India’s transition to clean energy can pose a huge economic opportunity for the country and it can emerge as a global leader in the green hydrogen sector. Most economies across the world have committed to net zero emissions. India followed suit and committed to net zero emissions by 2070 at COP 26 in Glasgow. India has been a significant contributor to global climate change negotiations since the Rio Summit in 1992. The country has taken several initiatives at different intervals, reflecting its seriousness towards climate change. India is prioritising the adoption of green hydrogen as a step in the direction of decarbonisation. Therefore, it is imperative to understand the buzz around green hydrogen and how it is crucial for India’s position as a climate conscious nation on the global stage.
What is Green Hydrogen? How Does it Differ From Other Types of Hydrogen?
Hydrogen is a simple and carbon-free molecule, but the methods used to produce it can result in vastly different greenhouse gas emissions. Green hydrogen is generated using renewable electricity to split water into hydrogen and oxygen. In contrast, grey hydrogen is produced from methane or coal, with the former resulting in CO2 emissions and the latter causing even higher emissions. Blue hydrogen follows a similar process to grey hydrogen but includes additional technology to capture and store the CO2 produced during the splitting process. The extent to which CO2 can be captured and stored varies, resulting in a wide range of blue hydrogen types. However, capturing a significant portion of CO2 can greatly reduce the climate impact of hydrogen production.
What are the Government Initiatives in the Sphere of Green Hydrogen?
India has a significant advantage in generating low-cost renewable energy, which makes green hydrogen the most cost-effective form of hydrogen in the long run. Consequently, India has the potential to be among the world’s most competitive producers of green hydrogen. Green hydrogen can be as cost-effective as natural gas based grey hydrogen. Furthermore, to achieve a genuinely low-carbon economy, green hydrogen is essential since hydrogen’s source of generation is crucial in determining if it is clean. It will also allow the emergence of a locally generated energy carrier, decreasing reliance on imports of critical commodities such as natural gas and petroleum.
In 2021, as India completed 75 years of independence, the Prime Minister announced the National Green Hydrogen Mission. It was approved by the cabinet in January 2022 with the intended objective of establishing India as a global leader in green hydrogen production and distribution. The mission focuses on generating opportunities for the export of green hydrogen and its byproducts, reducing reliance on imported fossil fuels and feedstock. This will foster domestic manufacturing capabilities, attract investment and business ventures for the industry, promote job creation and economic growth, and support research and development initiatives.
The Green Hydrogen Mission consists of four components, with the first part being the Strategic Interventions for Green Hydrogen Transition Programme (SIGHT) which offers financial incentives for domestic electrolyser production and green hydrogen generation. Two different strategies will be used to achieve these goals.
The second part involves supporting pilot initiatives in new end-use industries and manufacturing routes. Green Hydrogen Hubs will be developed in areas capable of sustaining large-scale hydrogen production and use. The Strategic Hydrogen Innovation Partnership (SHIP) is a Public-Private Partnership structure focusing on R&D initiatives. The objective is to support time-bound, goal-oriented R&D initiatives that will produce globally competitive technology.
A coordinated skill development program is part of the fourth component, supporting the workforce required for the Green Hydrogen Mission.
The Green Hydrogen Mission policy has several provisions aimed at encouraging and supporting the production of green hydrogen and ammonia using renewable energy sources. Manufacturers will have the flexibility to buy renewable energy or set up their renewable energy capacity through any developer. Open access to the grid will be granted within 15 days of the application, and unconsumed renewable power can be banked for up to 30 days with the distribution company.
Manufacturers of green hydrogen and ammonia will have the opportunity to purchase renewable energy from distribution licensees within their state at a discounted price that covers procurement costs, wheeling fees, and a small margin determined by the State Commission. Additionally, projects launched before June 30, 2025, will be exempt from inter-state transmission fees for 25 years.
To prevent procedural delays, manufacturers and renewable energy facilities will be given priority access to the grid, and incentives will be offered to those who use renewable energy to meet their Renewable Purchase Obligation (RPO) requirements. To simplify the process and ensure convenience, the Ministry of New and Renewable Energy (MNRE) will establish a single platform for all operations, including acquiring legislative permissions, to facilitate the ease of doing business.
Producers of green hydrogen and ammonia will be allowed to construct bunkers near ports to store green ammonia for export or use by ships. The relevant port authority will provide land for this purpose at a reasonable cost. The Inter-State Transmission System (ISTS) will prioritise connecting renewable energy generation specifically built for producing green hydrogen and ammonia.
Challenges in Transitioning to Green Hydrogen
The unique characteristics of hydrogen, including flammability, low density, ease of dispersion, and embrittlement, have historically made storage and transportation challenging. However, technological advancements and commercial motivations are driving the development of more cost-effective modes of storage and transportation.
Despite these developments, the emergence of a hydrogen economy is still hindered by high costs, supply chain complexity, policy, and regulations. Green hydrogen production is currently more expensive than hydrogen produced from fossil fuels, although decreasing renewable prices and economies of scale are expected to make green hydrogen more economically feasible in the future.
The complexity of sourcing and supplying hydrogen is also a challenge, as it can be produced through a variety of processes and has uses in various sectors. Furthermore, the storage and transportation of hydrogen require significant investment in infrastructure upgrades.
Historically, governments have provided minimal policy support for hydrogen compared to other technologies and end uses, despite its potential for significant impact. Finally, hydrogen use lacks consistent standards, either because they do not exist or have not been updated to reflect current technologies and practices.
Outline for Adoption of Green Hydrogen in India
NITI Aayog’s report titled “Harnessing Green Hydrogen Opportunities for Deep Decarbonisation in India” highlights a series of measures for promoting the adoption and production of green hydrogen in India.
Interventions on the supply side can bring down the price of green hydrogen to $1/ kg by employing policies like tax reductions, preferred dollar-based energy rates, and low-emission power purchase agreements. Establishing regulations and a reward mechanism to reach a 160 GW green hydrogen production capability. Unambiguous requirements for hydrogen blending in current and prospective future consuming sectors can be proposed. Offering incentives, such as a production-linked incentive programme for green steel that aims to capture export markets, is another measure.
To accelerate the development of commercial green hydrogen solutions across the value chain, the government should invest $1 billion in R&D, construct a manufacturing capacity of 25 GW by 2030, and launch green hydrogen standards and a labelling programme. The government should encourage the export of green hydrogen and products with integrated green hydrogen through a worldwide hydrogen alliance.
To encourage investment, the government should aggregate demand for green hydrogen and conduct dollar-based auctions and support state-level policymaking in the area of green hydrogen. Building an inter-ministerial governance framework with a specialised Project Management Unit, staffed by globally experienced specialists, is a step in the right direction for promoting capacity building and skill development.
Conclusion
The government’s recent budget announced an outlay of 19,700 crores, indicating a positive approach towards energy transition. India has set a goal of achieving an annual production of 5 million metric tons by 2030, presenting an ideal opportunity to take a leadership role in this area. By implementing policies and accelerating the adoption and production of green hydrogen, the government can contribute to a more sustainable future for both the country and the planet as a whole.
