India has ambitious targets to produce 5 million tonnes of green hydrogen by 2030. Yet today, industries still burn through grey hydrogen like it’s the only option. The reason is cost. And understanding why requires knowing the difference between three types of hydrogen that sound identical but are made completely differently.
This blog breaks down how hydrogen is actually produced, why each type costs what it does, and why India’s supply ambitions haven’t translated into real demand yet. By the end, you’ll understand which hydrogen type does what, why industries can’t just switch, and where green hydrogen will actually get used first.
What Are the Main Types of Hydrogen?
How you make hydrogen determines everything: cost, emissions, and whether industries will actually adopt it.
Three types of hydrogen dominate the conversation. They’re named after colours based on their production method, which sounds odd until you realize it’s a useful shorthand. The colour isn’t a chemical property. It’s a label for how much carbon the production process left behind.
Grey hydrogen is what the world runs on today. Blue is the compromise solution being tested in pockets. Green is where policy and investment are pushing hard, especially in India.
Each one starts with the same goal: produce hydrogen. Each one takes a radically different path to get there.
The Hydrogen Colour Spectrum
Type | How It’s Made | Energy Source | CO₂ per kg H₂ | Where It’s Used |
|---|---|---|---|---|
Grey | Steam methane reforming (SMR) from natural gas, no capture | Natural gas | 9-12 kg | Refineries, fertiliser plants, chemical industry |
Blue | SMR with carbon capture and storage (CCS) bolted on | Natural gas + electricity for capture | 1.5-4 kg | Emerging projects, industrial pilot schemes |
Green | Electrolysis splitting water using renewable energy | Wind, solar, hydropower | 0-0.6 kg | Emerging capacity, export markets, demonstration projects |
How Is Grey Hydrogen Made, and Why Does India Use It?
Grey hydrogen production is simple. You take natural gas, heat it to about 800°C with steam, and the carbon and hydrogen separate. You keep the hydrogen. The carbon escapes as CO₂ into the atmosphere.
It’s been done this way for decades. The process is mature, proven, and cheap. Every refinery in India uses it. Every fertilizer plant that makes ammonia uses it. The infrastructure exists and the technology is reliable. And remains significantly cheaper than any low-carbon alternative per kilogram.
The hidden cost: roughly 9 to 12 kilograms of CO₂ for every kilogram of hydrogen produced. That’s the emissions bill nobody was paying until carbon pricing became a real conversation.
India currently uses grey hydrogen for almost everything because it’s the path of least resistance.
How Is Blue Hydrogen Different?
Blue hydrogen takes the same starting point as grey. You still use natural gas. You still run the same reforming process.
Then you add one more step: capture the carbon dioxide before it escapes, cool it, compress it, and inject it underground into geological formations.
The result: Blue hydrogen with carbon capture reduces emissions from 9–12 kg CO₂ per kg down to 1.5–4 kg CO₂ per kg. Better than grey, not zero. In capture equipment, methane still leaks during production. Storage requires ongoing monitoring.
Cost: ₹300–400 per kilogram. More expensive than grey, cheaper than green.
Blue is being tested in small projects globally. North America is moving fastest. India hasn’t prioritized it, viewing it as a stepping stone rather than a destination. And that makes sense: if you’re going to invest, why stop at low carbon when you can reach near zero?
How Is Green Hydrogen Produced?
Green hydrogen production is fundamentally different.
You take water. You run an electric current through it. Electrolysis splits H₂O into hydrogen and oxygen. That’s it. No fossil fuels. No combustion. No hidden emissions, provided the electricity came from renewable sources.
When it’s said that hydrogen is renewable, it’s that the electrons used were generated by solar panels or wind turbines instead of coal powered plants. Hydrogen fuel made in this clean way almost does not produce any emissions: from 0 up to 0.6 kilograms of CO per kilogram of hydrogen, considering the manufacturing of the equipment and the losses in the grid.
The problem: Cost. Green hydrogen production in India costs ₹397–560 per kilogram today. That’s 2 to 3 times more expensive than grey.
Why? Electrolyzers are expensive capital equipment. Renewable electricity, while falling in price, still costs more than fossil gas. And the entire supply chain for electrolyser components is imported because India doesn’t manufacture them yet.
The Reality in India (2026)
Type | Main Barrier to Adoption | Main Barrier to Adoption |
|---|---|---|
Grey | Most commercially established | High emissions and limited carbon-cost pressure |
Blue | Requires additional infrastructure | Carbon capture complexity and infrastructure gaps |
Green | Cleaner but still scaling commercially | Competitiveness, equipment availability and uncertain demand |
That cost gap explains India’s paradox: the government targets 5 million tonnes of green hydrogen by 2030.
Companies have announced projects totalling 2.5 times that capacity. But demand is nowhere. Industries won’t switch from grey to green unless economics forces them.
So Why Isn't India Using Green Hydrogen Yet? The Demand Gap
Supply isn’t the problem. Demand is.
An oil refinery doesn’t choose hydrogen based on emissions ideals. It chooses based on cost per tonne. A fertiliser plant doesn’t care about carbon footprint mandates if switching hydrogen types cuts profit margins.
That’s how business works when margins are thin and competition is global.
Green hydrogen needs one of three things to scale:
- Carbon pricing that makes grey hydrogen expensive enough to trigger a switch
- Policy mandates that require industries to use a percentage of green hydrogen
- Cost parity where green and grey cost the same
India is working on all three. But none are at critical mass yet.
Where Will Green Hydrogen Actually Get Used First?
Green hydrogen won’t start by replacing all grey hydrogen gradually. It’ll start in sectors where hydrogen for industrial decarbonization is the only viable path because electricity can’t do the job.
- Steel manufacturing – You can’t make steel with a battery. Steel production needs hydrogen to reduce iron ore. This is happening now in pilot plants globally. India has announced projects.
- Fertiliser production – Ammonia, the basis for most fertilisers, needs hydrogen as a chemical feedstock. You can’t electrify this process. Green ammonia from green hydrogen is one of the highest priority applications.
- Oil refining – Refineries already buy hydrogen. Switching to green hydrogen is the most straightforward path. IOCL is building India’s first green hydrogen unit at Panipat refinery.
- Shipping and aviation – Battery electrification works for cars and trains. For long haul ships and aircraft, you need energy dense fuels. Green hydrogen or green ammonia are the only realistic options.
These aren’t theoretical applications. Pilot projects are running. Commercial projects are being financed. This is where the transition starts.
Transition Your Industrial Operations to Clean Energy
Quick Takeaway
Three plain truths about types of hydrogen in India right now:
The hydrogen colour classification describes the production method, not the gas itself.
Grey is cheap today (₹150–200/kg). Green is expensive today (₹397–560/kg). Blue sits between but hasn’t scaled because it’s viewed as temporary.
India has ambitious production targets but lacks committed demand. Cost is the real barrier. Once green hydrogen falls to ₹200–250/kg (expected by 2030 with scale), industrial switching becomes inevitable.
Frequently Asked Questions:
Grey (made from natural gas), blue (natural gas with carbon capture), and green (renewable powered electrolysis). These are the three types of hydrogen that matter at scale.
Green hydrogen uses renewable electricity and produces near zero emissions. How green hydrogen is different comes down to this: no fossil fuels involved.
Grey produces 9–12 kg CO₂ per kg. Blue captures some of that. Green eliminates it almost entirely.
The green hydrogen production process requires expensive electrolysers and renewable energy infrastructure. As both scale and costs fall, green hydrogen will become cost competitive by 2030-2032.
Steel, fertilisers, shipping, aviation, and oil refining. These sectors use hydrogen as a chemical feedstock or energy source where batteries simply don't work. Hydrogen for industrial decarbonization is essential in these hard to abate industries.
Likely on production capacity. But demand is uncertain. Industries won't switch unless cost improves or policy mandates green hydrogen adoption. The real test isn't supply. It's whether buyers actually commit to purchasing green hydrogen at current prices.
