Despite tens of billions of dollars in subsidies announced to stimulate supply, the dream of a future economy powered by green hydrogen – that is, hydrogen produced by electrolyzing water using renewable electricity – faces several challenges, according to the International Energy Agency’s recent Global Hydrogen Review 2021. According to the paper, “the cost of creating hydrogen from renewable power remains greater than fossil fuel alternatives in many regions of the world.”
This may lead one to believe that, at least in the short to medium term, blue hydrogen alternatives (hydrogen obtained from methane or coal, along with CO2 storage) will lead the hydrogen economy. However, such an approach assumes an abundance of both economical coal and natural gas, as well as the existence of adequate geologic formations for CO2 storage that is safe, permanent, and cost-effective. While such resources may be plentiful in North America, the Middle East, Russia, and Australia, they are not in many other places of the world. Liquified natural gas shipped to Asian ports frequently topped $20 per gigajoule for much of the last year, over ten times the price in North America and the Middle East. According to recent reports, blue hydrogen is already more expensive to manufacture than green hydrogen under these conditions.
CO2 storage capacity is maybe even more important for blue hydrogen’s future prospects, particularly in nations like India with historically low oil and gas output. Based on simplistic evaluations of subsurface pore space, most macro-scale energy transition models assume CO2 storage is ubiquitous, while real investable storage estimates are likely to be a fraction of those assessments. The idea of a world where CO2 storage stocks are restricted, if not non-existent in some areas, should raise concern. When other technologies are available and becoming more competitive, is it reasonable to use carbon capture and storage (CCS) to reduce emissions from the power industry or to create blue hydrogen? Would a better plan save valuable CO2 storage capacity for hard-to-abate industrial sectors where there are no viable alternatives? Or to encourage negative emissions technology in order to reduce CO2 levels in the atmosphere if we fail our objectives, or if climate consequences are worse than expected?
There are two ways to prosperity
The future of India’s sustainable energy is at a crossroads. Should the country continue to rely on imports to meet its demand for liquid and gaseous energy carriers, or should it go ahead with a green hydrogen future? As India navigates the interesting dilemma of providing an enormous growth of energy supply to satisfy its fast-rising economy while also meeting the government’s 2070 net-zero emissions target, the repercussions might be substantial.
India’s dependency on oil-rich nations for energy sources and blue hydrogen carriers, as well as its continuous vulnerability too often devastating international costs, is one path. The alternative would see India invest extensively in research, development, and demonstration to lower the cost of electrolysis and complement, and profit on, its position as one of the world’s lowest-cost solar power producers. Solar PV costs today were unthinkable just a decade ago. Electrolyzers and green hydrogen production prices are expected to be similarly surprised. Electrolysis on a large scale can also give demand-side flexibility, allowing weather-dependent renewable power output to be more predictable.
Now is the time for a bold, mission-driven approach
To be sure, a prosperous Indian economy based on globally competitive renewable energy will necessitate a comprehensive industrial policy that includes strategic investments and other interventions to boost demand for green hydrogen across the economy, including in the chemical industry, hydrogen fuel vehicles, hydrogen turbines for firm power generation, steam generation, and other low-emission industrial production opportunities. The Indian government has made a strong start in this regard with its National Hydrogen Mission. The first phase focuses on encouraging sustainable energy supply to meet anticipated green hydrogen demand. According to sources in the media, the next phase would likely emphasize demand signals through fertilizer, refining, and municipal gas distribution regulations. To achieve these goals, policymakers will need the strategic insight to plan ahead of time for flexible supply chains and labor capacities.
90 percent volume
Some may argue that India’s decarbonization timeline of 2070 allows them enough time to wait for wealthy countries to lower technology costs and follow their lead. It may appear to be a less dangerous path at first glance, but such a policy would merely generate new trade dependence, exposing the country to supply shortages and inflation. A strong mission-oriented industrial policy, in which the Indian government engages the private sector, universities, and the larger Indian community in a green energy future, on the other hand, provides a route to energy independence and prosperity.
Universities’ importance cannot be overstated. The dearth of local research staff will become a hurdle as Indian enterprises engage in research and development across the full green hydrogen value chain. To address this problem, colleges will need to spend significantly on research and research training programs, as well as strong incentives for collaboration between academics, business labs, and public research organizations. When universities are a vital element of the national research enterprise, they develop human capital that is matched with national economic demands, resulting in a long-term multiplier impact that helps to keep innovation alive.
No country, it may be claimed, requires green hydrogen more than India, in order to alleviate life-threatening air pollution in its cities, escape the crippling financial load of energy imports, and decarbonize its quickly rising economy. No country has a greater need to accelerate the green hydrogen economy and lead the way than the United States.
