. RMI
India’s policy architecture includes things like waivers on inter-state transmission charges for renewables tied to green hydrogen, environmental clearance exemptions, duty or GST reductions, and large investments in domestic electrolyser manufacturing. These are the levers India is using that might be deployed differently elsewhere. SORT Consultancy
Demand structure: India has large heavy industries (steel, cement, fertilisers) which are energy-intensive; switching them has both high potential benefit and high adaptation challenge. Also, local cost sensitivities are high: industries may not absorb big cost premiums.
The financing environment and cost of capital tend to be higher in India for such novel technologies, which increases risk unless mitigated by government policy or private sector innovation.

Policy Recommendations and Emerging Business Models

To ensure green hydrogen becomes cost-competitive by 2030 and is adopted broadly in industry, several policy levers and business model innovations will be crucial.

Policy measures:

Fiscal incentives and subsidies for production, particularly for early years, for renewable power, for electrolysers, for transport/storage infrastructure.
Waivers or reductions of grid access fees, interstate transmission charges, and open access charges for renewables powering hydrogen facilities.
Simplified regulatory approvals: environmental clearances, land permits etc., must be streamlined.
Procurement mandates or offtake agreements: government can act as anchor demand, e.g. requiring a certain % of industrial hydrogen usage or of government or public sector procurement to be green hydrogen.
Support for local manufacturing of electrolysers and related components, so that India does not remain dependent on imports, reducing costs and supply chain risk.
Carbon pricing or emissions trading that penalises carbon emissions sufficiently, so the environmental cost of grey hydrogen is internalised, making green hydrogen more competitive.
Creating industrial hydrogen clusters: Co-locating production, usage, transport, and storage close to demand centres and renewable energy supply to reduce transport and infrastructure costs.

Business models:

Green Hydrogen as a Service (GHaaS): where producers partner with industries, offering hydrogen supply contracts rather than the industries investing in their own hydrogen plants. This can reduce the upfront capital burden on industrial users.
Export-oriented models: Producing green hydrogen derivatives (ammonia, methanol) for export to countries demanding low-carbon feedstocks or transport fuels.
Public-Private Partnerships (PPPs) and blended financing mechanisms: combining government support with private investment and leveraging green bonds, concessional loans, etc.
Demand aggregation: industries join together to guarantee off-take, reducing risk for producers.
Innovative tariff and pricing models: e.g., time-of-use contracts for renewable electricity, contracts that allow hydrogen producers to hedge power costs.

Future Outlook: Beyond 2030

If India and other leading nations succeed in driving down green hydrogen costs, by 2030, the scene may look very different. Costs below USD 2/kg may become common in many locations. Some forecasts even suggest costs possibly approaching USD 1-1.5/kg under ideal conditions (very cheap renewable power, high electrolyser efficiency, high utilisation).

Beyond that, we may see green hydrogen derivatives — green ammonia, green methanol, e-fuels — becoming more widespread, enabling decarbonization even in shipping, aviation, and chemicals. Hydrogen storage technologies, transport infrastructure (pipelines, shipping in molecular or chemical carrier forms), and refuelling stations for mobility could scale significantly.

Furthermore, as global trade in hydrogen derivatives matures, India has the potential not just to meet domestic demand but also to become an exporter or hub, especially given its renewable energy potential and large industrial base.

FAQs

When will green hydrogen reach cost parity with grey hydrogen?

Many studies currently project that in several geographies, green hydrogen could approach cost parity with grey hydrogen by 2030, especially if renewable energy costs continue to decline, electrolysers scale up, and policy incentives are aligned. In India, the goal is for costs around USD 2/kg by 2030.

What are the main factors affecting green hydrogen prices?

Input power cost, electrolyser capital and efficiency, utilisation (load factor), transmission and distribution costs, storage and transport losses, financing costs and regulatory/policy burdens.

Which industries will benefit the most from green hydrogen?

Hard-to-abate, energy-intensive sectors: steel, cement, fertilizers, refining, chemicals, heavy transport. Also niche uses such as hydrogen blending, or ammonia / methanol production even for export.

Why is India investing heavily in green hydrogen?

India sees green hydrogen as a way to achieve multiple goals: climate change mitigation (net-zero by 2070), energy security (reducing fossil fuel imports), economic development (domestic manufacturing, job creation), and international competitiveness (exports of hydrogen or derivatives). Policy is aligning around this through subsidies, regulatory reforms, industrial missions.

Conclusion

Green hydrogen’s journey from high-cost novelty to industrial mainstay is becoming more plausible than ever. By 2030, driven by falling renewable energy costs, scale in electrolyser manufacturing, policy support, and demand aggregation, green hydrogen is likely to become cost-competitive (or close to) in many industrial applications, especially in India. The industries poised to lead are those that have hitherto found decarbonization most difficult: steel, cement, fertilizers, heavy transport.

Nonetheless, the path is not without its obstacles: infrastructure, safety standards, financing, regulatory complexity, public awareness and consistent policy execution will all need attention. For India, making the pieces fall into place will mean being both ambitious and disciplined: investing in renewables, encouraging local manufacturing, simplifying regulatory pathways, and ensuring strong demand signals.

As the world moves closer to net-zero goals, green hydrogen could shift from hidden gem to one of the cornerstones of a sustainable energy economy. For industry leaders, policymakers, investors, researchers and citizens, understanding the cost dynamics, challenges, and potential is essential. If the momentum holds, 2030 could be a watershed year for green hydrogen—where, for many, green hydrogen ceases to be a premium add-on and becomes an economically sensible choice.

Sources

Here are the main research/reports/pages from which data and insights were drawn:

Green Hydrogen Production Pathways for India (RMI) — projected cost decline from ~$4.4/kg to ~$2.4/kg by 2030; role of subsidies and states. RMI
At scale adoption of Green Hydrogen in Indian Industry (A. Jindal, 2024) — giving LCOH numbers: USD 4.45/kg now, moving to ~USD 2.45/kg by 2030. ScienceDirect
India’s green hydrogen-fuelled industrial clusters, World Economic Forum & Bain & Company — cost targets less than $2/kg, industrial clusters near ports, etc. World Economic Forum
India’s Green Hydrogen Strategy in Action (IFRI, 2025) — cost reduction goals, electrolyser localisation, etc. Ifri
India’s Green Hydrogen Strategy: Redirect Fossil Fuel Incentives … (Down to Earth / EY India) — showing cost expected to drop to around $3-$3.75/kg in many cases; policy measures. Down To Earth
From Promise to Purchase: Unlocking India’s Green Hydrogen Demand (Bai,n, etc.) — comparing current vs grey hydrogen cost, demand-side barriers. Bain
India’s Green Hydrogen Roadmap: 2025 to 2030, Sort Consultancy — details on NGHM measures and cost target ~USD 2/kg. SORT Consultancy
How can Indian policymakers boost investments for domestic green hydrogen financing (CEEW) — cost ranges, policy levers, challenges? CEEW
Techno-Economic Analysis of Hydrogen Production (arXiv) — comparison of grey/blue/green hydrogen costs globally; importance of power cost, etc. arXiv