With renewable energy decreasing carbon emissions in the power sector, Green hydrogen has become an emerging strategy to decarbonise the industrial sector
India's G20 Presidency presents an opportunity for India to lead the way in its transition to green energy, especially in the field of green hydrogen, which can aid in global decarbonization efforts. India aims to become a global hub for green hydrogen (GH2) production and exports.
At a time when India’s energy demand is projected to rise further along with its economic growth, 80% of India's energy is derived from coal, oil, and solid mass, doubling its energy consumption over the past two decades. By 2030, energy demand is predicted to rise by roughly 50%. Additionally, India depends on imported fossil fuels to meet the needs of important sectors like mobility and industrial production, which account for over 40% of its primary energy requirements, worth more than $90 billion each year. India's pledge to attain net zero emissions by 2070 is a vital step toward addressing these challenges.
India needs to prioritize its efforts towards achieving a complete transition to renewable energy, especially in the industrial sectors like steel, cement, fertilizers, and petrochemicals that contribute the most to greenhouse gas emissions. While renewable energy has significantly reduced carbon emissions in the power sector, green hydrogen is an emerging solution to decarbonize the industrial sector as well. Green hydrogen will be utilized in the production of ammonia, petroleum refining, city gas distribution systems, and the manufacturing of steel and synthetic fuels.
The Indian government has launched the National Green Hydrogen Mission to establish the country as a global center for green hydrogen production and achieve energy self-reliance through clean energy. With an investment of ₹19,444 crore, the Mission aims to produce 5 million tonnes (MT) of green hydrogen annually by 2030, positioning India as a leader in the green hydrogen market. 5 MT of green hydrogen will abate 28 million tonnes of CO2, and as the green hydrogen economy grows, this proportion will increase. The adoption of green hydrogen has the potential to reduce cumulative CO2 emissions by 3.6 gigatonnes and energy imports in the range of $246-$358 billion by 2050. The mission also seeks to position India as a leader in the technology and manufacturing of electrolysers and other green hydrogen-related technologies.
Hydrogen is a mainstay in G20
Japan, Saudi Arabia, and Indonesia have focused on hydrogen (H2) during their respective G20 presidencies. Japan commissioned a report on hydrogen from the IEA, which found that it has significant potential in various industries and sectors. Saudi Arabia focused on blue hydrogen. Indonesia. switched the focus back to green hydrogen and signed a joint study agreement for green hydrogen projects in Sumatra.
While some G20 countries like Canada, the US, Italy, and Germany, announced their green hydrogen policies in 2020 road maps, France, Australia, Korea, and Japan had their hydrogen road maps in place in 2019 itself. Countries like the UK, Russia, and South Africa unveiled their hydrogen roadmaps in 2021. During last year, Brazil and Argentina prepared low-carbon hydrogen strategies.
Backed by the National Green Hydrogen Vision, India has made Green Hydrogen one of the priority areas of the G20 2023 agenda and is accelerating efforts in this direction. During its presidency, India should strategically advance its green hydrogen vision within the G20 framework, while streamlining its domestic policies. Some of the key initiatives that can be taken by India could be as follows.
1. Need for favorable policies - India currently consumes 5 MMT of hydrogen annually, mostly sourced from fossil fuels, for use in petroleum refineries and ammonia production for fertilizers. Green Hydrogen comes with a price tag that is at least two times higher than Grey (natural gas-based) Hydrogen, or even more. According to the Niti Aayog, Green hydrogen can achieve cost parity with natural gas-based hydrogen (grey hydrogen) by 2030. The government can reduce the cost by providing preferential electricity tariffs. It can incentivize and mandate the existing hydrogen-consuming sectors, such as refinery and ammonia/fertilizer, to develop the market, which would require comparatively lesser transition support. This would increase the green hydrogen demand from 16% in 2030 to 96% in 2050.
At present, the production cost of green hydrogen through electrolysis ranges from $4.10 to $7 per kg of clean gas, depending on the technology employed. Nonetheless, it is projected that by 2030, the cost in India may decrease to as little as $1.7/kg to $2.4/kg and further to $0.6 to $1.2/kg by 2050 due to the expected reduction in the cost of electrolyzers and renewable energy production.
2. Unambiguous roadmap for green hydrogen – Given the Indian government's sense of urgency, there is a requirement for a comprehensive plan for green energy that is accessible to all stakeholders. For example, the Ministry of New and Renewable Energy (MNRE) guidelines should present a more detailed plan for providing incentives to original equipment manufacturers (OEMs) for manufacturing hydrogen-based vehicles and the creation of refueling infrastructure for the adoption of green hydrogen as a preferred fuel.
3. R&D Investments - MNRE is responsible for creating a set of guidelines for the implementation of various components of the Mission. These components consist of an amount of Rs 17,490 crore allocated for the Strategic Interventions for Green Hydrogen Transition Programme (SIGHT), Rs 1,466 crore for pilot projects, Rs 400 crore for research and development (R&D), and Rs 388 crore for other related initiatives. The allotment of funds is anticipated to attract substantial investments and promote R&D, with a focus on electrolysers, in the coming years. The mission aims to generate more than Rs 8 lakh crore in investments and create over 6 lakh job opportunities by the year 2030. Moreover, during this period, by 2030, India aims to establish 25 GW of electrolysers and invest $1 billion in R&D to accelerate the progress of commercial green hydrogen technologies throughout the value chain.
4. Collaborating with G20 members – Under its G20 presidency, India must assume a leadership position in obtaining inexpensive climate finance via multilateral organizations or by leveraging bilateral accords with developed nations to gain access to a portion of the $100 billion/year commitments established during COP16.
5. Exploring bilateral cooperation – India ought to endeavor to expand its bilateral collaborations with countries both inside and outside the G20 groups. For instance, India and Egypt have signed an MoU to build a green hydrogen plant in the Suez Canal Economic Zone with an investment of $8bn and an initial capacity of 150MW electrolyser producing 20,000 tonnes of green hydrogen per year and later upgraded to 1.5GW electrolyser producing 220,000 tonnes per year. Notably, under its 2023 presidency, India has extended an invitation to Egypt to be a guest country during G20 meetings.
6. Strengthen India Hydrogen Alliance – There is a need to strengthen and expand the scope of India Hydrogen Alliance (IH2A), as this would facilitate an industry-led coalition of global and Indian companies to create a hydrogen value chain and economy. Recently, the European Investment Bank (EIB) has joined IH2A with indicative funding of €1 billion to bring stakeholders like industry, investors, and government agencies together on green hydrogen hubs and projects together.
India's G20 Presidency positions it as a key advocate for the promotion of green hydrogen, with the overarching aim of achieving global decarbonization. By prioritizing green hydrogen on the G20 2023 agenda, India is not only accelerating its policy interventions within its borders but also establishing a strong green energy framework within the G20 group through investment and technological advancements.
(The author is a Junior Fellow, Observer Research Foundation. His research interests include energy policy and energy geopolitics.)