New Delhi: When it comes to climate change issues, there is a lot of talk about hydrogen and how it can help us in restricting the temperature rise to 1.5 degrees centigrade as decided in the Paris agreement of 2015. Hydrogen although is nothing new and is used extensively today in areas, such as, oil refineries, fertilizers and other chemicals and petrochemical industries. The point to note is that what is being produced today is hydrogen from fossil fuels, called grey hydrogen. This is valid not only for India but for the world over. Grey hydrogen, of course, leads to carbon emissions but half as much as coal. There are ways to isolate a part of the carbon dioxide through carbon capture and storage (CCUS) though there are costs involved (details given later). Such hydrogen is called blue hydrogen. What the world aspires for is green hydrogen ie. hydrogen produced through electrolysis wherein the required electricity is obtained from renewable sources, like, solar, wind and biomass.
There are several issues in the production of green hydrogen and today, less than 1% of the hydrogen that is produced is green. The International Energy Agency (IEA) has estimated that 6% of the global gas and about 2% of global coal is being used to manufacture hydrogen which is emitting about 830 million tons (mt) of carbon dioxide annually.
To produce green hydrogen, one requires huge amounts of renewable based electricity which will put pressure on availability of land. That apart the production cost of green hydrogen today is about $5-$6 per kilogram (kg) and this is primarily due to the cost of electrolysers which is around $300 per kg and it is expected that about 2050, the cost of electrolysers will come down to about $100 per kg. Around 2005, the cost was about $850 per kg. Capex cost comprises about 50% of the cost of green hydrogen. Efficiency of electrolysers is also a matter of concern and needs to be enhanced if production of green hydrogen is to be competitive with grey hydrogen. Green hydrogen production cost has to be brought down to about $1-$2 which is the current cost of production of grey hydrogen. To convert grey hydrogen to blue hydrogen, it costs about $0.5 per kg.
When we are speaking of limiting the temperature rise to about 1.5 degrees centigrade, one is actually looking at a huge quantity of green hydrogen. According to the International Renewable Energy Agency (IRENA), by 2050, hydrogen and its derivatives will account for 12% of the final energy use worldwide and about two-thirds of this will be met by green hydrogen. This will require about 5,000 GW of electrolysing capacity by 2050, producing about 400 million metric tons of green hydrogen per year. This would require an investment of about $78 billion between now and 2050 for electrolysis and transport put together.
Production of such huge amounts of hydrogen, of course, will have to be dispersed throughout the world. It will not be possible for a single region to cater to the world demand. The current demand for hydrogen is about 70 mt per year which will multiply manifold by 2050. According to The Energy and Resources Institute (TERI), India alone may require about 70 mt of hydrogen by 2050 compared to the current demand of about 6 mt. Not all regions of the world are best suited for production of green hydrogen. It is most cost effective where cheap renewable electricity is available and in that respect, India is well placed. In fact, some countries are leveraging their high renewable energy potential to become global exporters of hydrogen, for example, Saudi Arabia, Morocco, Australia and Chile. By the same economic logic, for a country like Japan, it makes more sense to import green hydrogen from Australia rather than make it at home.
Coming to the use of green hydrogen, there are specific areas where it will be useful. It cannot be used everywhere since it has to compete with batteries which will remain more competitive. One of the best uses of hydrogen is in the industrial sector which is considered to be hard-to-abate when it comes to carbon emissions. While we have an action plan for the power sector (ie. moving away from fossil fuels) and the transport sector (ie. moving towards electric vehicles), there is no pathway for the industrial sector, at least as of now. Industries which can benefit include chemicals and petrochemicals, iron and steel and cement.
Green hydrogen can replace existing fossil fuel based hydrogen feedstock in a number of industrial processes. Hydrogen can be used in the transport sector when it comes to heavy duty, long haul trucking. For lighter vehicles like cars, batteries remain the most economical option. Hydrogen also provides an avenue for storage but here again, it is only long-term storage where it is beneficial. Long-term would mean inter-seasonal storage. For intra-day storage, batteries remain the best option since they can be stored and discharged several times in a day. Further, green hydrogen can also play a critical role in space heating in buildings.
There is no doubt that hydrogen will offer us the possibility of lowering our carbon emissions but its large scale utilisation will not happen unless there is a direct support from the government. It is a classic case of the ‘chicken and egg’ story. For its wide-spread use cost of electrolysers has to come down and cost will not come down unless there are huge orders wherein the industry can have the benefit of economies of scale. So the government has to move in and provide incentives to the industry. Separately, the government will also need to provide money for research and development in the production of electrolysers.
A different model of industrial growth may be necessary where production of green hydrogen and the industries using the hydrogen may have to be co-located since transportation of hydrogen is not an easy issue given the fact that it is inflammable and would require huge containers as it has low energy density. Further, there are high upfront costs if hydrogen has to be transported long distances since construction of pipelines is an expensive proposition. Government intervention would also be required in the framing of regulations in the use of hydrogen so as to make it safe. As on date, there are practically no regulations on the use of hydrogen. So the task before us is immense and gigantic and India will have to do much more than just announce having a Hydrogen Mission.
[This piece was authored by Somit Dasgupta, Senior visiting fellow, Indian Council for Research on International Economic Relations (ICRIER)]
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Sentient Labs developed hydrogen fuel cell technology in collaboration with the public sector CSIR (Council of Scientific and Industrial Research)-NCL (National Chemical Laboratory) and CSIR-CECRI (Central Electrochemical Research Institute.)