Green Hydrogen and Carbon Credits – The Emerging Opportunity
Introduction: The Hydrogen Frontier
Green hydrogen is emerging as one of the most promising sectors for carbon credit generation in India. With the government's National Green Hydrogen Mission targeting 5 million metric tonnes per annum by 2030, the potential for carbon credit monetisation is enormous.
The connection between green hydrogen and carbon credits is direct and strategic. Green hydrogen production through electrolysis using renewable energy generates significant emission reductions by displacing fossil fuel-based hydrogen production — which is currently responsible for approximately 2% of global CO₂ emissions.
In March 2025, the Ministry of Power approved eight initial crediting methodologies spanning renewable electricity generation, green hydrogen production, industrial energy efficiency, landfill methane recovery, and nature-based solutions. This marked a significant step toward formalising green hydrogen carbon credits within India's domestic carbon market.
Over 40 entities have already registered projects spanning sectors such as biogas, green hydrogen, and forestry, according to the government. These early registrations suggest broad interest and readiness among industries to participate once the trading platform goes live.
This guide provides a comprehensive overview of how green hydrogen projects can generate carbon credits, the regulatory framework, methodologies, revenue potential, and how to participate in this emerging opportunity.
What Is Green Hydrogen?
Definition
Green hydrogen is hydrogen produced through the electrolysis of water using electricity from renewable sources — primarily solar, wind, or hydro power. The process produces hydrogen and oxygen with zero direct carbon emissions.
The Hydrogen Colour Spectrum
| Colour | Production Method | Emissions |
|---|---|---|
| Green | Electrolysis using renewable electricity | Zero emissions |
| Blue | Steam methane reforming with carbon capture | Low emissions |
| Grey | Steam methane reforming without carbon capture | High emissions |
| Brown | Coal gasification | Very high emissions |
The Emission Threshold
India has notified the emission threshold of 2 kg CO₂e/kg H₂ to officially classify hydrogen as "green". Only hydrogen meeting this threshold qualifies for green hydrogen certification and carbon credits.
The Production Process
| Stage | Description |
|---|---|
| 1. Renewable electricity generation | Solar, wind, or hydro power |
| 2. Electrolysis | Electricity splits water (H₂O) into hydrogen (H₂) and oxygen (O₂) |
| 3. Purification | Hydrogen is purified for use |
| 4. Storage/Transport | Hydrogen is stored and transported for use |
India's National Green Hydrogen Mission
The Mission
India's National Green Hydrogen Mission aims to make the country a global hub for green hydrogen production, targeting 5 million metric tonnes per annum by 2030.
The Policy Framework
| Element | Description |
|---|---|
| Emission Threshold | 2 kg CO₂e/kg H₂ |
| Target | 5 million metric tonnes per annum by 2030 |
| Certification | Green Hydrogen Certification of India (GHCI) |
| Incentives | Production-linked incentives, viability gap funding |
The Strategic Importance
Green hydrogen is central to India's decarbonisation strategy for hard-to-abate sectors:
- Steel: Hydrogen-based direct reduction of iron
- Fertiliser: Green ammonia production
- Refining: Hydrogen for hydrocracking and desulphurisation
- Transport: Hydrogen fuel cells for heavy transport
- Power: Hydrogen for long-duration energy storage
The NDC Context
India's NDC for 2031 to 2035, approved on 25 March 2026, raises the non-fossil power capacity target to 60 percent by 2035, increases the emissions intensity reduction target to 47 percent from 2005 levels, and expands the carbon sink target to 3.5 to 4 billion tonnes of CO₂ equivalent. Green hydrogen will play a critical role in achieving these targets.
The Green Hydrogen Certification of India (GHCI)
What Is GHCI?
The Green Hydrogen Certification Scheme of India (GHCI) is a government-backed certification system launched by the Ministry of New & Renewable Energy (MNRE).
The GHCI Digital Portal
The GHCI Digital Portal serves as the single-window platform where hydrogen producers register, submit production data, and receive government-backed certification confirming their hydrogen meets the emission threshold of 2 kg CO₂e/kg H₂.
Portal Features
| Feature | Description |
|---|---|
| Digital signatures | Secure authentication |
| Automated fee calculation | Transparent fee structure |
| Certificate generation | QR verification for authenticity |
| Public certificate registry | Transparency and traceability |
GHCI Certification Benefits
GHCI certification enables producers to:
- Claim carbon credits: Access the carbon credit market
- Access government incentives: Production-linked incentives, viability gap funding
- Demonstrate green credentials: To domestic and international buyers
- Support export competitiveness: Meet international green hydrogen standards
The Workflow
| Step | Description |
|---|---|
| 1. Registration | Hydrogen producers register on the portal |
| 2. Data submission | Producers submit production data |
| 3. Verification | Accredited Carbon Verifiers (ACVs) verify the data |
| 4. Certification | Technical Committee reviews and certifies |
| 5. Certificate issuance | Certificate is generated with QR verification |
How Green Hydrogen Generates Carbon Credits
The Basic Mechanism
Green hydrogen projects generate carbon credits by displacing fossil fuel-based hydrogen production and avoiding the associated emissions.
The Baseline Scenario
The baseline scenario is what would have happened without the green hydrogen project:
- Hydrogen would have been produced using steam methane reforming (SMR) or coal gasification
- These processes generate significant CO₂ emissions
The Project Scenario
The project scenario includes:
- Hydrogen production through electrolysis using renewable electricity
- Zero direct emissions from hydrogen production
- Displacement of fossil fuel-based hydrogen
The Emission Reduction Formula
Emission Reductions (tCO₂e) = Baseline Emissions – Project Emissions – Leakage
The Key Variables
| Variable | Description |
|---|---|
| Hydrogen production | Volume of green hydrogen produced |
| Baseline emission factor | Emissions from fossil fuel-based hydrogen production |
| Grid emission factor | Emissions intensity of the electricity used |
| Renewable share | Percentage of renewable electricity in the mix |
The Emission Threshold
To qualify as "green" and generate carbon credits, hydrogen must meet the emission threshold of 2 kg CO₂e/kg H₂.
The Regulatory Framework: CCTS Offset Mechanism
The Offset Mechanism
Under India's Carbon Credit Trading Scheme (CCTS), green hydrogen projects can participate through the Offset Mechanism. This voluntary mechanism enables non-obligated entities to register eligible projects and earn Carbon Credit Certificates (CCCs).
The CCTS Framework
The CCTS includes a voluntary offset market open to all entities, enabling projects in renewable energy, biogas, green hydrogen, afforestation, and waste management to register and earn tradable carbon credits.
Approved Methodologies
In March 2025, the Ministry of Power approved eight initial crediting methodologies spanning renewable electricity generation, green hydrogen production, industrial energy efficiency, landfill methane recovery, and nature-based solutions.
The government has stated there will be methodologies for green hydrogen from electrolysis, and from biomass.
Key Timelines
| Event | Timeline |
|---|---|
| Methodologies approved | March 2025 |
| Indian Carbon Market Portal launch | March 21, 2026 |
| Voluntary offset trading | Expected 2026 |
| Compliance trading | 2026-27 |
Key Institutions
| Institution | Role |
|---|---|
| Bureau of Energy Efficiency (BEE) | Administrator — develops methodologies, registers projects, monitors compliance |
| Grid Controller of India | Registry — maintains CCC accounts |
| CERC | Regulator — oversees trading |
Approved Methodologies for Green Hydrogen
Available Methodologies
| Methodology | Description | Applicability |
|---|---|---|
| Green Hydrogen Production (Electrolysis) | Hydrogen production through electrolysis of water using renewable electricity | Hydrogen from electrolysis using captive renewable power |
| Green Hydrogen Production (Biomass) | Hydrogen production from biomass | Hydrogen from biomass gasification |
| Renewable Electricity Generation | Grid-connected renewable electricity generation | Green hydrogen projects integrated with renewable power |
The Green Hydrogen Methodology Details
The green hydrogen methodology covers:
- Hydrogen production from electrolysis of water
- Using electricity from a captive renewable power plant only
- Or from a mix of electricity predominantly from a captive renewable plant and residually from the electric grid
Methodology Requirements
| Requirement | Description |
|---|---|
| Baseline setting | Establish a credible baseline scenario |
| Additionality assessment | Demonstrate additionality using approved tools |
| Emission reduction quantification | Calculate emission reductions using approved methods |
| Monitoring | Implement a robust monitoring plan |
| Verification | Have emission reductions verified by an independent VVB |
| GHCI certification | Obtain GHCI certification for the hydrogen produced |
The Additionality Assessment
Key considerations for additionality assessment:
- Financial barriers: Did the project need carbon revenue to be viable?
- Technological barriers: Did the project require investment in unproven technology?
- Institutional barriers: Did the project face regulatory or policy hurdles?
- Common practice: Is the project type common in the region?
Project Types That Qualify
Electrolysis Using Captive Renewable Power
| Aspect | Details |
|---|---|
| Description | Hydrogen production through electrolysis of water using electricity from a captive renewable power plant only |
| Renewable Source | Solar, wind, or hydro |
| Key Requirement | Renewable electricity must be generated from a captive plant |
| Emission Threshold | ≤ 2 kg CO₂e/kg H₂ |
Electrolysis Using Grid and Renewable Mix
| Aspect | Details |
|---|---|
| Description | Hydrogen production using a mix of electricity predominantly from a captive renewable plant and residually from the electric grid |
| Key Requirement | Predominantly from captive renewable plant |
| Emission Threshold | ≤ 2 kg CO₂e/kg H₂ |
Biomass Gasification
| Aspect | Details |
|---|---|
| Description | Hydrogen production through gasification of biomass |
| Feedstock | Agricultural residue, forestry residue, municipal solid waste |
| Key Requirement | Sustainable biomass sourcing |
Step-by-Step: How to Earn Carbon Credits from a Green Hydrogen Project
Step 1: Set Up a Green Hydrogen Project
Action: Establish a green hydrogen production facility using approved technology.
Key requirements:
- Renewable electricity source (captive renewable power plant)
- Electrolysis system
- Hydrogen purification and storage
- Monitoring and measurement systems
Step 2: Obtain GHCI Certification
Action: Register on the GHCI Digital Portal and obtain certification for your hydrogen.
Process:
- Register on the portal
- Submit production data
- Get verified by an Accredited Carbon Verifier (ACV)
- Receive GHCI certification
Step 3: Choose the Right Carbon Credit Methodology
Action: Select an approved methodology for green hydrogen projects.
Timeline: 2-4 weeks
Step 4: Carry Out a Baseline Emission Study
Action: Establish the baseline scenario:
- Fossil fuel-based hydrogen production that would have occurred
- Associated emissions
Timeline: 4-8 weeks
Step 5: Prepare the Project Design Document (PDD)
Action: Document the project design, including:
- Project description
- Baseline scenario
- Methodology selection
- Emission reduction calculations
- Monitoring plan
Timeline: 4-8 weeks
Step 6: Demonstrate Additionality
Action: Use approved tools to prove that the project would not have happened without carbon finance.
Timeline: 2-4 weeks
Step 7: Appoint a Validation and Verification Body (VVB)
Action: Select a VVB empanelled with the relevant registry and accredited in the energy sector.
Timeline: 2-4 weeks
Step 8: Validation
Action: The VVB validates the project design and issues a Validation Report.
Timeline: 2-4 months
Step 9: Registration
Action: Submit the Request for Registration to the registry.
For CR-I: Use the Indian Carbon Market Portal launched on March 21, 2026.
Timeline: 14-30 working days
Step 10: Project Implementation and Monitoring
Action: Operate the green hydrogen facility. Monitor:
- Hydrogen production
- Renewable electricity consumption
- Emissions avoided
Timeline: Ongoing
Step 11: Verification
Action: The VVB verifies the emission reductions and issues a Verification Report.
Timeline: 2-4 months
Step 12: Issuance
Action: Apply for issuance of Carbon Credit Certificates.
Timeline: 14-30 working days
Step 13: Sale
Action: Sell CCCs through Power Exchanges or bilateral agreements.
Timeline: Ongoing
Revenue Potential and Project Economics
The Economics of Green Hydrogen Projects
Green hydrogen projects generate revenue from multiple sources:
- Green hydrogen sales: Selling hydrogen to industrial users
- Government incentives: Production-linked incentives, viability gap funding
- Carbon credits: Selling CCCs to obligated entities or ESG buyers
The Role of Carbon Credits
Carbon credits can significantly improve green hydrogen project economics by:
- Adding a new revenue stream
- Reducing payback periods
- Attracting investment
- Making projects commercially viable
Revenue Projections
| Project Size | Annual H₂ Production (tonnes) | CO₂ Avoided (tonnes/year) | Annual Carbon Revenue (at ₹800/credit) |
|---|---|---|---|
| 1 MW electrolyser | ~150 tonnes | ~1,500 tonnes | ₹12,00,000 |
| 5 MW electrolyser | ~750 tonnes | ~7,500 tonnes | ₹60,00,000 |
| 10 MW electrolyser | ~1,500 tonnes | ~15,000 tonnes | ₹1,20,00,000 |
| 50 MW electrolyser | ~7,500 tonnes | ~75,000 tonnes | ₹6,00,00,000 |
Note: Actual carbon credit generation depends on the baseline emission factor and project design.
The GHCI Digital Portal
What Is the GHCI Digital Portal?
The GHCI Digital Portal serves as the single-window platform where hydrogen producers register, submit production data, and receive government-backed certification confirming their hydrogen meets the emission threshold of 2 kg CO₂e/kg H₂.
Portal Features
| Feature | Description |
|---|---|
| Single-window platform | All certification processes in one place |
| Digital signatures | Secure authentication for all transactions |
| Automated fee calculation | Transparent and efficient |
| Certificate generation | QR verification for authenticity |
| Public certificate registry | Transparency and traceability |
The Workflow
| Role | Function |
|---|---|
| Producers | Register, submit data, receive certification |
| Accredited Carbon Verifiers (ACVs) | Verify production data |
| Technical Committee | Review and approve certification |
Why GHCI Certification Matters
GHCI certification enables producers to:
- Claim carbon credits: Access the carbon credit market
- Access government incentives: Production-linked incentives, viability gap funding
- Demonstrate green credentials: To domestic and international buyers
- Support export competitiveness: Meet international green hydrogen standards
Green Hydrogen and CBAM: The Export Connection
The CBAM Context
The Carbon Border Adjustment Mechanism (CBAM) is the EU's carbon tariff on imports. It came into effect on January 1, 2026, placing a carbon price on emissions from carbon-intensive products.
The Hydrogen Connection
Green hydrogen can help Indian exporters reduce their carbon footprint and CBAM liability:
- Steel: Hydrogen-based direct reduction of iron can significantly reduce steel emissions
- Fertiliser: Green ammonia production reduces fertiliser emissions
- Refining: Green hydrogen reduces refinery emissions
The Export Opportunity
GHCI certification enables producers to demonstrate green credentials to domestic and international buyers — supporting India's clean energy transition and export competitiveness.
The Strategic Advantage
Companies that invest in green hydrogen and earn carbon credits will be better positioned to:
- Meet CBAM requirements
- Access premium markets
- Demonstrate carbon compliance
- Reduce export costs
Challenges and How to Overcome Them
Challenge 1: Additionality
Problem: Demonstrating that the project would not have happened without carbon finance.
Solution: Use approved additionality tools. Document financial, technological, and institutional barriers.
Challenge 2: GHCI Certification
Problem: Obtaining GHCI certification requires rigorous verification.
Solution: Engage early with Accredited Carbon Verifiers. Ensure compliance with the 2 kg CO₂e/kg H₂ threshold.
Challenge 3: Renewable Electricity
Problem: Ensuring renewable electricity is genuinely additional and not diverted from other uses.
Solution: Use captive renewable power plants. Document additionality of renewable electricity.
Challenge 4: Baseline Setting
Problem: Establishing a credible baseline scenario.
Solution: Use conservative assumptions. Document current hydrogen production practices.
Challenge 5: Market Access
Problem: Finding buyers at competitive prices.
Solution: Use a broker like Carboned.in to access market intelligence and buyer networks.
Challenge 6: Regulatory Uncertainty
Problem: Evolving regulations and methodologies.
Solution: Stay informed. Work with a carbon advisory firm. Adapt quickly to changes.
The Future of Green Hydrogen in India's Carbon Market
The Growing Opportunity
India's green hydrogen sector is poised for significant growth:
- National Green Hydrogen Mission: 5 million tonnes per annum by 2030
- Approved methodologies: Eight initial methodologies for green hydrogen
- Early registrations: 40+ entities already registered
The Carbon Market Connection
The CCTS offset mechanism provides a clear pathway for green hydrogen projects to earn carbon credits. As the market matures, demand for green hydrogen carbon credits is expected to grow significantly.
The Investment Opportunity
The growing demand for carbon credits, combined with supportive government policies, creates a significant investment opportunity in green hydrogen projects.
The International Dimension
GHCI certification and carbon credits can help Indian green hydrogen producers access international markets and demonstrate compliance with global standards.
How Carboned.in Can Help
At Carboned.in, we help green hydrogen project developers navigate the carbon credit process with clarity and confidence.
Our Services
| Service | What We Do |
|---|---|
| Eligibility Assessment | Determine if your green hydrogen project qualifies |
| GHCI Certification Support | Guide you through the GHCI certification process |
| Methodology Selection | Choose the right methodology for green hydrogen |
| Baseline Study | Conduct a credible baseline emission study |
| Additionality Assessment | Demonstrate additionality using approved tools |
| Documentation Support | Prepare PDDs and supporting documents |
| VVB Coordination | Connect you with empanelled VVBs |
| Registration Support | Guide you through CR-I, Verra, or Gold Standard |
| Credit Brokerage | Connect you with buyers at competitive prices |
Why Choose Carboned.in?
| Reason | Why It Matters |
|---|---|
| Legal Expertise | Led by Siddharth Gupta, Advocate, Calcutta High Court |
| Regulatory Knowledge | Deep understanding of CCTS, GHCI, and green hydrogen methodologies |
| Practical Experience | Real-world experience with project registration |
| End-to-End Support | From GHCI certification to credit sale, we guide you every step |
Your first consultation is completely free. No obligation. Just honest advice.
Frequently Asked Questions
What is green hydrogen?+
Hydrogen produced through electrolysis of water using renewable electricity, with emissions ≤ 2 kg CO₂e/kg H₂.
What is the National Green Hydrogen Mission?+
India's mission to make the country a global hub for green hydrogen production, targeting 5 million metric tonnes per annum by 2030.
What is GHCI?+
The Green Hydrogen Certification of India — a government-backed certification scheme that verifies hydrogen meets the emission threshold of 2 kg CO₂e/kg H₂.
How does green hydrogen generate carbon credits?+
By displacing fossil fuel-based hydrogen production and avoiding the associated emissions.
What is the emission threshold for green hydrogen?+
≤ 2 kg CO₂e/kg H₂.
What methodologies are available for green hydrogen?+
Methanol for green hydrogen production through electrolysis using renewable electricity and from biomass.
How many methodologies have been approved?+
Eight initial methodologies were approved in March 2025, including green hydrogen production.
How many entities have registered green hydrogen projects?+
Over 40 entities have registered projects across sectors including biogas, green hydrogen, and forestry.
What is the GHCI Digital Portal?+
A single-window platform where hydrogen producers register, submit production data, and receive government-backed certification.
Can green hydrogen help with CBAM?+
Yes. Green hydrogen can help Indian exporters reduce their carbon footprint and CBAM liability.
What is the revenue potential for green hydrogen carbon credits?+
A 1 MW electrolyser generating ~1,500 tonnes of CO₂ reduction annually could earn ~₹12,00,000 at ₹800/credit.
What is the CCTS offset mechanism?+
A voluntary mechanism that enables non-obligated entities to register eligible projects and earn Carbon Credit Certificates (CCCs).
How can I get GHCI certification?+
Register on the GHCI Digital Portal, submit production data, get verified by an Accredited Carbon Verifier, and receive certification.
How can Carboned.in help?+
We provide GHCI certification support, methodology selection, documentation, registration, and credit brokerage.
Siddharth Gupta is the founder of Carboned.in and specialist counsel for India's carbon compliance framework — advising obligated entities, project developers, and buyers on CCTS, CR-I registration, and credit transactions.
