The original version of the article was published on 22nd March 2023 in “The Daily Guardian”
Earlier this month, NITI Aayog Chief Executive Officer Amitabh Kant announced that India was aiming to bring down the cost of producing green hydrogen — an environmentally-friendly produced fuel — to USD 1 per kilogram by 2030. While this is an ambitious target, India has a distinct advantage in low-cost renewable energy generation, potentially making it one of the most competitive producers of green hydrogen in the world. The global demand for hydrogen in 2020 was around 90 million tonnes, however, 99 per cent of this was produced from natural gas, coal, or oil as per estimates by the International Energy Agency (IEA). Extracting hydrogen from fossil fuels creates carbon dioxide (CO2) emissions, which means it is not environmentally sustainable.
Green hydrogen on the other hand doesn’t release any greenhouse gases into the atmosphere, making it an eco-friendly fuel. The Indian government also announced its National Green Hydrogen Mission earlier this year in an attempt to utilise its competitive advantage in the sector. Let us take a look at green hydrogen and its benefits, production in India, our competitive advantage, and the steps being taken by other countries to lead the production of this eco-friendly fuel.
What is Green Hydrogen?
Green hydrogen is hydrogen produced through the process of electrolysis, generated by renewable energy sources, such as solar or wind, or from low-carbon power. Unlike grey hydrogen which is usually produced from fossil fuels, green hydrogen is a zero-emission fuel which does not release any greenhouse gases into the atmosphere. In simple terms, it is an eco-friendly fuel. The supply of green hydrogen is virtually unlimited as it can be produced and transported anywhere in the world. Green hydrogen is clean and sustainable and has the potential to transform the energy infrastructure globally, which currently relies heavily on fossil fuels. Due to innovations in the production of green hydrogen production, the eco-friendly fuel is being manufactured at a reasonable cost with respect to its energy density. In different regions, the cost of hydrogen varies broadly in the range of 0.8 to 4 USD per kilogram.
Is Green Hydrogen the Answer to Our Climate Crisis?
Green hydrogen is one of the primary prominent contenders for a replacement for fossil fuels. It is seen and projected as a solution to environmental degradation caused by the excessive use of fossil fuel emissions, which is leading to global warming and the climate crisis. The eco-friendly fuel is easy to transport, manufacture, recycle, and store, making it the ultimate energy fuel of the future.
India is heavily dependent on energy imports, with oil and gas accounting for nearly 80 per cent of the country’s energy needs. The heavy reliance on imported fossil fuels not only makes the country vulnerable to any price shocks and volatility but also exposes us to geopolitical risks.
As per data from the International Energy Agency (IEA), India is the world’s third-largest emitter of greenhouse gases, accounting for around 7 per cent of global emissions. However, at the 2021 United Nations Climate Change Conference, India pledged to reach net-zero emissions by 2070. Since assuming its G20 presidency in December last year, the country has been trying to lead the charge in the global action on climate change and green hydrogen can be a key enabler to help us build a low-carbon economy.
India has an abundance of natural resources with a solar potential of 750 gigawatts (GW) and a total wind potential of 302 GW. By using these resources in green hydrogen production, the country can reduce its dependence on imported fossil fuels while also furthering its climate change commitments.
The country has pledged to reduce its greenhouse gas emissions intensity by 45 per cent by 2030 compared to 2005 levels and green hydrogen can play a leading role by replacing fossil fuels in sectors such as transportation, industry, and power generation.
What is the National Green Hydrogen Mission?
Earlier this year, the Union government of India approved the National Green Hydrogen Mission, which is a comprehensive action plan to establish a green hydrogen ecosystem, while also helping create a systemic response to the opportunities and challenges in this section. The government has allocated Rs. 19,744 crore for the mission, including Rs. 17,490 crore for the Strategic Interventions for Green Hydrogen Transition Programme (SIGHT), programme, Rs. 1,466 crore for pilot projects, Rs. 400 crore for R&D, and Rs. 388 crore towards other components.
The implementation of the respective components of the mission will be carried out by the Ministry of New and Renewable Energy. One of the key objectives of the mission is to make India a leading producer and supplier of green hydrogen in the world. If India is successful in becoming a global leader and hub for the production, usage and export of green hydrogen, it will help the country become more self-reliant, reduce our dependence on imported fossil fuels and also lead to significant decarbonisation of the economy.
Currently, major sectors such as industrial production, transport, and manufacturing rely on imported fossil fuels. If the mission is implemented successfully, it will start a shift towards using renewable energy sources and reducing our dependence on other countries for fossil fuels. Additionally, the mission will attract investments and create significant employment opportunities.
The production capacity targeted by 2030 is likely to create over six lakh jobs in the country. Under the plan, the government has identified ten potential states that could be the key enablers in manufacturing green hydrogen in the country. These are Karnataka, Odisha, Gujarat, Rajasthan, Maharashtra, Tamil Nadu, Andhra Pradesh, Kerala, Madhya Pradesh, and West Bengal. Under the SIGHT programme, the government will provide two financial incentive mechanisms, which will target the domestic manufacturing of electrolysers and the production of green hydrogen.
Can India be the global leader in Green Hydrogen production?
While India’s National Green Hydrogen Mission is certainly a step in the right direction, it should be noted that other countries are also taking active steps in prioritising the production of green hydrogen. Australia has identified this eco-friendly fuel as a priority, aiming to produce it for under USD 2 per kilogram. Similarly, the European Union has also adopted a clear strategy, aiming to develop hydrogen valleys, which will use offshore wind capacity of the North Sea to power electrolysers. Saudi Arabia has announced its intentions to enter the market using its vast solar power potential. The United States Department of Energy has launched its ambitious Earthshots initiative to reduce the cost of green hydrogen by almost 80 per cent to USD 1 per 1 kilogram in one decade also known as the “1 1 1” plan.
India’s target of reducing green hydrogen production cost to USD 1 per kilogram by 2030 is a very aggressive time frame. However, the country does have certain advantages such as large renewable energy resources and low electricity production costs, which puts it ahead of other countries. The ‘Harnessing Green Hydrogen’ report produced by NITI Aayog highlights the potential of green hydrogen as a market creation engine for the country, but it also highlights the need for urgency and action to achieve this as other countries are also taking active and aggressive action in similar directions. India’s target for cost reduction needs to be more ambitious and backed up with aggressive incentives and mechanisms, even more than those outlined in the green hydrogen policy. There is a need to combine and accelerate technological advancements and regulatory support in the sector to help accelerate the government’s National Green Hydrogen Mission if India aims to utilise its competitive advantage in the sector.
Shreya Maskara/New Delhi
Contributing reports by Ratika Khanna, Neha Rai and Nelabh Krishna, Researchers at Polstart.
From Polstrat, a non-partisan political consultancy which aims to shift the narrative of political discourse in the country from a problem-centric to a solutions-oriented approach.