India and China are taking the lead in the shift of the electricity generation sector to cleaner sources of energy such as solar and wind. The elimination of greenhouse gas emissions from some industrial sectors, such as steel mills, oil refineries, and fertilizer factories, is far more difficult.
According to Tareq Emtairah, director of the United Nations Industrial Development Organisation’s department of energy, “it is evident that the majority of the energy-intensive sectors will be in the global south in the coming years.” Decarbonizing several of these industries, particularly iron and steel, fertilizers, and oil refining, will be difficult.
Green hydrogen becomes important in this setting if emerging nations are to lower their emission intensity while maintaining the pace of economic expansion, according to scientists.
Green hydrogen is created by electrolyzing water with renewable energy, which produces no carbon emissions. After that, the hydrogen and nitrogen can be mixed to create “green” ammonia without using planet-warming hydrocarbons. Green ammonia is used to produce fertilizers and store energy.
The chief executive of the Delhi-based Vasudha Foundation, an environmental think tank, Srinivas Krishnaswamy, stated that “green hydrogen can assist reduce emissions from hard to abate sectors such as steel and fertilizers.” The greening of long-distance freight and transit is another benefit.
India restated its ambition to create a green hydrogen ecosystem to reduce emissions at Sharm El-Sheikh, among other long-standing climate goals.
India’s long-term strategy said that the country’s green hydrogen mission, which was declared in 2021, will witness a rapid increase in production, turning it into a green hydrogen hub.
India may have an advantage as an early adopter because the green hydrogen economy is still in its infancy worldwide. Black hydrogen, which is now used to manufacture the majority of hydrogen in the world, is produced using natural gas. There is also grey hydrogen produced using low-carbon methods, although its market share is minuscule.
Noam Boussidan, platform curator on energy at the World Economic Forum, a global lobbying organization, said, “We must make a realistic appraisal of the current green hydrogen scenario.” “Green hydrogen is essential for global carbon dioxide reduction. Steel, shipping, and trucking in particular will profit from more green hydrogen production.
According to market research firm Precedence Research, the global market for green hydrogen was valued at $1.83 billion in 2021 and is projected to reach over $89.18 billion by 2030, growing at a compound annual growth rate of 54 percent between 2021 and 2030. According to Precedence, the green hydrogen market is increasing at the quickest rate in the Asia-Pacific region.
By 2047, India wants to have a 25 million-ton yearly production capacity. The amount might be increased as technology advances and the demand outlook strengthens. India now produces a little amount of green hydrogen, all of which originates from pilot programs.
The nation aims to produce 5 million tonnes of green hydrogen by the end of this decade. India also intends to increase the capacity of its green hydrogen-based electricity by 175 GW by 2030.
Although green hydrogen might be a practical solution to reduce carbon emissions, there are still significant obstacles to scaling up the technology and making it economically feasible. Experts said it is also uncertain whether demand will increase accordingly.
Emtairah stated, “Public procurement for sectors like steel and cement that are now carbon-intensive is especially important if we are to develop demand from end users for green hydrogen.
According to Bernhard Lorentz, global leader of climate strategy at consulting firm Deloitte, industrial markets may also take into consideration grey hydrogen created from low-carbon technologies until hydrogen generation is carbon emission-free. According to Lorentz, “there is still substantial risk in the sector, and bankability of hydrogen projects is still a problem.”
According to Boussidan of UNIDO, certification is one approach to enhance large lenders’ acceptance of green hydrogen programs. He hypothesized that there might be different criteria for green and grey hydrogen.
As the cost of renewable energy, particularly solar energy, has grown less expensive than coal-fired electricity in nations like China and India, analysts say, developing nations have scented an opportunity in green hydrogen.
In comparison to fossil-based hydrogen, which costs roughly $1.80 per kg, hydrogen produced from renewable energy costs between $3 and $6.55 per kg, according to the European Commission’s July 2020 hydrogen policy paper. As Indian businesses have declared significant efforts to manufacture green hydrogen, this could drastically change within a few years.
According to government sources, the cost to produce green hydrogen in India is approximately Rs 500 per kg. Through its legislative measures, the government hopes to cut the cost of manufacturing by 40–50%.
At the Asia Economic Dialogue event earlier this year, Reliance Industries chairman Mukesh Ambani stated, “We really believe that in the next ten years, we will bring the cost of green hydrogen to a dollar per kilo and make sure that we transport and distribute it thereafter at less than a dollar per kilo.”
According to Reliance Industries, it will not only establish plants to make electrolyzers but also green hydrogen. A $20 billion investment program that will be carried out over the course of five to seven years has been unveiled. A 5,000-acre Dhirubhai Ambani Green Energy Giant Complex as well as Giga factories for electrolyzers, fuel cells, integrated solar photovoltaic modules, and energy storage would be constructed by the company in Jamnagar, Gujarat.
Other corporate entities have done the same. In order to manufacture green hydrogen, the state-run Indian Oil Corporation has announced partnerships with the renewable energy company ReNew Power and the global engineering powerhouse Larsen & Toubro. The largest oil marketing firm in the nation announced earlier this year that it would construct a green hydrogen plant at its Mathura refinery in Uttar Pradesh.
In order to produce green hydrogen, Korean steelmaker POSCO and renewable energy company Greenko ZeroC struck a contract in September. State-owned power company NTPC and government-run gas supplier GAIL both intend to construct India’s largest green hydrogen facility.
By 2025, India might become a major hub for the manufacture of hydrogen electrolyzers with an 8GW capacity as a result of recent breakthroughs. According to Bloomberg New Energy Finance, the nation’s planned electrolyzer facilities will virtually match the estimated 7GW global capacity by the end of 2022.
A lot of the investment plans follow after promised incentives and governmental initiatives. From the nation’s $20,000 billion green hydrogen goal, the government is anticipated to set aside approximately Rs 6,000 billion for each of its production-linked incentive programs for electrolyzers and green hydrogen.
R.K. Singh, the energy minister, stated last month that “we will have a PLI for electrolyzers and a PLI for creating green hydrogen.” But only the initial capabilities, perhaps 4-5 million tons, will require the PLI for producing green hydrogen. Green hydrogen will thereafter be able to stand on its own.
India’s green hydrogen strategy, which was introduced in February, promises to provide less expensive renewable energy, 25 years of free interstate power transmission for projects completed before June 2025, affordable land in energy parks, and manufacturing zones for the regional hydrogen industry.
By leveraging the financial might of regional conglomerates and technical know-how from the West, Indian companies are working hard to establish a local industry.
“I think India can produce a substantial amount of green hydrogen,” said Krishnaswamy of the Vasudha Foundation. “It is still early but given that big businesses such as Reliance have made investments and a number of startups such as Ohmium are popping up to make electrolyzers.
In the carbon-intensive industrial sector, hydrogen might very well operate as a disruptive force and set the pace for India’s energy transition.