Pollution

Green hydrogen can drive India’s transition to clean energy, combat climate change

By 2030, the cost of green hydrogen is expected to compete with that of hydrocarbon fuels

 
By Jasleen Bhatti
Published: Tuesday 29 June 2021
Green hydrogen can drive India's transition to clean energy and combat climate change

Hydrogen will make up 12 per cent of the energy mix by 2050, according to the International Renewable Energy Agency (IRENA). About 66 per cent of this hydrogen used, must come from water instead of natural gas, the agency suggested.

Green hydrogen is produced by electrolysis of water using renewable energy and has a lower carbon footprint. 

At present, less than 1 per cent of hydrogen produced is green hydrogen, according to IRENA's World Energy Transitions Outlook. Manufacturing and deployment of electrolysers will have to increase at an unprecedented rate by 2050 — from the current capacity of 0.3 gigawatts to almost 5,000 gigawatts, the agency said.

India catching on

Under the Paris Climate Agreement, India pledged to reduce the emission intensity of its economy by 33-35 per cent from 2005 levels by 2030.

The country consumes about six million tonnes of hydrogen every year for the production of ammonia and methanol in industrial sectors, including fertilisers and refineries. This could increase to 28 million tonnes by 2050, principally due to the rising demand from the industry, but also due to the expansion of transport and power sectors.

India has favourable geographic location and abundance of sunlight and wind for the production of green hydrogen. 

Green hydrogen technologies are being promoted in sectors where direct electrification isn't feasible. Heavy duty, long-range transport, some industrial sectors and long-term storage in the power sector are some of these sectors. 

Green hydrogen production will also reduce the country’s dependence on imports while also staving off climate change. 

With technological improvements, green hydrogen will become more affordable and accessible sooner than expected.

Green hydrogen currently costs $5-6 per kilogram (or Rs 371-446), which is nearly triple the cost of grey hydrogen, according to a recent study. By 2030, the cost of green hydrogen is expected to compete with that of hydrocarbon fuels. 

The price will decrease further as production and sales increase. It is also projected that India's hydrogen demand will increase five-fold by 2050, with 80 per cent of it being green.

India will become a net exporter of green hydrogen by 2030 due to its cheap renewable energy tariffs, according to the Global Hydrogen Council.

India is making the right decisions despite having a late entry into the green hydrogen race.

Green hydrogen can be used in a wide range of existing applications such as fertilisers, mobility, power, chemicals and shipping. Green hydrogen can be blended up to 10 per cent by city gas distribution networks for wider acceptance.

The Ministry of New and Renewable Energy (MNRE) has circulated a draft cabinet note to establish a hydrogen ecosystem in the country. The note suggested inter-ministerial consultations on green hydrogen consumption obligations for fertiliser producers and petroleum refineries.

These industries will be subject to obligations between 2023-24 and 2029-30, sources indicated. In some sectors, the purchase of green hydrogen will be mandatory, similar to renewable purchase obligations.

The localisation of electrolyser production and the development of green hydrogen projects can create a new green technologies market in India worth $18-20 billion and thousands of jobs.

The nascent stage of this industry allows for the creation of regional hubs that export high-value green products and engineering, procurement and construction services.

India's green hydrogen penetration path

Green hydrogen is a cross-cutting solution that may reduce emissions across a range of sectors. The Government of India has to overcome several challenges to pave the way for this new form of energy, given the high costs and lack of supporting infrastructure at present.

Below are some key steps the country can follow to build a global-scale green hydrogen industry:

  • Set a national target for green hydrogen and electrolyser capacity: As with renewable energy, India should announce ambitious national targets for green hydrogen and electrolyser capacity by 2030. Existing hydrogen applications like oil refining and fertilisers should be required to use a certain percentage of green hydrogen while new greenfield hydrogen applications like oil refining and fertilisers should only use green hydrogen from a future date (to eliminate long-term lockins). A phased manufacturing programme should be used to build a vibrant hydrogen products export industry in India such as green steel. 
  • Launch an incentive programme for the production of electrolysers: Capital costs are responsible for about 30 per cent of green hydrogen costs. Dollar-linked contracts for hydrogen procurement should be considered in sectors with relevant demand, as is done for oil and gas. India should consider launching an incentive programme for the production of electrolysers to ease the huge global supply shortage.
  • Implement complementary solutions that create virtuous cycles: Use technology that has the potential to create positive cycles and spillover effects. One example might be hydrogen infrastructure for refueling, heating and generating electricity at airports.  
  • Optimise distribution networks: For many hydrogen applications, the network is vital. A stakeholder can make decisions to invest in solutions that will soon reach high levels of utilisation. Hydrogen boilers make sense for heating where gas pipeline infrastructure already exists. Grid operators must choose to decarbonise the gas grid with regulator support, before shutting it down entirely. Once a decision has been made, hydrogen still has a competitive edge, even after budgeting for technological retrofitting to the network and upgrading consumer appliances.

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