India should explore the possibility of hydrogen exports
Tirtha Biswas, Program Lead, Council on Energy, Environment and Water, opines that industry should be incentivized to invest in the hydrogen economy. With the right investments and policies, India will not just be able to ramp up its production of blue/green hydrogen, it can also become its leading exporter.
IBT: With the global buzz rising around net zero carbon emissions, the pressure on India, particularly, is mounting as it is seen as the planet’s third-largest emitter of carbon dioxide. What is your opinion on this – is this a distant dream or an attainable reality? If it is the former, then why is it so; the latter, how can it be achieved?
Tirtha Biswas: Increase in emissions is a function of GDP growth. To attain net zero carbon emissions, there needs to be a negative growth in the emissions. This means that the reduction in energy intensity and emissions footprint of the energy mix has to be higher than the GDP’s growth rate. Given India’s ambitious economic growth target in the coming decades, the efforts in decarbonizing will also need to be very high.
CEEW studies indicated that India has the potential to commit that its per capita emissions as well as the cumulative emissions (between 1901-2100) will not exceed those of China, European Union and the United States. However, India would requirecertain critical support systems to enable the clean energy transition. India would need hundreds of billions of dollars to finance the clean energy transition, and there is limited access to low-cost capital. Similarly, there is a need to strengthen the R&D ecosystem particularly in the areas of disruptive technologies such as green hydrogen, or electrofuels etc.
IBT: How can green & blue hydrogen play a part in bringing down India’s carbon emissions? What advantages do they have over its counterparts like LPG, biogas, ethanol & natural gas? How can investors be attracted to invest in this technology?
Tirtha Biswas: Green hydrogen is a potential zero-carbon energy vector and feedstock. However, even with very aggressive reduction in technology prices, it will take at least a decade for full-scale commercialisation to happen. This means that if India wants to decarbonize today, it would have to turn towards fuels like natural gas, biofuels as a as a near-term solution. So, natural gas has a very critical role to play as a transition fuel to green hydrogen.
The question on investors is also linked to the economics of a project. That also defines that how is the project being structured. One of the options can be that instead of looking at 100%, greenfield green hydrogen project, it can be blended with existing technologies. For example, the ammonia sector is already making use of (grey) hydrogen. As green hydrogen becomes cheaper over time, transition towards it can be made.
IBT: According to media reports, hydrogen technology is currently being used in the petrochemicals and fertilizer industry. What are the other industrial applications of green & blue hydrogen?
Tirtha Biswas: In India, hydrogen is currently being used in sectors like petrochemicals refineries & ammonia. Going forward, the sectors which can drive green hydrogen consumption and also help achieve the economies of scale are heavy industries, which is steel, ammonia, transport HCNG, forklifts and so on.
IBT: What are the possible challenges that could slow down India’s adoption of green hydrogen as a clean fuel? What difficulties can stem in producing it (e.g. commercial viability)? How can they be resolved?
Tirtha Biswas: What is important right now is to ensure that the transition to an eventual hydrogen economy is smooth. Without policy certainty, investments in certain fossil-based technologies and infrastructure would end up becoming locked in assets, or rather also known as a white elephant. For example, the steel industry contributes to 8% of national emissions and it is also anticipated to grow 2 fold in the next decades. The blast furnace is the main workhorse of the industry. It primary relies on coal (and coke), and technological constraints allow limited co-blending of natural gas and hydrogen, thus having an insignificant impact on overall emissions reduction. It’s a highly capital-intensive technology (~ INR 5000 crore per tonne of steel per annum output) and the cost is recovered through a period of 45 to 50 years. So, the challenge is how to ensure that the steel industry invests in technology which is future ready. One solution could be to invest in natural gas technologies and gradually increase the share of hydrogen & reduce the share of natural gas while retaining the same equipment. Grey hydrogen (obtained from biomass) can be utilized for certain industries which does not require high purity, such as steel and costs can be saved this way.
Secondly, policy intervention is needed to strengthen R&D. Currently, India has a very fragile R&D ecosystem. To put things in perspective, a report by the Ministry of Steel (2017), indicated that the average R&D expenditure by the Indian steel industries is less than a percentage of the annual turnover. For example, the Steel Authority of India, had spent an amount of INR 335 crores in the year 2017-18 on R&D. In contrast, the Swedish government is spending around 1200 crores on a hybrid project. So, an ecosystem encouraging R&D in the country needs to be created for a cost-effective hydrogen economy.
Lastly, manufacturing needs to be supported beyond offering a PLI support system or increasing the import duties. For example, raw materials (like platinum, iridium, graphite) used to produce an electrolyzer stack account for around 40% of its cost. India does not have access to these critical minerals and it may therefore end up becoming a mere assembler of the product instead of its manufacturer. India does not necessarily have to be engaged in end-to-end manufacturing each and everything. The country needs to identify its strengths and opportunities, and complement them by aligning with the right partners as the world seeks to diversify global value chains.
IBT: Recently, draft regulations for the National Hydrogen Energy Mission were released. How can the government’s NHM help India reduce its carbon emissions? In your opinion, what are some of the suggestions to improve the policy?
Tirtha Biswas: Most renewable energy resources that can produce low-cost electricity, are situated far away from the potential demand centres. If hydrogen were to be shipped, it would significantly erode the economics. In order to ensure easy access to low-cost hydrogen we would need innovative solutions. One such practical solution can be that instead of transporting hydrogen, one wheels electricity to the demand location through open access. Transporting hydrogen on the other hand, is economically competitive only for large-scale pipelines, which would further require demand offtake guarantees and adapting the natural gas infrastructure to become hydrogen ready. Further for centralised supply chains, the cost of hydrogen storage also become critical. Storing green hydrogen in tanks is very expensive. Underground storage of hydrogen is significantly cheaper. However, the underground storage potential in the country still needed to be understood.
IBT: Which other countries can India look up to in terms of drawing inspiration for hydrogen technology? What can it learn from them?
Tirtha Biswas: The approach that the hydrogen economy should take is a function of how a country’s industrial structure is currently and what it is likely to be 20 years down the line. Unlike the developed economies, the industrial sector will be one of the be a significant driver of future emissions growth in India and hence, the focus should be on the industrial decarbonization.
Economies like European Union and Japan, have strong research footprint across hydrogen value chain. Indian industries should stop waiting for technology handouts and instead aim for technology co-development. India could also take a cue from EU’s Hydrogen Valley Programme, where a concentrated demand market can help achieve the economies of scale in early markets. Finally, India should also aspire to be an exporter of hydrogen like Australia, which is currently currently exporting its green hydrogen to Japan.
IBT: What impact has the pandemic had on India’s clean energy transition? Will it derail India’s progress towards being a carbon neutral nation? Why/why not?
Tirtha Biswas: The pandemic did slow the renewable energy deployments. However, the sector received constant support from the government such as extension of project deadlines, financial incentives through ISTS waivers, and new the PLI schemes supporting domestic PV and EV manufacturers. We also saw some innovative renewable energy projects being tendered out during the period. It is also interesting to note that the sales of EVs rose from 0.77 in FY20 to 0.87% yoy in FY’21. But, owing to the pandemic and the ensuing supply chain disruptions, the deadlines of these projects are being extended. However, overall, the sentiment of the sector has remained positive during the pandemic.
Tirtha Biswas is a policy analyst, working on the development of sustainable and competitive pathways for Indian industry to support its low-carbon growth aspirations. At The Council, his research spans across mineral resource security, greenhouse gas emissions, green hydrogen, and energy efficiency of the domestic industrial sector in India. He has completed a dual degree from the Indian Institute of Technology (Indian School of Mines), Dhanbad, and holds an undergraduate degree in Mineral Engineering and a Masters in Mineral Resource Management.