MNRE launches scheme to incentivise production of green hydrogen

The Union Ministry of New and Renewable Energy (MNRE) has recently published guidelines and incentives to promote the procurement of green hydrogen as part of the National Green Hydrogen Mission.

Under the mission, Rs 17,490 crore has been set aside for the Strategic Interventions for Green Hydrogen Transition (SIGHT) programme, to bolster domestic electrolyser manufacturing and green hydrogen production. These incentives are designed to facilitate cost reduction and rapid expansion.

Implemented under Mode-2B, a system adopted by the MNRE for the SIGHT scheme, this approach involves aggregating demand and soliciting bids for green hydrogen and its derivatives at the lowest cost through a competitive selection process.

Tranche I of Mode 2B offers a bidding capacity of 200,000 million tonnes per annum.

The scheme's execution will be entrusted to agencies nominated by the Union Ministry of Petroleum and Natural Gas (MoPNG), primarily oil and gas companies, guided by the Centre for High Technology (CHT).

Each oil and gas entity will seek bids at the most competitive rates for either a single refinery or multiple refineries. CHT will assume responsibility for providing secretarial, managerial and implementation support, as well as fulfilling other responsibilities assigned by MoPNG. Green hydrogen is essential for removing sulfur content in crude oil to produce petrol and diesel.

Indian Oil Corporation announced its plan last year to convert 50 per cent of its grey hydrogen to green hydrogen by 2030 by establishing green hydrogen plants in all its refineries. Similarly, Hindustan Petroleum Corporation is reportedly constructing a 370 tonnes per annum green hydrogen plant at its Visakhapatnam refinery.

To qualify for incentives under the scheme, bidders must meet the criteria outlined in the 'National Green Hydrogen Standard' as notified by MNRE.

The scheme offers a direct incentive over three years from the beginning of production and supply, with rates of Rs 50 / kilogramme of green hydrogen in the first year, Rs 40 / kg in the second year and Rs 30 / kg during the third year.

According to the scheme's document, "The bidder quoting the lowest price of supply will be allocated its admissible capacity first. Subsequently, the bidder quoting the next lowest price of supply will be allocated its admissible capacity, continuing until the total available capacity is exhausted."

Additionally, the document specifies, "The net worth of the bidder as on the last date of the previous financial year, as specified in the tender document should be equal to or greater than Rs 15 crore per thousand MT per annum of quoted production and supply capacity of green hydrogen."

A scheme monitoring committee, co-chaired by the secretary of MoPNG, secretary of the MNRE, mission director of the National Green Hydrogen Mission, and other experts, will periodically review the implementation status and performance of capacities awarded or established under the scheme. The committee will also facilitate and recommend measures to address challenges.

A recent report by the World Economic Forum titled Green Hydrogen: Enabling Measures Roadmap for Adoption in India highlighted limited on-the-ground traction for green hydrogen. It also noted that key players are mostly adopting a 'wait-and-watch' approach.

While countries worldwide are aggressively pursuing green hydrogen to combat emissions, it comes with the risk of greenwashing. Environmental organisations have cautioned about potential land-use and water conflicts arising from the significant land and water resources required for green hydrogen production.

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