Can national hydrogen mission bring energy transition in India?

The Union Cabinet has approved the National Green Hydrogen Mission to promote green hydrogen in a bid to cut emissions and become a major exporter in the field. The move is aimed at making India the global hub for the production of green hydrogen and achieve netzero carbon emissions by 2070.

Hydrogen, made by splitting water with an electrical process called electrolysis, can be used as a fuel. If the devices that do that, electrolysers, are powered by renewable energy, the product is called green hydrogen.

So, unlike grey hydrogen which uses natural gas, green hydrogen is produced by the electrolysis of water using renewable energy and thus doesn’t emit carbon dioxide into the atmosphere. The carbon intensity ultimately depends on the carbon neutrality of the source of electricity (i.e., the more renewable energy there is in the electricity fuel mix, the “greener” the hydrogen produced.

Green hydrogen can cut dependency on fossil fuels, as the global market for the clean alternative is slated to be worth almost $60 billion.

The National Hydrogen Mission was launched on August 15, 2021, with a view to cutting down carbon emissions and increasing the use of renewable sources of energy. The mission seeks to promote the development of green hydrogen production capacity of at least 5 MMT (Million Metric Tonnes) per annum with an associated renewable energy capacity addition of about 125 GW in the country by 2030.

In what could be a big step towards achieving India’s updated climate action goals, the government on Wednesday approved the National Green Hydrogen Mission with initial financial outlay of Rs 19,744 crore. It will help India in not only reducing its carbon footprint but also saving a substantial amount of foreign exchange on import of fossil fuels in due course.

The mission will eventually help the country become energy independent while taking a big leap towards decarbonisation of major sectors of the economy as part of its long-term goal of carbon neutrality by 2070.

It is expected that the mission would help India in abating nearly 50 million metric tonnes of annual greenhouse gas (GHG) emission by 2030 in sync with India’s updated climate action pledge under the Paris Agreement to reduce emissions intensity (emission per unit of its GDP) by 45% by 2030 from 2005 level.

The ministry of new and renewable energy (MNRE) will formulate the guidelines for implementation of the different components of the Mission.

The components of the mission include an outlay of Rs 17,490 crore for the Strategic Interventions for Green Hydrogen Transition Programme (SIGHT), Rs 1,466 crore for pilot projects, Rs 400 crore for R&D, and Rs 388 crore towards other related initiatives. The allocation is expected to attract huge investments and encourage R&D, focussed on electrolysers, in the next few years.

In all, the mission envisages an investment of over Rs 8 lakh crore and creation of over 6 lakh jobs by 2030.

It will also result in a cumulative reduction in fossil fuel imports of over Rs 1 lakh crore and abatement of nearly 50 MMT of annual greenhouse gas emissions by 2030.

The mission will have wide-ranging benefits — creation of export opportunities for green hydrogen and its derivatives; decarbonisation of industrial, mobility and energy sectors; reduction in dependence on imported fossil fuels and feedstock; development of indigenous manufacturing capabilities; creation of employment opportunities; and development of cutting-edge technologies.

The mission will also support pilot projects in emerging end-use sectors and production pathways. Regions capable of supporting large-scale production and/or utilisation of hydrogen will be identified and developed as Green Hydrogen Hubs, the Minister added.

Further, a public-private partnership framework for R&D (Strategic Hydrogen Innovation Partnership – SHIP) will be facilitated under the mission. R&D projects will be goal-oriented, time-bound, and suitably scaled up to develop globally competitive technologies. A coordinated skill development programme will also be undertaken.

According to Niti Ayogya, green hydrogen prices are determined largely by the cost of electrolysers and electricity. Beyond that, there are the operating costs, transmission and distribution (T&D) costs, and wheeling charges for electricity as well as specific local duties and taxes like the goods and services tax (GST) in India.

India’s distinct advantage in terms of low-cost renewable electricity, complemented by rapidly falling electrolyser prices, can enable green hydrogen to be not just economical compared to fossil-fuel based hydrogen but also compared to the green hydrogen being produced around the globe. Adoption of green hydrogen can enable India to abate 3.6 gigatonnes of CO2 emissions cumulatively between now and 2050.

Green hydrogen can achieve cost parity with natural gas-based hydrogen (grey hydrogen) by 2030, if not before. Beyond cost, since hydrogen is only as clean as its source of generation, green hydrogen will be necessary to achieve a truly low-carbon economy. It will also enable the emergence of a domestically produced energy carrier that can reduce the dependence on imports for key commodities like natural gas and petroleum.

India plans to build electrolyser capacity of 60-100 gigawatts to help produce green hydrogen.

The incentive by the government aims to make green hydrogen affordable and bring down its production cost, currently at Rs 300 to Rs 400 per kg.

Grey hydrogen costs around Rs 200 per kg to produce as gas costs have pushed the prices from Rs 130 per kg. To promote the use of green hydrogen, mandatory targets for green hydrogen consumption — would be required of fertiliser units, petroleum refineries and city gas distribution networks.

The government has allowed concessional green electricity, waiver of inter-state transmission charges, land at renewable energy parks and mega manufacturing zones for promoting green hydrogen and green ammonia. India also plans to introduce a production-linked incentive (PLI) scheme to encourage the manufacturing of electrolyzers. The plan is to target lower costs of renewable power generation and to bring down the costs of electrolysers to make the production of green hydrogen cost-competitive so that this fuel could replace fossil fuels and fossil fuel-based feedstocks in fertiliser production, petroleum refining, steel production, and transport applications.

Reliance Industries, Indian Oil, NTPC, Adani Enterprises, JSW Energy and Acme Solar have big plans on green hydrogen.

Reliance Industries aims to reduce the production cost of green hydrogen to under $1/kg by the end of this decade while billionaire Gautam Adani has stated that Adani Group aspires to be among the biggest producers of green hydrogen in the world.

State-owned NTPC on January 3, said it has commissioned India’s first green hydrogen blending project. The green hydrogen blending has been started in the piped natural gas (PNG) network of NTPC Kawas township, Surat. The project is a joint effort of NTPC and Gujarat Gas Ltd (GGL).

Indian Oil Corporation (IOC) is targeting to replace at least a tenth of its current fossil-fuel-based hydrogen at its refineries with carbon-free green hydrogen as part of a decarbonization drive. It has set up green hydrogen plants at its Panipat and Mathura refineries. While renewable energy plants currently produce electricity equivalent to 5 per cent of its electricity consumption, IOC is targeting nearly 5 GW of renewable electricity generation capacities by 2025 for use at its oil refineries.

Cost of Electrolyser: Green hydrogen is produced by splitting water into hydrogen and oxygen using an electrolyser. One million tonne of green hydrogen corresponds to around 11-13 GW of electrolyser capacity. According to NITI Aayog, at present, the cost of hydrogen production through electrolysis ranges from US$ 4-10 per kg based on the technology used. With a price decline for both electrolysers and renewables, NITI Aayog expects the cost of green hydrogen to fall to approximately US$2 per kg by 2030 and US$0.7 per kg by 2050.The government recently approved incentives of Rs 170 bn to be allotted for electrolyser and green hydrogen manufacturing in the country. Companies using the incentives for mass scale production could certainly compete on cost.

Water availability: For producing 1 kg of hydrogen, 9 kg of water as input is required. Accordingly, a large-scale (1 GW) electrolyser, producing 0.15 million tonne of hydrogen, would consume about 3 million tonne of water. Hence shortage of water can be a key hindrance in green hydrogen manufacturing.

Combustibility: Its flammability and its lightness mean that hydrogen, like other fuels, needs to be properly handled. Many fuels are flammable. Compared to gasoline, natural gas, and propane, hydrogen is more flammable in the air. A concern is the higher energy content of hydrogen poses risks as auto fuel. Auto fuels are highly flammable. A vehicle laden with hydrogen will be more vulnerable in case of a major accident. Hydrogen stations will need to adapt to more stringent safety measures. In other words, the technology for hydrogen fuel cell vehicles needs to be far superior in terms of safety. However, the risk of combustibility of hydrogen fuel cells is almost as much as is lithium cells. Hence companies that use technology to mitigate such risks need to be monitored.

Tags: Cabinet, Electrolysis, Green Hydrogen, National Green Hydrogen Mission, NetZero