National Green Hydrogen Mission: One step closer to a sustainable future!

Spiceroutelegal

This article provides an overview of the National Green Hydrogen Mission issued by the Government of India in January 2023 (“Mission”), its aim and objectives, key highlights, intended regulatory and fiscal support offered. We have further delved into analysing the advantages of green hydrogen, along with the hurdles that may be faced in its widespread adoption and other practical considerations. This Mission represents a huge step forward in the race of achieving net zero emissions.

INTRODUCTION

As the world is currently going through its worst energy crisis and the fear of climate change is dawning, hydrogen energy has increasingly gained popularity in the market.

Hydrogen gas can be used as a fuel in transportation, power generation, and other industrial activities, without the release of greenhouse gases when burnt. Even though hydrogen is abundant in nature, it cannot be used in its purest form. Currently the most eco – friendly way of producing hydrogen is through the process of electrolysis, in which an electrolyser is used to separate water molecules into hydrogen and oxygen using renewable energy sources such as wind and solar. Green hydrogen, derived through renewable energy, is instrumental in ensuring low carbon and a self-reliant economy.

The market for green hydrogen, is expected to reach €10 trillion by 2050 and provide up to 25% of the world’s energy demands[1]. Although many industry giants like Reliance, Adani, Larsen & Toubro, Greenko, and state-run oil companies like Indian Oil Corporation, GAIL, and ONGC are already moving toward employing this environmentally friendly energy, the official launch of the Mission provides investors with an assurance of government backing.

SOME FACTS ON GREEN HYDROGEN – FUEL OF THE FUTURE

  • Hydrogen emits only water when burned – making it one of the most environment friendly fuels.
  • Hydrogen is the most abundant element on earth, which can be produced from renewable energy sources and through electrolysis.
  • There are two other categories of hydrogen: BLUE hydrogen, which is generated from fossil fuels with carbon capture and storage options; and GREY hydrogen, which is produced from fossil fuels, and is most commonly used today. However, production of both these forms of hydrogen generates carbon dioxide, making GREEN hydrogen the most suited alternative.
  • In April 2022, Oil India Limited commissioned India’s first 99.99% pure green hydrogen plant in Assam using anion exchange membrane technology. US – based Ohmium International, with its subsidiary in India, has commissioned India’s first green hydrogen proton exchange membrane electrolyser manufacturing unit in Karnataka.
  • Electric cars with hydrogen fuel can have a driving range similar to vehicles with combustion fuel. They can refuel in just a few minutes and since the fuel cell is more than twice as efficient as an internal combustion engine, a fuel cell car travels farther on that tank of hydrogen than a traditional car would on petrol or diesel.

NATIONAL GREEN HYDROGEN MISSION

India has been on a rapid development spree in all sectors in the past decade, as a result of which the demand for renewable energy resources has been increasing progressively. In order to meet these demands while taking into consideration climate changes and sustainability, green hydrogen plays a key role. With the aim of positioning India as the global hub for the production and export of green hydrogen, Prime Minister Narendra Modi introduced the Mission on India’s 75th Independence Day[1].

Taking a step forward in the right direction, Union Cabinet approved this Mission on January 4, 2023 with an initial outlay of Rs. 19,744 crores[2].

The funds will be utilised for achieving the Mission objectives of (i) domestic production and exports of green hydrogen, (ii) de – carbonisation of industries in the mobility and energy sectors, (iii) reduction of reliance on imported fossil fuels, (iv) promotion of domestic manufacturing infrastructure and technologies, and (v) creation of employment opportunities.  

The Government of India wishes to implement the mission through an integrated approach along with the Central and State government agencies. While the Ministry of  New and Renewable Energy will be responsible for the overall coordination for implementation of the Mission, other Ministries and departments will undertake focused steps to ensure compliance and achievement of the Mission objectives. The Mission aims to provide a comprehensive action plan for developing a fully functional green hydrogen ecosystem and initiating a systematic response to the opportunities and challenges of this developing industry.

India’s unwavering commitment to its aspirational climate goals of reducing emissions intensity and achieving 50% cumulative electric power installed capacity from non-fossil fuel-based energy resources by 2030 has been widely acknowledged. Owing to the large supply of domestic renewable energy sources, India has the potential to emerge as the global hub for green hydrogen.

COMPONENTS OF THE MISSION

  • SIGHT Programme: Two unique financial incentive mechanisms will be offered under the Mission through the Strategic Interventions for Green Hydrogen Transition (SIGHT) Programme, which targets domestic electrolyser manufacture and green hydrogen production.
  • Policy Framework: To facilitate the emergence of the extensive green hydrogen ecosystem, an enabling policy framework will be developed.
  • Pilot Projects: The Mission will assist pilot projects in developing end-use industries and distribution channels. Green hydrogen hubs will be established in areas that can support large-scale production and/or use of hydrogen.
  • Research and Development ProjectsThe Mission will assist the Strategic Hydrogen Innovation Partnership (SHIP), a public-private partnership structure for research and development. The objectives, deadlines, and magnitude of research and development initiatives serves as guide in creating globally competitive technology.
  • Skill Development: Under the Mission, a coordinated skill-development programme will be implemented.
  • Demand CreationReduction in importing fossil fuels and fertilisers and creating demand both domestically and internationally for generation of green hydrogen.
  • Incentivising SupplyStrategic Interventions for green hydrogen transition by providing direct financial incentives for: a) Electrolyser manufacturing; and b)Green hydrogen production.

PHASED APPROACH

The Mission has been designed to be rolled out in a phased manner to gradually promote the production and use of green hydrogen in India, while combating any challenges that may come along.

GOVERNANCE STRUCTURE – EMPOWERED GROUP

Effective implementation of the Mission requires teamwork and cooperation among the Central and State Governments, industry, institutions, and other stakeholders. A flexible and goal-driven governance structure will be created to guide and oversee the Mission’s execution through the establishment of an Empowered Group (“EG”). The EG chaired by the Cabinet Secretariat of the Government of India will oversee the Mission’s operations, provide guidance, frequently evaluate progress, recommend fiscal, monetary, and regulatory interventions to further the Mission’s objectives, and, if required, approve course corrections. The EG may decide to consult Chief Secretaries from the States, Secretaries of other Ministries and Departments, and other experts for assistance in providing guidance and recommending improvements in the Mission activities.

The National Green Hydrogen Advisory Group (“Advisory Group”) has been constituted to advise the EG on all scientific and technological matters pertaining to the Mission. The Advisory Group will propose a research and development (“R&D”) roadmap based on market demand, and the state of technology and research at the time. It will conduct technological gap analysis and identify broad performance and cost targets based on a global benchmark. Additionally, it will assist the EG in developing targeted calls for bidding for pilot and R&D projects and assessing funding request submissions.

The Mission Secretariat will formulate and assist in developing regulatory framework, including guidelines for procurement of green hydrogen and its derivatives, a programme for incentives and projects, and undertake evaluation, financing, and administration of pilot and R&D projects. The Mission Secretariat, with guidance from the EG, will actively monitor the sector’s exposure to different hazards, classify them and promptly address them.

STRATEGIC INTERVENTIONS FOR GREEN HYDROGEN TRANSITION PROGRAMME (“SIGHT”)

The Mission’s strategy to promote the growth of the country’s green hydrogen sector would include a comprehensive incentive programme – SIGHT, which will offer extensive financial incentives and non-financial incentives to encourage low-cost domestic production of hydrogen-associated equipment and technology.

SIGHT has proposed to offer two unique financial incentive mechanisms to support domestic electrolyser manufacture and increase the production of green hydrogen. The proposed incentives and interventions under the programme are expected to significantly lower the cost of green hydrogen, facilitate uptake in emerging sectors, and provide viability support for innovators in this sector till the production of green hydrogen and its derivatives reaches scale and sustainability.

INTEGRATED MISSION STRATEGY

In order to ensure the successful accomplishment of the Mission’s objectives, an integrated approach has been taken and the relevant ministries, departments, agencies, and following institutions of the Central and State Governments shall undertake their respective obligations:

  • The Ministry of New and Renewable Energy will be in charge of the Mission’s overall coordination and execution.
  • The Ministry of Power will put laws and regulations in place to make sure that renewable energy is made available for the generation of green hydrogen at the lowest possible cost through the development of the necessary power system infrastructure.
  • The Ministry of Petroleum and Natural Gas will help the public and private sectors work together to promote the use of green hydrogen in refineries and municipal gas distribution.
  • The Ministry of Chemicals and Fertilisers will promote the use of domestic green ammonia-based fertilisers to gradually replace importing fertiliser and fossil fuel-based feedstocks, enabling the sector to become less dependent on imports and decarbonising it.
  • The Ministry of Road Transport and Highways will promote the use of green hydrogen in the transportation sector through regulations, standards, and codes, primarily for heavy commercial vehicles and long-distance travel.
  • The Ministry of Steel will promote the use of green hydrogen in the steel industry, identify and support pilot projects for the use of green hydrogen in the manufacture of steel, and implement legislative changes to hasten the commercial production of green steel.
  • The Ministry of Ports, Shipping, and Waterways will play an important role in developing India’s export capacities for green hydrogen and its derivatives. This includes infrastructure for storage bunkers, port operations equipment, and refuelling facilities.
  • The Ministry of Finance will examine appropriate tax and financial structures to support the generation, use, and export of green hydrogen and its derivatives.
  • The Ministry of Commerce & Industry will promote investments, reduce the cost of business, and implement necessary industrial and trade policy measures for low-cost production and trade of hydrogen and its derivatives.
  • The Ministry of Railways will aim at utilising green hydrogen in its operations in order to meet its lofty goals of reducing its carbon footprint. Therefore, it is envisaged that railroads will play a significant role in the transportation of green hydrogen and its derivatives.
  • The Ministry of External Affairs will be crucial in creating bilateral and global partnerships to support the expansion of the green hydrogen ecosystem in India and abroad.
  • The Ministry of Education will attempt to include the most recent advancements in training and curriculum at various levels. Guidelines for laboratory setups in schools and higher education institutions will also be recommended, allowing students to gain practical experience with technologies.
  • State governments and state agencies will play a significant role in the development of the green hydrogen ecosystem. States will have the opportunity to establish themselves as industry leaders by creating projects, completing them, putting in renewable energy infrastructure, and promoting the export of green hydrogen derivatives.

MISSION OUTCOMES

  • Build capabilities to produce at least 5 million metric tonne of green hydrogen per annum by 2030
  • Addition of about 125 GW to renewable energy capacity
  • lakhs employment opportunities
  • 5 million metric tonne per annum of CO2 emissions is expected to be averted
  • INR 8 lakh crores in investments

CHALLENGES

While all that the Mission is offering sounds promising to begin with, there are a number of challenges that will need to be addressed in order to make this Mission a success and encourage the widespread adoption of green hydrogen.

As mentioned earlier, while hydrogen is used in every sphere of one’s life, the hydrogen being used currently is produced from fossil fuels, thereby making the production itself a carbonising process. Green hydrogen on the other hand is very cost intensive due to the high costs of electrolysers used for the production of hydrogen. Not too many companies in the Indian market have the technical expertise to make cost-effective electroysers. Therefore, massive government support in terms of financial incentives will have to be extended.

It is also important to note that electrolyser manufacturing in India is at a very nascent stage, therefore awareness around the technical specifications and its functionalities is lacking. Lack of knowledge may create gaps and inefficiency during government bids. Therefore, everyone involved in the process shall have to be highly skilled and have the expertise to combat the difficulties in the initial stages.

Production of green hydrogen needs to be ramped up in order to meet the demand that will be created by the Mission. This will require significant financial commitments and innovative public-private sector partnerships.

There is a need to enhance the distribution and storage of green hydrogen. This is required to ensure that green hydrogen can serve as a workable replacement for conventional fossil fuels.

Designing enabling policies and regulatory framework to ensure effective hydrogen generation and storage, and overseeing adherence and compliance with these regulations is a must.

Lastly, awareness about green hydrogen needs to be raised amongst the general public. This will help to create a market demand for green hydrogen and encourage more people to switch to cleaner energy sources.

WAY FORWARD

India’s energy transformation is projected to be greatly facilitated by green hydrogen, particularly in the decarbonisation of industries. It is anticipated that the Mission will accelerate the development of the green hydrogen ecosystem and establish new avenues for innovation and capital investment in the entire green hydrogen value chain. This will result in an increase in financial transactions, job opportunities, and economic growth. To make this a reality, India must develop supply chains that include pipelines, tankers, intermediate storage facilities, and last-mile distribution networks. Additionally, it must implement a successful skill-development programme to guarantee that scores of workers can receive the training they need to adapt to a green hydrogen economy that can support it.

CONCLUSION

Creating a sustainable green hydrogen economy requires the creation of an efficient supply chain that begins with the production of electrolysers and ends with the production of green hydrogen, while ensuring that the price of green hydrogen remains competitive with other alternatives. For the hydrogen vision to become a reality, the levelised cost of green hydrogen production and storage — which is currently around INR 400/kg[3] — must significantly reduce in the next few years.

The strategy is to target reduced costs for renewable energy sources to drive down the cost of electrolysers, which can be accomplished with the help of financial and R&D assistance that is backed by the government, to make the generation of green hydrogen cost-competitive. Hence, the success of this Mission rests on how incentives are planned and implemented, how the country creates local demand, and how it develops legislative frameworks that facilitate hydrogen-based sectors as it attempts to achieve a balance between its socio-economic requirements and decarbonisation objectives.

In all, the Mission is an ambitious initiative that can help India achieve its climate targets and promote the production of green hydrogen. It promises to be a game-changer in terms of energy security, job creation, and innovation while also boosting India’s renewable energy sector. We look forward to seeing how this Mission will help shape the future of clean energy in India over the next few years.

Please reach out to Praveen Raju and Janhavi Joshi for queries.

[1] “Ministry of Power notifies Green Hydrogen/ Green Ammonia Policy” (Ministry of Power, 17 Feb. 2022) <https://pib.gov.in/PressReleasePage.aspx?PRID=1799067> accessed 22 Jan. 2023.

[2] “Cabinet approves National Green Hydrogen Mission” (Ministry of New and Renewable Energy, 4 Jan. 2023) <https://pib.gov.in/PressReleasePage.aspx?PRID=1888547> accessed 22 Jan. 2023.

[3] “India needs 115 GW RE power, 50 bn litre demineralised water to meet 5 mn ton green hydrogen target by 2030; EY – SED Fund report” (EY India, 29 June 2022) <https://www.ey.com/en_in/news/2022/06/india-needs-approx-115-gw-of-renewable-power-generation-capacity-and-approx-50-billion-litres-of-demineralized-water-supply> accessed 22 Jan. 2023.