The Year Of Green Hydrogen? Cleantech Predictions For India In 2025

India’s cleantech narrative witnessed some important shifts in 2024 helped by investments into solar power and electric vehicle (EV) infrastructure, and a much-needed innovation push for green hydrogen and nuclear fusion, which are coming under the spotlight as we step into 2025. 

Despite the progress in cleantech and climate tech innovation in 2024, the pace of progress remains slower than the accelerating climate crisis and the waste and carbon generated by human activities.

As per a report by the Centre for Science and Environment, India faced extreme weather events on 93% of the days between January and September in 2024.These claimed thousands of lives, affecting 3.2 Mn hectares of crops, and the overall magnitude of destruction was much larger than that. The outlook is grim not just for India or the Global South, but nearly every country worldwide.

While governments have looked to drive investments into climate tech and cleantech, the funding push and stronger policy measures have not created a groundswell for these clean technologies just yet. 

There’s still the question of which segments are getting the investments, and whether these investments are addressing the problems that need to be solved today.

As per those we spoke to, India’s cleantech priorities must include advancing renewable and clean energy solutions such as green hydrogen, enhancing waste recycling, improving carbon capture technologies, scientifically managing landfills, and implementing stricter ESG regulations for large corporations, that force them into action rather than just tokenism. 

In fact, as per Inc42’s research, the total amount of private funding in India’s cleantech sector has declined year-on-year (YoY) after 2022. This indicates a crucial gap that private investors have not been able to fill, either due to their fund structures or investment horizons. 

A report by IIMA Ventures and MUFG noted that out of the 800-odd operational climate tech startups in India, two-thirds have secured seed rounds while there is a noticeable gap in growth-stage capital. Less than 3% of the startups have raised Series B or beyond, indicating a need for more substantial later-stage investments to help promising solutions scale.

Meanwhile, as a country primarily dependent on fossil fuels as the energy source, India will have to make a significant shift in its energy source and storage to reach its net zero by 2070. An analysis by Wood Mackenzie shows that the country can achieve it by 2050 if renewable energy sources grow more than 5X comprising 76% of the total energy used, make trillions of dollars of investment, and harness the entrepreneurial spirit and immense software and data analytics skills that already exist in the country.

As the world grapples with the twin crises of climate change and energy security, India’s strides in cleantech can pave the way for transformative changes—both domestically and globally. With that, let’s dive deep into analysing what could be the key emerging trends in the broader cleantech ecosystem in the coming year. 

On The Inflection Point For Green Hydrogen 

Green hydrogen is the big north star for India’s clean energy project. The push for public-private partnerships resulted in collaborations between state-run corporations and businesses. 

This was in line with our prediction that the green hydrogen boom would be imminent in 2024. For instance, Amara Raja Infra successfully set up India’s first green hydrogen fuelling station in Ladakh for state-run NTPC Limited. 

In 2025, we expect startups to address the major headache of cost. While government financial support will become key in building cost-intensive electrolysers, concerns related to capital expenditure can be addressed only in two ways – tech innovation and scale.

Experts pointed to startups looking to produce green hydrogen more efficiently through commercialisation of R&D. For example, Peak XV-backed Newtrace has developed and is now expanding its groundbreaking membrane-less electrolysers to bring down the cost of production. The startup is now piloting its technology with BPCL and ONGC Energy Center, both major players in the energy industry. 

Similarly, h2e Power’s electrolysis system, based on solid oxide fuel cell (SOFC) technology, claims to lower onsite hydrogen production costs significantly. And recently it secured Oil India’s (OIL) tender to establish a 1 MW green hydrogen project in Himachal Pradesh.

In many ways, government contracts and tenders is the primary source of revenue for such companies, and investors would be watching this space keenly to see which companies are able to engage with government organisations more regularly. This is similar to how companies in the drone and defence tech industry have to go about scaling up. 

Besides VC dollars, the ground will remain open for private equity players, government grants and corporate venture capital funds to back green hydrogen startups that can partner with large power companies.  

Sandiip Bhammer, managing partner of climate tech fund Green Frontier Capital (GFC), believes that besides the high cost, the other hurdle in scaling green hydrogen is the lack of infrastructure available. 

“Even if we produce it, how are we going to store it? How are we going to transport and distribute it? So these are all very practical considerations. But with the regulatory tailwinds and set safety standards, and with the big boys of the industry willing to spend money and innovate, better results are expected in the coming days,” he told Inc42. 

Currently, most green hydrogen projects in India are in a pre-commercial phase. In the coming years, the existing MoUs and pilots are expected to scale towards full-fledged commercialisation. 

Energy Conservation Through Automation

While making energy sources greener will continue to remain the focus, the efficient use of energy through industrial automation is another important area for climate tech investors in India.

Besides robotic process automation and internet of things, industrial automation is set for the AI revolution as well, which helps in demand and supply mapping, intelligent logistics and inventory management, reducing the potential for waste — energy and goods. 

In India, the likes of CynLr, Perceptyne, Difacto, and Accio Robotics are some of the top names that raised funding in 2024 and are set to make some significant innovations in industrial automation in the coming days. 

Arpit Agarwal, partner at Blume Ventures, said that simply speaking low energy consumption equals low emissions. Industry 4.0 and Industry 5.0 technologies, for one, could help optimise on emissions, because companies see these technologies as a way to save money, so there is a clear impact on their bottom lines. 

This should ideally accelerate further adoption of new-age industrial processes which will have a tangible effect on reducing emissions, he added. 

Steps Towards Direct Air Capture

Direct air capture (DAC) technologies are getting popular across the globe, and India. DAC refers to extracting carbon dioxide directly from the atmosphere for its storage and utilisation in some other industrial processes. 

As per IEA data, there are twenty-seven DAC plants commissioned so far worldwide, capturing almost 0.01 Mt of carbon dioxide per year. However, even these are in the early stages of development, and India is only now beginning to see the first signs of business innovation, with companies such as Kerone looking to emulate larger global DAC startups such as Climeworks, Heirloom Carbon. 

While meaningful business development around DAC is still perhaps a few years away in India, Dr Miniya Chatterji, CEO of Sustain Labs Paris, said that there is a spurt of newcomers coming into the space of direct air capture. Chatterji runs a global climate and sustainability-focused venture builder which also works with startups in India.

“We are evaluating the space and looking at the newer startups while also seeing the kind of innovation they are doing in expanding capturing carbon to other greenhouse gasses as well as particulate matters. We are evaluating how innovative solutions here can help in localised pollution control,” Chatterji said. 

While these startups are in the US, in India, DAC is still at a research level in engineering schools, she added.

Meanwhile, in the area of carbon capture, Chakr Innovation has already caught the attention of climate investors. Abhilash Sethi, investment director at climate tech and agritech investor Omnivore, said that growing innovation is visible across carbon abatement, removal, and resilience.

Will EVs Dominate The Cleantech Narrative?

Vehicle electrification will continue to remain one of the top priorities of the private and public sectors, in India and globally. However, VCs are now looking to infuse money into less-capex-heavy, innovation-led platforms that are driving electrification.

In an interview with Inc42 this year, Blume’s Agarwal said that OEMs are not a game VCs want to play anymore. He said that even the subcategories such as battery manufacturing and financing are also getting less VC focus in India particularly. However, it is pertinent to note that these areas remain open to global investors, PE funds, or VCs with large cheque sizes.

On the other hand, the sentiment is clear that innovative software platforms that can help drive EVs with better tech are going to emerge more in numbers and also get interesting for VCs.

GFC’s Bhammer added that the EV segment is far from saturated. “However, VC money will flow into less capex heavy and innovation-led platforms – the companies that basically spur the growth of the usage of electric vehicles through digitisation.”

Meanwhile, as per Gartner’s forecast, the world is expected to have 85 Mn EVs on the road by the end of 2025, growing 33% from 2024. The rise in EVs will continue to be dominated by China, followed by Europe and North America. The research report forecasts India to have 5 Lakh EVs by the end of next year

Will Waste Management Become Big Business?

Speaking of EVs, there’s a major problem on the horizon when it comes to recycling batteries. And indeed, this also applies for other electronics. 

In its recent research, Gartner claims that by 2030, automakers will enable the recycling of 95% of batteries from EVs to mitigate the risk of raw material shortage. Hence, more tech innovations could be expected in the recycling of Li-ion batteries, which will lower the burden on OEMs to invest in such technologies. 

Even though India introduced the 2022 Battery Waste Management Rules, there’s a lot of lag in implementation and innovation. Shubham Vishwakarma, founder of Metastable Materials, a Li-ion battery recycling startup, explained that Li-ion batteries haven’t been around for long and they have a very long lifespan (at least seven years). So significant volumes of these batteries will hit end-of-life soon.

“The industry is definitely paying attention. They know that recycling these batteries isn’t just good for the environment; it makes good business sense… But it’s not all smooth sailing.  We need more investment in recycling technology and better ways to collect and track batteries. Most people don’t even know how to dispose of their old phone batteries properly, let alone those from EVs,” the founder said.

As the industry prepares for more tech innovation in solving a comparatively newer problem of Li-ion batteries, it is important to bear in mind that the traditional problem of recycling of waste from landfills is yet to be solved in India.

However, with cleantech startups emerging in recycling and upcycling of waste materials including plastics, and VCs too willing to infuse capital behind tech, India is expected to continue seeing some novel developments, albeit at a slower pace.

Angirus, the Udaipur-based startup that makes building blocks or bricks from recycled plastics and other waste materials, is now set to scale up its factory at a commercial level. There are more startups likely to emerge that make cutleries from sugarcane bagasse and even biocomposites. 

Agrifood Life Sciences Will Gain Investor Attention

Sustainable farming processes, innovation in biotechnology in the fields of biomaterials, protein production, gene editing technology, precision fermentation are some of the key emerging areas of development expected in the coming years.

GFC’s Bhammer believes that India is in a unique position, because organised retail is evolving at the same time, and there is a requirement for consistent availability of fruits and vegetables throughout the year. And investments in agrifood tech is one way to spur supply in a sustainable manner, unlike the West, where farm production became heavily industrialised and one-dimensional. 

There are attempts ongoing globally to usher in clean technologies via sustainable agriculture and food production to meet the needs of a nation with as much diversity in food consumption as India. The most clear example of this has come in dairy farming, where a number of companies have looked to infuse tech into farm operations to improve milk production and distribution. 

Gujarat-based Zero Cow Factory is working on producing animal-free milk protein and dairy products using precision fermentation and bioengineering of microbes. Given methane produced by cow waste has long been deemed as a major greenhouse gas contributor, more technologies are expected to emerge to address this issue. However, the scalability of these technologies will only be answered with time.

Besides, there are smaller developments expected to keep happening in waste management with the use of BSF and in the areas of precision fermentation. In 2024, Zydus entered the fermentation-based protein market with Sterling Biotech.

Will Investors See The Cleantech Upside?

There’s little doubt that cleantech and climate tech in India is only now emerging from the labs and colleges. The next generation of startups need the support to enable commercialisation of research and development, the right infrastructure for developing cutting edge climate resilience technologies and helping lift the marginalised sections which are expected to be hit the worst by climate change. 

However, the problem often discussed is that not every segment might get the attention from private investors, especially VCs. Investments in areas such as clean energy production, EVs, industrial automation, and any developments in the intersection of sustainability and AI are expected to keep booming, but niche R&D-heavy models are struggling to see the patient capital that they require. 

“Climate action is a three-component opportunity. It includes climate mitigation, which is where most VCs are involved. And then there is climate adaptation and climate resilience, where the largely private equities are involved because the capital involved here is much larger and the payback periods are also much longer,” added Green Frontier Capital’s Bhammer.

Meanwhile, global collaborations are key, especially for a country like India. Recently, the US International Development Finance Corp said that it would consider more deals to accelerate India’s adoption of clean energy after making loans to solar equipment makers.

Though funding is expected to remain slow, investors continue to remain hopeful about the future of cleantech and climate tech, because at some point these technologies will mature. Omnivore’s Sethi added, “We believe climate tech today is where ecommerce was in India in 2011—on the verge of mainstream adoption. It’s a long-term game, with immense potential for building impactful companies without rushing for unicorn status.”

With several macroeconomic factors in play and regulations and ESG norms yet to become stricter, will India be able to take the right strides forward in nurturing cleantech and climate innovation in 2025?

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