The Union Cabinet’s Rs. 37,500 crore incentive scheme to promote surface coal and lignite gasification into syngas and downstream products is one of the most significant policies of our times. This is even more consequential for India’s hydrogen ecosystem. Be it urea or ammonia used in fertilisers or a refinery for transport fuel, all of it runs on a molecule called hydrogen. India consumes roughly 6 million metric tonnes (MMT) of this workhorse molecule every year, a number expected to double to 12 MMTPA by 2030 as the economy expands. But the real challenge is where this hydrogen comes from, its planetary cost, and India’s import dependence. The answer increasingly points to coal. 

Globally, 96% of hydrogen is produced by steam methane reforming of natural gas, emitting 9–12 kg of CO₂/kg of hydrogen produced. This is "grey hydrogen." What is less discussed, and more relevant to India, is "brown hydrogen" produced from coal gasification, a thermochemical process in which coal or lignite reacts with steam and oxygen, undergoing partial oxidation to produce synthesis gas (syngas), a mixture of hydrogen and carbon monoxide. 

While coal gasification emits CO₂ at levels comparable to those of natural gas reforming, it produces a high-purity, high-pressure CO₂ stream well-suited for Carbon Capture, Utilisation and Storage (CCUS) technologies. With CCUS, this pathway can produce “blue hydrogen” with over 90% lower emissions than the unabated baseline. This is where 2026-27’s Rs. 20,000 crore CCUS outlay matters Budget as much as the gasification scheme itself. Together, they represent a Rs. 57,500 crore bet on a blue hydrogen industrial strategy. 

Yet India's official hydrogen policy has not caught up with this logic. The National Green Hydrogen Mission (NGHM), with an outlay of Rs. 19,744 crore over seven years, is India's flagship hydrogen programme, aiming to achieve 5 MMT per annum of green hydrogen production capacity by 2030, supported by 125 GW of dedicated renewable energy. Alongside the NGHM, the Green Hydrogen Certification Scheme of India (GHCI), launched by the Bureau of Energy Efficiency in April 2025, sets a lifecycle emissions threshold of 2 kg CO₂/kg hydrogen, one of the most demanding green hydrogen standards in the world. Eligible production pathways under the GHCI are currently limited to electrolysis powered by renewable energy and biomass-based conversion. Coal gasification with CCUS, regardless of its actual lifecycle carbon intensity, falls entirely outside the certification tent. 

In effect, a hydrogen produced from Indian coal via gasification and carbon capture, with a lifecycle intensity below 2 kg CO₂/kg hydrogen, fails India's green certification, while a molecule with identical emissions from an electrolyser with imported critical minerals and high water requirements would pass. That is not rational climate policy but sheer hex-code obsession. India's hydrogen mission obsesses over the colour agenda rather than focusing on the molecule itself, its footprint across the full lifecycle, and, most critically, where it comes from and who controls its supply chain. The solution is simple: include coal gasification with CCUS under the GHCI, using the same emissions threshold as electrolysis. Allow projects to combine gasification and CCUS incentives, and shift the NGHM target from “green” to “clean” hydrogen, including blue hydrogen. Beyond certifications and targets, the strongest case for coal-to-hydrogen is energy sovereignty. 

In the financial year 2025-26 alone, India's import bill was Rs. 2.77 lakh crore, which, along with energy security threats, raises geopolitical and sovereignty vulnerabilities. And it has a domestic solution sitting right beneath the ground— coal. India's 401 billion tonnes of coal reserves are domestic, sovereign, and domestically priced; its supply chain is onshore, and the workforce is Indian. The FOREX stays in the country. A coal-based blue hydrogen economy is not merely cheaper than its alternatives in the Indian context but is also more secure. The self-reliance quotient of a molecule produced from Indian coal, captured with Indian CCUS, is categorically higher than that of green hydrogen dependent on imported electrolyser supply chains and scarce freshwater, or grey hydrogen dependent on imported LNG. 

Therefore, India should seriously explore coal gasification for hydrogen. While technological and economic challenges persist, hampering investment and growth in the coal gasification industry, should be addressed by the new incentive scheme. While the scheme aims to address financial incentives of up to 20% of plant and machinery costs, there is still a lack of clear guidance on offtake assurances and on providing infrastructure status to further strengthen economic viability. 

But beyond clean energy, energy security means supply control. Coal offers that, gasification provides the pathway, and CCUS adds climate credibility. Policy certification now needs to align with this reality. 

(Dr. Akanksha Jain and Ms. Shagun Mamgain are Research Consultants at the Centre for Climate Change and Energy Transition (CCET), at the Chintan Research Foundation (CRF). Views expressed are personal.)