The ongoing global efforts to limit global warming call for minimizing the use of energy sources whose production or consumption produces greenhouse gasses. A report published in 2021 by UNOPS, UNEP and the University of Oxford stated that infrastructure was responsible for 79 percent of total greenhouse gas emissions and was therefore a priority sector for climate action. McKinsey estimates that infrastructure assets in emission-heavy industries such as power, transportation, and buildings, account for almost half the capex required to meet net-zero targets.
A variety of solutions are being evaluated or developed for achieving carbon neutrality by 2050. One of these is hydrogen, especially green hydrogen. Depending on how it is produced, hydrogen is termed as being gray, blue, or green. Of these, green hydrogen can be produced in an environment-friendly manner, by splitting water into hydrogen and oxygen using renewable electricity or by utilizing biomass to generate hydrogen through a microbial decomposition or gasification-based process.
Hydrogen is very versatile – it can be used as a means of energy storage; as a fuel; or as a raw material in industrial processes. One of the key applications of green hydrogen is decarbonization of “hard to abate” industrial sectors where direct electrification is not easily possible. Sectors such as refineries, fertilizers, etc. where hydrogen is used as a feedstock for the process will need green hydrogen to decarbonize their operations. . Hydrogen can also be used to power fuel cells, where it converts the chemical energy of the fuel cell into electricity, without combustion.
Fuel cells can be used for greening of heavy duty transportation vehicles where batteries are not suitable. These vehicles can be supported by a network of hydrogen refueling stations which are based on decentralized hydrogen generation, which in remote locations can be through locally available biomass by utilizing biomass to hydrogen technologies. Replacement of natural gas with green hydrogen in sectors such as steel, city gas distribution, glass, ceramics etc. will not only help in reducing the carbon footprint, but also help make India energy independent as we import 46% of our total natural gas consumption.
Both government and industry acknowledge green hydrogen as an important enabler of a net-zero economy. In January 2023, the Union Cabinet approved initial outlay of INR 19,744 cr for the National Green Hydrogen Mission with the objective of making India a global hub for the production, usage, and export of green hydrogen and its derivatives. Of the total outlay INR 17,490 cr is dedicated for incentives towards electrolyser manufacturing and green hydrogen production which should help in enabling adequate supply. There is an equal push from states to promote adoption of green hydrogen with various states announcing incentives on capex, electricity charges, banking and land related charges through respective green hydrogen policies over and above the incentives available under central government schemes. .
The National Green Hydrogen Mission needs to be complemented with a time-bound, stepwise roadmap for its implementation. The government can help in developing the market through mandates of green hydrogen purchase for sectors that are already using hydrogen. Any hesitancy on the part of the private sector to invest in an early-stage technology like hydrogen can be addressed, to a large extent, by offering near-term demand certainty. Such demand visibility will help India achieve scale in electrolyser manufacturing to cater to its own demand as well as to serve export markets. Current international estimates peg India’s electrolyser manufacturing capacity to reach 9-10 GW by 2030. This will help green hydrogen confidently and quickly traverse the cost reduction curve. Wide-scale adoption will almost be a certainty once economies of scale are achieved. With cost parity with gray hydrogen expected to be achieved by 2030, green hydrogen can then be used to decarbonize other sectors such as mobility, chemicals, aviation and new applications such as production of green fuels (ethanol/methanol)..
Green hydrogen has potential to greatly reduce carbon dioxide emission and yield huge savings on energy imports in the coming decades. Moreover, it will bolster India’s energy security, which, in turn, will reduce the volatility of price inputs for Indian industries and strengthen India’s foreign exchange health. India has announced ambitious infrastructure projects that will be rolled out over the coming years and decades. This implies an increase in the output of heavy industries. There is also a very strong focus on expanding the country’s renewable energy capacity manifold. These goals, coupled with the policy direction we are seeing, augur well for the hydrogen ecosystem in India. Green hydrogen, on its part, will make our industries more sustainable than before and improve the feasibility of future expansion. It will be a virtuous cycle once it gets going, which we should hope will be soon.
