The National Green Hydrogen Mission has received $19,700 crore from the 2023 Federal Budget. This will launch a programme that might help India establish itself as a green hydrogen (super)power. What will it take and why is this important?
By 2030, India intends to generate 50% of its power from non-fossil fuels. Yet, industry also has to migrate to a more energy-efficient model. Steel, cement, fertilisers, and petrochemicals are the industrial sectors in India that produce the most greenhouse gas emissions.Green hydrogen has the potential to both drive industrial expansion and lower industrial pollution. It takes a lot of energy to split water into hydrogen and oxygen. Green hydrogen is produced when this energy originates from non-fossil, renewable sources. It may act as both an energy source and a carrier (for heavy industrial, long-distance travel, flight, and power storage) (as green ammonia or blended with natural gas).
By 2030, India wants to produce at least five million tonnes, more than any other country combined. A need for 100–125 GW of renewable energy, 60–100 GW of electrolyzers, an investment opportunity of 8 lakh crore, and a reduction in yearly emissions of 50 MMT would result from this. India is geographically fortunate to become one of the lowest-cost producers of green hydrogen because to its significant wind energy resources and plenty of sunshine.
In order for the vision to become a reality, business and government must work together on five goals. The importance of domestic demand is first. We cannot be a large participant in the worldwide market if we are not a major player at home. The mission announces the Strategic Interventions for Green Hydrogen Transition (SIGHT) fund, which would provide direct assistance for the use of green hydrogen for five years at a cost of Rs. 13,000 crore. Heavy industries will be encouraged to boost demand as a result, providing economies of scale that enable suppliers to lower costs.
Refinery blending requirements might also cause a demand spike. Plants that produce urea are exempt. Targets may be raised over time as blending demands increase (including for urea fertilizers). Using government procurement as leverage is another strategy. Can India, the second-largest steel manufacturer in the world, strive to surpass all others in the production of green steel? Green steel, which is created from green hydrogen, is now significantly more expensive, but costs might be lowered with increased manufacturing efficiency and technological advancements. Green steel may receive a portion of government steel purchases. In the future, India may promote itself as an exporter of green steel.
Second, both domestic and foreign investors may find India to be a desirable location. There are much fewer green hydrogen generating initiatives declared or active in India than elsewhere. Transporting green hydrogen is challenging and costly. The goal is to create green hydrogen centres that will combine production, consumption, and exports. Project approval may be simplified with the help of a mission secretariat, which can also lower financial risks.Finally, the SIGHT fund offers 4,500 crore as part of the performance-linked incentive programme to boost the manufacture of electrolysers. Presently, producers import stacks and put them together. With targeted public investment, we must improve our ability to manufacture the most important and valuable electrolyser components in India. If value addition is not prioritised, electrolyser technology and production will once more become consolidated. By 2030, China may have 38% of the global electrolyser capacity under its control. To meet strict application criteria, greater efficiency targets, the ability to utilise non-freshwater, and the ability to substitute essential minerals, electrolyser technology must be enhanced.
Fourth, create bilateral alliances to create robust supply chains. There have been roughly 63 bilateral partnerships established worldwide, with Germany, South Korea, and Japan having the most. For sales to Japan or the EU, using loans denominated in yen or euros, respectively, might lower the cost of financing and improve our ability to compete internationally. Few bilateral agreements deal with investments or technology transfer; most are import-export-focused. India must collaborate with nations that share its values in commerce, value chains, standards, and research and development. For research and development, the mission allots 400 crore, which can be used to attract private funding for joint technological development. In nations with abundant renewable energy sources and affordable financing, Indian enterprises ought to think about collaborating on projects.
In order to create regulations for a global green hydrogen economy, India needs collaborate with other big economies. In the absence of universally accepted frameworks, efforts to establish norms and standards are led by associations of private firms rather than by means of formal international procedures. Conflicting rules and protectionist policies are already manifesting in important markets. They imperil India’s aspirations.An chance to develop regulations for a global green hydrogen economy exists under India’s G20 leadership. The operational, competitive, and strategic challenges must be addressed by these regulations. India need to support a worldwide network for green hydrogen that would enable business collaboration. The 21st century will see green hydrogen become a crucial industrial fuel. India is in a good position to take the lead in advancing the interests of the planet and our global community.