Green Hydrogen Can Spearhead India’s Transition To Clean Energy

Context: An analysis on green hydrogen – Its significance in changing energy paradigm and necessary policy reforms to be put in place to leverage the potential.

An overview of the Indian energy paradigm

• High carbon dependence: 82% energy from sources such as coal, oil and gas, and biomass.
  • India is the world’s third-largest emitter: With 3.6 gigatonnes of Co2 equivalent emissions.
• Heavy import-dependent: 85% for crude oil, 53% for gas, and 24% for coal.
  • Impact on import bill: Reaching $160 billion and accounted by vulnerabilities in fuel prices.
• Growing impetus towards carbon-free products and markets: As several countries announced net-zero targets.
  • Sustainability and rapid growth: Could go hand-in-hand by rapid innovation in clean energy sector.
• Significant growth potential:
  • International Energy Agency (IEA): India will overtake European Union as the world’s third-largest energy consumer by 2030.
  • Growth share: India will account for biggest share of energy demand growth over next two decades.
• Hydrogen, is also a chemical feedstock with an existing global market of 70 million tonnes.
  • Indian market: India consumes 6 Mt of hydrogen (8.5% of global demand) annually, which is made by reforming 18 Mt of import-dependent natural gas.

Significance of green hydrogen

• About: Green hydrogen (H2) is made by splitting water (H20) via renewable power.
• Application as an energy carrier: Can replace some energy imports, feasible, given India’s record-low renewable power prices ( ?1.99/$2.7 cents per kWh).
• Industrial application: Ideal power source for energy-intensive industries like refining, steel, cement, heavy mobility, and industrial heating.
• Critical to meet India’s target of 450 gigawatts of renewable energy by 2030:
  • Addressing ‘duck curve’ scenario (As experienced by California): By providing an alternative market for cheap surplus generation by renewables in peak-generation hours.
  • Co-advantage: As electricity accounts for 70% of the production cost of green hydrogen, cheap electricity from renewables adds to the competitiveness of green hydrogen.
• Economic potential – Sunrise industry: Enable Indian entrepreneurs to capture new avenues of growth.
  • Attracting industries: Locally available green hydrogen can attract high-value green industries, like green steel and green chemicals, to shift production to India.
  • New market and job creation: Localization of production could create a new green technology market worth $18-20 billion and generate domestic jobs.
  • Export potential: Massive opportunity to create regional hubs to export high-value green products and engineering, procurement, and construction services.
  • Global Hydrogen Council: Classified India as a net exporter of green hydrogen from 2030.

Way forward

• Inspirations from the global trend: West Asian countries, Chile and Australia are aiming to become leaders in green hydrogen.
• Policy reforms necessary to support green hydrogen transition
  • Announce ambitious targets for green hydrogen and electrolyzer capacity by 2030: On similar lines as renewables.
  • Mandate blending a certain percentage of green hydrogen with grey hydrogen: For existing applications and mandate new greenfield capacities of hydrogen applications like oil refining and fertilizers to use only green hydrogen from a future cut-off date.
  • Aim to build a vibrant hydrogen products export industry: Such as green steel, using a phased manufacturing programme.
  • Form a regional alliance with South Korea, Japan, and Singapore: To export green hydrogen from coastal India to help them reach their net-zero ambitions.
  • Explore dollar-linked contracts for the procurement of hydrogen: As capital cost contributes around 30% of green hydrogen cost.
  • Roll out production-linked incentive scheme: For electrolyzer manufacturing.