Total, Adani team up for $5 billion India hydrogen project

Hydrogen tank Source: iStock

French giant TotalEnergies SE and Indian billionaire Gautam Adani’s conglomerate plan to invest $5 billion to produce green hydrogen and related products in India as the world’s third-largest polluter seeks to decarbonize.

Total will buy a 25 per cent stake in Adani New Industries Ltd. for an undisclosed amount, according to an exchange filing from Adani Enterprises Ltd. on Tuesday. Adani New Industries is a closely-held company of Adani Enterprises, the flagship firm for the coal-to-ports conglomerate. Adani Enterprises’ shares rose 5.6 per cent in Mumbai, pushing this year’s jump to 28.5 per cent.

The purchase would be yet another shot in the arm for Adani, who has been seeking global investors to bolster his green energy ambitions. Adani New Industries aims to invest more than $50 billion over the next 10 years in green hydrogen and its ecosystem, the filing said, as part of the group’s broader plan to boost its presence in the green-energy value chain. Green hydrogen projects will also help India – the world’s third-largest carbon emitting country – to slash its reliance on oil and coal as it chases the target of being net-zero carbon by 2070. 

“To meet India’s energy transition goals, we need big money and technology to come into the green hydrogen sector to drive down the costs,” said Debasish Mishra, a Mumbai-based partner at Deloitte Touche Tohmatsu. “India can’t think of a decarbonization roadmap without green hydrogen.”

Total is boosting clean-energy output while reining in oil-product sales as shareholders demand greater efforts to fight climate change. It has previously teamed up with Adani to invest in natural gas and renewables in India, where the government this year unveiled plans – and incentives – for massive hydrogen growth. In 2019, Total bought a 37.4 per cent stake in Adani Gas Ltd. – now called Adani Total Gas Ltd. – and last year spent $2.5 billion acquiring 20 per cent of Adani Green Energy Ltd. and a 50 per cent stake in a portfolio of solar assets.

Potential Path

Adani New Industries will start by investing around $5 billion to build 2 gigawatts of hydrogen-producing electrolyzers powered by a 4-gigawatt solar and wind farm to make urea to displace imports of the fertilizer, Total said in a press release. The venture eventually plans to target 1 million tons of green hydrogen production a year by 2030, underpinned by 30 gigawatts of clean power capacity.

Other major producers could include Australian billionaire Andrew Forrest’s Fortescue Future Industries, which is aiming for initial output of 15 million tons a year of green hydrogen by 2030 from a network of global projects. Vestas Wind Systems A/S, InterContinental Energy and other partners are aiming to produce about 1.8 million tons of the fuel a year and to begin exports as soon as 2027 from the Asian Renewable Energy Hub in Western Australia.

© 2022 Bloomberg L.P.

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