In every election at the state and federal level, the phrase our companies should do more research and development is spoken. It is spoken because companies and industries need to evolve, and one method is to spend money on research and development. For a company, there is desire, but research spending is similar to advertising, you know some of it works but some of the spending does not, but nobody ever knows which dollars do and do not work. It is often left to university research departments and the government to incentive research and development.
In an article by Sarita Chaganti Singh of Reuters, the government of India is planning a $2 billion incentive program for the green hydrogen industry. The money will be used to reduce the production cost and increasing the scale of the industry.
The government of India is following the United States and European Union which has approved incentives worth billions of dollars for green hydrogen projects. Hydrogen is made by splitting water with an electrical process and the fuel is free of greenhouse emissions.
Companies such as Reliance Industries, Indian Oil, NTPC, Adani Enterprises, JSW Energy and Acme Solar have big plans on green hydrogen. Adani is partnering with France’s Total Energies.
Linking to dividend paying stocks, government incentives tend to help large organizations stay large. In the example above the companies are some of the biggest in India with access to engineering consulting firms and capital to expand as the cost falls and margins are to be made from hydrogen. When governments offer incentives, the reality is the biggest companies benefit and they can keep making profits to pay dividends as they manage change.
There are more questions than answers, till the next time – to raising questions.