New Delhi: NITI Aayog CEO Amitabh Kant has said that the government’s aim is to bring down the production cost of green hydrogen from $5-6 per kg to $1 per kg.
It will be difficult to speed up India’s transition to renewables “unless cheap finance is available to be able to rapidly enhance both renewable and non-renewable”, Kant told Bloomberg Television. Finances at low costs are critical, he added.
Slashing production costs, many believe, can act as an incentive for Indian industries to use clean energy. With climate scientists urging the world to move towards clean fuels to check the pace of global warming, the shift away from fossil fuels has gained urgency.
Unlike petrol or diesel, hydrogen releases no carbon emissions upon combustion. Hydrogen produced through the electrolysis of water is called green hydrogen and is classified as renewable since it is made using wind or solar energy.
India is currently the third-largest emitter of carbon dioxide in the world. Addressing the nation on Independence Day in 2021, Prime Minister Narendra Modi unveiled the ‘Green Hydrogen Mission’ to make India the world’s largest exporter of green hydrogen with a five million ton production target by 2030. To that effect, the government unveiled a Green Hydrogen Policy in February to boost the production of green hydrogen.
As India imports 85 per cent and around 53 per cent of its oil and gas requirements respectively, green hydrogen can help reduce the country’s dependence on imports. In addition to reducing the carbon footprint, a hike in production of green hydrogen can help India to meet half of its energy requirements through renewables.
What is Green Hydrogen Policy
Green hydrogen is produced through an energy-intensive method of extracting hydrogen through electrolysis, the process of running current through a liquid to separate chemical compounds. The production cost is high because the scaling-up of electrolysis cells is expensive.
Other methods include gasification of coal or a process called steam methane reformation (SMR). However, carbon and other greenhouse gasses are released in these methods of hydrogen extraction, called brown, grey and blue hydrogen, making them unsustainable.
India’s Green Hydrogen Policy includes waivers on inter-state transmission charges for 25 years. What this means is that inter-state transmission charges will not apply if a producer wants to set up a solar power plant in one state to power a green hydrogen plant in another. These waivers, according to the policy document, can be availed by producers who set up green hydrogen plants before July 2025.
The Ministry of Power, in a press statement in February, said that manufacturers of Green Hydrogen/Ammonia and the renewable energy plant shall be given connectivity to the grid on priority basis to avoid any procedural delay.
Moreover, the government has committed to setting up a single-window clearance process via the Ministry of New and Renewable Energy, for those looking to invest in green hydrogen, to ensure that production can begin “in a time-bound manner”.
Investments in green hydrogen
The Indian industry’s interest in scaling-up this source of renewable energy was palpable even before the government launched the ‘Green Hydrogen Mission’ last August.
State-owned Indian Oil Corporation Limited had announced last July that it would set up the country’s first green hydrogen plant. In June 2021, Reliance Energy said it would invest $10 billion in green hydrogen and other renewable energy sources.
In November the same year, the Adani Group, too, announced it would invest $70 billion in renewable energy infrastructure, including green hydrogen, by 2030. Joining hands with ReNew Power, Larsen & Toubro Ltd. has also announced plans to invest in green hydrogen.
“Private companies, aspiring to be hydrogen producers, should be free to choose electrolyser technology, import of which should be at minimum rates of import duty and GH (green hydrogen) exports should be encouraged,” wrote Sanjeev S Ahluwalia, advisor to the think tank Observer Research Foundation (ORF).
Green hydrogen can help decarbonise shipping and transport, and act as a fuel for various manufacturing industries, such as steel and cement. Steel manufacturing is among the most fossil fuel intensive industries. In April, a study by the Delhi-based policy research institute Council on Energy, Environment and Water had said a gradual transition to green hydrogen fuel could help steelmakers stay profitable by as early as 2030.
The study suggested that green hydrogen-based steel is 60-70% more expensive than those produced through existing methods. “But, only a minuscule 9% blend of green hydrogen could achieve a 60% reduction in emissions and breakeven with the upper range of blast furnace costs today,” it concluded.
(Edited by Amrtansh Arora)