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Green or Grey? The Uncertain Quality of India’s New Hydrogen Policy

Green or Grey? The Uncertain Quality of India’s New Hydrogen Policy

A part of an electrolyser at a hybrid power plant near the town of Schenkenberg north of Berlin, February 2012. Photo: Reuters/Thomas Peter

  • India unveiled its ‘green hydrogen’ policy on February 17. It aims to make the country a “hub” for the fuel by incentivising its production.
  • The policy is an important first step but doesn’t address many crucial details, including the demand for ‘green hydrogen’ in India, energy scientists say.
  • The hydrogen is also only as ‘green’ as the renewable energy used to produce it – and in India, this is not often the case.

Kochi: India unveiled its new “green hydrogen policy” on February 17. Production costs of ‘green hydrogen’ are now expected to drop drastically while renewable energy plants are expected to be able to have a clearer path to producing this fuel – one of the cleanest known sources of energy.

Some experts have hailed the new policy as a “watershed moment” in India’s clean energy programme. Adopting green-hydrogen technology has for a long time been expected to bring India closer to its ambitious climate pledges, which includes reducing our total projected carbon emissions by one billion tonnes by 2030.

But while the policy is an important first step, it still doesn’t address many crucial details – including creating the demand for green hydrogen in India, according to energy scientists. The hydrogen is also ‘green’ only as long as the renewable energy that is used to make it is green. In India, that’s hardly the case.

Greens and greys

Numerous industries – from refineries to ammonia production – use hydrogen as a fuel. The element produces only water when combusted, in stark contrast to the various by-products of the extraction and use of fossil fuels.

Currently, all of India’s hydrogen – which uses about 6 million tonnes every year – is grey: because it is derived almost entirely from natural gas, a fossil fuel, through a process called steam-reforming. Here, natural gas (or methane) is split into carbon and hydrogen, with carbon monoxide and carbon dioxide as by-products. So the process is an important contributor to atmospheric carbon and in turn to global warming.

On the other hand, in electrolysis, electricity is passed through water to split it into hydrogen and oxygen, and the hydrogen is piped off for use. This process can be clear or dirty depending on how that electricity is produced. If the power source is green, the resulting hydrogen is also green.

This is why countries have rushed to incorporate ‘green hydrogen’ in their clean energy missions. Prime Minister Narendra Modi announced the ‘National Hydrogen Mission’ in August last year, which aims to make India a “green hydrogen hub”, i.e. a leading producer and exporter of ‘green hydrogen’.

If done right, green hydrogen in industries and in the transportation sector could help India cut its carbon emissions to a significant degree, bringing the country closer to its climate targets. By 2050, nearly 80% of India’s hydrogen is projected to be ‘green’ – i.e. produced by renewable electricity and electrolysis, according to one report by The Energy and Resources Institute (TERI), New Delhi.

India is aiming to produce 5 million tonnes of ‘green hydrogen’ by 2030. Multiple corporations have already joined the bandwagon, including Adani Enterprises, which plans to invest in manufacturing hydrogen fuel cells, which are crucial to enable the use of ‘green hydrogen’ in transportation.

The Union Ministry of Power notified India’s ‘green hydrogen’ policy on February 17. It incentivises green hydrogen production in many ways. One of them is by enabling manufacturers to purchase renewable power from a power-exchange or by setting up their own renewable energy capacity. Manufacturers can subsequently “bank” their unconsumed renewable power for up to 30 days with the distribution company.

Hydrogen manufacturers can avail grid connectivity on a priority basis for electricity. In addition, the policy also envisages concessional prices for distributors and waivers for inter-state transmission charges for 25 years.

Put together, these incentives reportedly mean the generation cost of ‘green hydrogen’ is expected to drop by up to 50%, from the current average of Rs 500 per kg, say some. The Union Ministry for New and Renewable Energy is also expected to set up a single portal for all statutory clearances, for “ease of doing business”.

However, there are many crucial details that the policy is currently not clear about.

Also read: Hydrogen Has Been Hyped as Key to a Global Energy Transition. Why?

Demand creation

The policy aims to increase supply, although there is a bottleneck to begin with. “The kind of electrolyser capacity that will be required to realise” the programme is “not available right now in the country,” S.S.V. Ramakumar, a director at Indian Oil who helped to frame the new policy, told Reuters earlier this month. “All the production capacity and order books of big global players are booked and overflowing till 2025.”

More importantly, while the policy incentivises the production and supply of ‘green hydrogen’, it does not specify mechanisms or incentives to create demand, in the words of Pawan Mulukutla, director of Clean Mobility & Energy Tech at the World Resources Institute-India (WRI-India), and his colleague Anuraag Nallapaneni, a senior program associate.

Who will use the ‘green hydrogen’ that will be produced? The government has not mandated any industries currently using ‘grey hydrogen’ to transition to the green variety. The use of ‘green hydrogen’ as fuel in the transport sector is also virtually non-existent. There are few hydrogen-powered vehicles in the market while hydrogen fuel technology in the country has not yet matured.

“However, this is just the first part of a larger policy that is to come so hopefully this issue regarding demands will be addressed then,” Girish Sethi, senior director – Energy, TERI, told The Wire Science.

According to him, this will be important because TERI’s calculations suggest that the need for hydrogen in India is likely to increase at least five-fold by 2050, led by industrial demand, including those that currently use some form of hydrogen, like refineries, and those that don’t, like steelmaking.

Currently, India’s steel industry depends entirely on fossil fuels, including coking coal for its blast furnaces and coal-based sponge iron, Sethi said. If this industry is to be decarbonised – which it must be for India to meet its climate targets – hydrogen will be the way to go.

Storage, transport, costs

Storing hydrogen is non-trivial because it is highly flammable. The new policy, however, only talks of building storage bunkers at ports for export, and not at other points. And even with exporting, there are other hurdles, including high costs, as The Wire has reported.

If green hydrogen is to reach homes and vehicles, it will have to be transported. Existing natural gas pipelines aren’t suited for this purpose because hydrogen needs more safety measures, said Kajol, a senior manager with the energy program at WRI-India (she goes by a single name).

One way out would be to explore the possibility of “green hydrogen valleys”. That is, Kajol explained, the main users of the hydrogen could be concentrated in a ‘valley’, or a bounded area, that also contains a ‘green hydrogen’ production point. Creating such an “ecosystem of sorts” would mean fewer logistical transport and storage problems, she added.

For now, hydrogen uptake in transportation is prevented largely by high cost and the lack of a distribution system. But this will likely change by 2050 – when the cost of green hydrogen could decrease to Rs 340 per kg – if there is pipeline transport and as costs of renewable energy and electrolysis decrease as well, according to a report by the International Council on Clean Transportation.

However other estimates predict a higher decline in costs by 2030: cheaper renewable power could bring down the production cost of green hydrogen to below Rs 150 per kg, Kashish Shah, a research analyst with the Institute for Energy Economics and Financial Analysis, has said. Mukesh Ambani, chairman and managing director of Reliance Industries Ltd., has also said technology and innovations in the sector could bring the cost of green hydrogen to half of that by the end of this decade itself.

Also read: After COP26: What Needs To Happen for India To Meet Its Targets

Only as ‘green’ as RE

Ultimately, all this matters only if the hydrogen that India produces is truly ‘green’. That will happen only if the renewable energy used to make it is ‘green’.

Many renewable energy projects in the country are not ‘green’ even when they claim to be because of their environmental impact. Karnataka’s Pavagada solar park, for example, is spread over 13,000 acres. The Wire visited the facility in 2018 and found that the soil had degraded, traditional water conservation systems had fallen apart and farming in the area had become unviable.

More recently, researchers reported that Pavagada has reportedly lost a large fraction of its bird and large mammal population since the project was set up.

Many renewable energy farms are being installed in natural ecosystems such as grasslands and deserts in semi-arid and arid regions. Historically, such unforested areas have been treated as ‘wasteland’, feeding the impression that they can be used for other purposes. This is not true.

In addition, arid and semi-arid are home to important species, whose cause power companies tend to neglect in the process. This fate recently befell the great Indian bustard, which is India’s national bird, in Rajasthan.

India is already pushing for renewable energy in a big way, with a target to install 500 GW of renewable power generation by 2030.

But this may prove insufficient if India is to meet its green hydrogen production and export targets. This in turn means more land required for large solar and wind power projects, and in turn more impact on the rural population, and birds and animals.

India is thus likely to have more conflicts between these projects’ proponents and the people who own and/or use the land. In Pavagada, already, jobs at the solar park provide regular incomes but the absence of diversified livelihood options impose long-term economic risks.

In effect, any green policy ought to acknowledge and plan for these off-target outcomes.

For now, experts have pinned their hopes on the more detailed mission document from the Union government, which will hopefully spell out more details to plug these gaps. But until then, by glossing over crucial details, the policy remains incomplete.

Note: This article was edited at 10:22 am on February 26, 2022, to include the point about India’s electrolyser capacity.

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