Adani, Total team up in $5bn green hydrogen project

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% 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’s shares were trading almost 6% higher in Mumbai at 11:53 a.m. local time.

The purchase would be yet another shot in the arm for Adani, who has been seeking global investors and has committed to spend as much as $70 billion by 2030 across 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 a target of being net-zero carbon by 2070.

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% stake in Adani Gas Ltd. — now called Adani Total Gas Ltd. — and last year spent $2.5 billion acquiring 20% of Adani Green Energy Ltd. and a 50% stake in a portfolio of solar assets.

Green hydrogen, produced from water and renewable power, is forecast for rapid growth this decade, and global output could jump as much as 18-fold to about 11.6 million tons a year by 2030 with strong policy support, according to BloombergNEF.

Potential Path

It also offers a potential path to decarbonize heavy industries such as steelmaking, cement production and fertilizers. While the fuel is still a long way from being commercially viable, India targets production of 5 million tons by the end of the decade.

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.