India must put in place actionable policy to achieve Hydrogen Mission targets, which will depend on cheaper green hydrogen
As India strives to achieve its net zero emissions target by 2070, green hydrogen is considered a key in decarbonizing the economy, thereby improving the environment. Green hydrogen is produced using renewable electricity by splitting water molecules into hydrogen and oxygen.
Most of the hydrogen used today utilises high carbon sources like hydrogen extracted from coal using a gasification process is brown hydrogen, extracted from natural gas using methane through a steam reforming process is grey hydrogen, and when carbon generated from steam reforming is stored underground through industrial carbon capture it is labeled as blue hydrogen.
Bringing the shift from grey/blue hydrogen to green hydrogen is the need of the hour. The hydrogen demand in India is eight million tonnes of hydrogen (Mt H2) in 2022, an increase of seven per cent from 2021 due to recovery in the refinery and steel sector, as they were hit hard due to the 2020 pandemic (International Energy Agency).
The hydrogen demand is expected to grow fourfold by 2050. Currently, over 95 per cent of the current hydrogen demand is fossil fuel-based, and very little is green hydrogen. To meet this growing demand, it is important to shift towards cleaner production, i.e., green hydrogen. This transition Modi’s 8 years in power: India story back on track will have a significant cumulative reduction of 3.6 giga tonnes of CO2 in India between 2020 to 2050, which can translate into $246-$358 billion cumulative net energy savings between 2020 to 2050 (Niti Aayog).
India already announced the National Green Mission in August 2021 to increase green hydrogen use. The mission is followed by the Green Hydrogen Policy to achieve the target of five million tonnes of clean fuel by 2030. India will need around 115 GW of installed renewable power and 50 billion liters of freshwater production to achieve this target.
In Budget 2023, the Government has approved an outlay of Rs 35,000 crore towards green energy and an additional Rs 19,700 crore towards a green hydrogen mission to reduce dependency on fossil fuel. According to the IRENA 2022 report, more than 1500 green hydrogen projects were globally announced by June 2022. Many private and publicly owned companies in India are investing in green hydrogen projects. Further, India has also signed an agreement with Egypt to invest $8 billion in the Suez Canal Economic Zone to produce 20000 tons of green hydrogen annually.In 2016, the Government introduced Project Green Ports to make India cleaner and greener. However, till today little progress has been made in this project.The challenge remains in preparing existing ports to reduce fossil-fuel-related activities and increasing the production and handling of renewables, among which green hydrogen. According to the Maritime India Vision 2030 Report, the Government plans to increase the share of renewable energy from current levels of less than 10 per cent to over 60 per cent by 2030.
The first key challenge in producing green hydrogen is the considerable cost difference between green and grey/blue hydrogen. The production of green hydrogen is two to three times higher than grey/blue hydrogen. Green hydrogen costs are mainly determined by electrolysis and electricity costs. The cost of hydrogen from electrolysis is between $4.10/kg - $7/kg depending on various technology choices. The electricity costs of solar and wind are levelized. Further, EU Bank will provide $1.1 billion to develop green hydrogen hubs in India to reduce the costs of green hydrogen. Thus, it is expected that there will be an increase in fossil fuel costs and a decrease in green hydrogen costs by 2040.
The Government needs to reduce GST to 5 per cent and impose duty waivers to promote green hydrogen adoption in India. The second challenge is the limited amount of renewable energy (wind, solar) and the need for more research and development. The third challenge faced is the need for land available for producing electrolysers and storing equipment, such as compressors, rectifiers, dryers, cooling water towers, etc., in the port area. The fourth challenge is that hydrogen is highly flammable and volatile, and wide-ranging safety measures are required to prevent leakages. The fifth challenge is poorly developed pipeline networks and poor logistics infrastructure.
The action should be undertaken to develop standards and labels for green hydrogen and hydrogen-embedded products like green steel and green ammonia. The govt needs to explore promoting green hydrogen exports through a global hydrogen alliance. The government should formulate the second phase of the national policy, and states should launch their own policy to complement efforts at the national level. A delay in acting could lead to India missing out on an ample opportunity.
(Charu Grover Sharma is assistant professor, Indian Institute of Foreign Trade; Yashobanta Parida is assistant professor, FLAME University)