Key to unlocking India’s green hydrogen ambitions

India launched National Green Hydrogen Mission on August 15, 2021 and has since accelerated its efforts towards achieving net zero emission target set for 2030. But to become a leading exporter, it needs to guarantee usability, cost efficiency and scale, besides ensuring rapid development of the infrastructure for transport and storage.

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• India launched National Green Hydrogen Mission on August 15, 2021 and has since accelerated its efforts towards achieving net zero emission target set for 2030.
• The government has set the initial outlay for the Mission at  Rs. 19,744 crore, including an outlay of Rs.17,490 crore for the SIGHT  programme.
• India’s Green Hydrogen production capacity is likely to reach at least 5 MMT per annum, with an associated renewable energy capacity addition of about 125 GW.
• Green hydrogen costs in India could potentially fall by half to as low as Rs. 160-170/kg by 2030, bringing parity with grey hydrogen and other fossil fuels.

New Delhi, Feb 22: Over a span of few decades, India has emerged as a favourable destination for investments in renewable energy projects and technologies. Though the country is still largely dependent upon fossil fuels and grey hydrogen for energy consumption, green hydrogen can be the driving force to meet India’s net zero emission target of 2030.

The government has said that India’s Green Hydrogen production capacity is projected to reach at least 5 MMT per annum, with an associated renewable energy capacity addition of about 125 GW.  The targets by 2030 are likely to bring in over Rs. 8 lakh crore investments and create over 6 lakh jobs. Nearly 50 MMT per annum of CO2 emissions are expected to be averted by 2030. But will it be in a position to become a leading exporter of green hydrogen?

What is green hydrogen?

There are four different variants of hydrogen, depending on production methods i.e., Grey Hydrogen, Blue Hydrogen and Green Hydrogen.

Grey hydrogen is produced from natural gas while ‘Blue’ hydrogen is from fossil fuel sources where the ensuring carbon emitted is captured via carbon-capture processes. Green Hydrogen, however, is a key industrial fuel that has a variety of applications including the production of ammonia, steel, refineries and electricity.

Green hydrogen is when hydrogen is produced via electrolysis, the splitting of water into hydrogen and oxygen with electricity generated from renewable energy sources such as solar or wind. This is the most environmentally sustainable way of producing hydrogen. It is worth noting, that green hydrogen has no colour as it is an invisible gas.

Where is green hydrogen utilised and its pricing in India

According to Niti Aayog, green hydrogen prices are determined largely by the cost of electrolysers and electricity. Beyond that, there are the operating costs, transmission and distribution (T&D) cost, and wheeling charges for electricity as well as specific local duties and and taxes like the goods and services tax (GST) in India.

In February 2023, the railways minister Ashwini Vaishnaw announced India would have its first green hydrogen-fuelled trains by the end of the year. The National Thermal Power Corporation or NTPC announced commencement of India’s first green hydrogen blending project in Kawas township, Surat, Gujarat.

Green hydrogen can be used in transportation. Renewable energy based cars have hydrogen tank that connects to the fuel cell where the electricity that powers the engine is generated. Fuel cell technology uses chemical energy of hydrogen or other fuels to cleanly and efficiently generate electricity. Green hydrogen can be used for heavy load vehicles like mining vehicles and buses; trains, aircrafts, lorries, and even maritime transport.

As of today, the primary usage of (grey) hydrogen fuel remains with chemical industry for manufacturing ammonia and fertilisers and petrochemical industry to produce petroleum products. The utilisation of hydrogen in chemical and petrochemical industries, however, generates immense pollutants and green hydrogen can be the answer to bring down carbon emission.

Union Minister of Information & Broadcasting Anurag Thakur had announced that the government will focus on bringing down the cost of green hydrogen in the next five years. According to a report by KPMG published in 2022, green hydrogen costs in India could potentially fall by half to as low as Rs. 160-170/kg by 2030, bringing parity with grey hydrogen and other fossil fuels. At present, the cost of producing 1 kg of green hydrogen is between $5.5 and $6 (Rs. 414 to 497) which is far too expensive for large scale manufacturing of the renewable gas.

Benefits of National Green Hydrogen Mission

The Mission will result in the following likely outcomes by 2030:

• Development of green hydrogen production capacity of at least 5 MMT (Million Metric Tonne) per annum with an associated renewable energy capacity addition of about 125 GW in the country.
• Over Rs. 8 lakh crore in total investments
• Creation of over Six lakh jobs
• Cumulative reduction in fossil fuel imports over Rs. 1 lakh crore
• Abatement of nearly 50 MMT of annual greenhouse gas emissions

Country-wise demand and policy perspective for hydrogen

Country/region	Current Hydrogen Demand	Policy Target Demand	Capital Demand Focus Allocated (US$)
European Union	8 MMTPA	6 GW capacity by 2024; 40 GW by 2030; 10 MMTPA green H2 by 2030	609 billion
United States	10 MMTPA		> 15 billion
China	22 MMTPA	35 MMTPA (by 2030); 160 MMTPA (by 2050)	13 million
Russia	2-3.5 MMTPA	7 MMTPA by 2035 and 33 MMTPA by 2050 (export only)	1.2 billion
Japan	2 MMTPA	3 MMTPA by 2030 and 20 MMTPA by 2050 (5-30 by 2050)	935 million/yr
Australia	650 ktpa		278 million (annual support)/yr
United Kingdom	0.7 MMTPA	5 GW/a electrolysis capacity by 2030	2 billion

Source: NITI Aayog

According to  World Economic Forum, China consumes and produces more hydrogen than any other country in the world– its current annual usage is more than 24 million tonnes. Though most countries produce and consume grey hydrogen, for India green hydrogen could be a huge value-adding opportunity. With the launch of NGHM, the country pivots towards renewables and away from imported fossil fuels, which currently meet most of the nation’s oil and gas demand.

Tobias Winter, Director of Indo-German Energy Forum Support Office, has said that India is gifted with ideal climatic conditions to produce green hydrogen. India produces and consumes 6 million tonnes green hydrogen, and addition to this 2 million tons import indirectly through ammonia and fertilisers.

Amid a panel discussion at the REConIndia 2023, Mr. Winters also stated that countries like Germany sees India as a potential producer of green hydrogen. Adding to this, he also stated that the country, with this opportunity, must also look into its green hydrogen production readiness.

Experts spoke on the need for a strategic foresight to establish flexible supply chains, invest in research, development, and demonstration to drive down the cost of electrolysis and workforce capabilities for the future. Meanwhile, net energy importers like Chile, Morocco and Namibia are emerging as exporters of emissions-free green hydrogen.

Mr. Winters has stated that for India to emerge as the leading choice for export of green hydrogen to developed nations it will have to become price competitive. The German government is likely to float tenders for the procurement of green hydrogen by the end of 2023/2024. The EU member will look for multiple suppliers from different countries since the region is staring at a recessionary phase.

India’s aim to become a leading global exporter of green hydrogen can be fulfilled when the production of the renewable fuel surpasses the domestic consumption levels. The other aspect to look into would be safe storage and transportation of green hydrogen. At present, green hydrogen is transported via pipelines, over the road in cryogenic liquid tanker trucks or gaseous tube trailers. Green hydrogen can be a welcoming step for places where energy demand cannot be covered using traditional battery solutions.

For India to become a leading exporter, it needs to guarantee the usability of this energy, cost efficiency, required quantity, investments and rapid development of the infrastructure for transporting and storing green hydrogen.