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News: Recently, a new green hydrogen and green ammonia policy has been introduced that envisages building a prominent role for clean fuels in the country’s fossil fuel-dominated energy mix.
What does the policy offer?
The policy offers some concessions on interstate electricity transmission charges, which has the potential to halve the current costs of producing green hydrogen.
Other important provisions deal with ease of doing business, grid connectivity, and single window clearances. The policy aims to meet the output target of 5 million tonnes of green hydrogen by 2030 from nil now.
What are some issues with the policy?
The policy is tilted towards the supply side measures and has very little to no measures to create demand for the fuel.
Policy also has missed focusing on electrolysers and fuel cells, which are used in producing and storing green hydrogen. Fuel cell systems are used from electric vehicles to large-scale installations providing electricity directly to the grid and can serve as an alternative for batteries.
If these measures are not subsequently incorporated, India may end up depending on imports again to meet hydrogen goals.
Why is Hydrogen important for India?
Hydrogen has application in refineries, steel-making, power generation, and transport, or to produce synthetic fuels such as methanol, diesel, and jet fuel.
The investment potential in this area is significant. Global sales of hydrogen could be worth $600 billion, and the value chains of green hydrogen could become a $11.7-trillion investment opportunity by 2050.
What is the way forward?
There is need for both supply and demand side measures as without demand, investments remain too risky for wide-scale production that could reduce costs, and without economies of scale the technology remains too costly.
Therefore, incentives need to be provided for industries to buy green hydrogen, without which private sector participation may be limited.
Source: This post is based on the article “Making Green Hydrogen work” published in Business Standard on 22nd Feb 2022.
