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Source– The post is based on the article “How to become a green hydrogen superpower” published in The Hindu on 7th March 2023.
Syllabus: GS3- Infrastructure: Energy
Relevance: Non-fossil sources of energy
News- The 2023 Union Budget has allocated ₹19,700 crore for the National Green Hydrogen Mission.
What is the potential of green hydrogen for India?
India has committed to 50% electricity capacity from non-fossil sources by 2030. But an energy transition in industry is needed at the same time. Most industrial greenhouse gas emissions in India come from steel, cement, fertilizers and petrochemicals.
Green hydrogen can lead to industrial growth while simultaneously reducing industrial emissions. It can serve as an energy source for heavy industry, long distance mobility, aviation, and power storage. It can also serve as an energy carrier.
India is targeting at least five million tonnes of production by 2030. This would create demand for 100-25 gigawatts of renewable energy, 60100 GW of electrolysers, investment opportunity of ₹8 lakh crore, and cut 50 MMT of annual emissions.
India has abundant sunshine and significant wind energy resources. It is geographically blessed to become one of the lowest cost producers of green hydrogen.
What should be the priorities of the government for the success of the mission?
First, domestic demand is critical. If we are not a big player domestically, we cannot be a major player in the international market.
The mission introduces a Strategic Interventions for Green Hydrogen Transition fund for five years, with ₹13,000 crore as direct support to consume green hydrogen. This will encourage heavy industries to increase demand, offering economies of scale.
Blending mandates for refineries can be another demand trigger. Urea plants have been exempted.
Another approach is to leverage government procurement. India is the second largest steel producer in the world. Costs of green steel, made from green hydrogen, are currently much higher.
But, this could be reduced with economies of scale and changes in production technologies. A share of government procurement of steel may be green steel.
Second, India can be an attractive destination for domestic and foreign investment. GreenHydrogen production projects in India are far fewer compared to others. Green hydrogen is difficult and expensive to transport.
The mission envisions green hydrogen hubs to consolidate production, end use and exports. A mission secretariat can ensure project clearance is streamlined and reduce financial risks.
Third, the SIGHT fund offers ₹4,500 crore to support electrolyser manufacturing under the performance linked incentive scheme. Currently, manufacturers are importing stacks and assembling them.
India must become more competitive with targeted public funding in manufacturing the most critical and high value components of electrolysers in India.
Electrolyser technology must be improved to achieve higher efficiency goals, specific application requirements, be able to use non freshwater, and substitute critical minerals.
Fourth, establish bilateral partnerships to develop resilient supply chains. Globally, about 63 bilateral partnerships have emerged; Germany, South Korea and Japan have the most.
Using yen or euro denominated loans for sales to Japan or to the EU, could reduce the cost of capital and help us become export competitive.
Many bilateral deals focus on import export but few deal with technology transfer or investments. India must cooperate with like minded countries on trade, value chains, research and development, and standards.
The mission allocates ₹400 crore for R&D, which can be leveraged to crowd in private capital into technology codevelopment.
Indian companies should consider joint projects in countries with good renewable energy resources and cheap finance.
Finally, India must coordinate with major economies to develop rules for a global green hydrogen economy.
In the absence of common global frameworks, rules and standards are being driven by collectives of private corporations rather than through structured intergovernmental processes.
There are already signs of conflicting regulations and protectionist measures in majormarkets. These put India’s ambitions at risk.
India’s G20 presidency is an opportunity to craft rules for a global green hydrogen economy.These rules must address operational threats, industrial competitiveness and strategicthreats.
India should promote a global network on green hydrogen via which companies couldcollaborate.
