• Green hydrogen is a potential substitute for fossil fuels that can be used for transport, for the production of ammonia, fertilizers, chemicals, and steel, and for generating electricity.
• India’s National Green Hydrogen Mission’s goal is ‘to make India the Global Hub for production, usage, and export of Green Hydrogen’ and ‘to assume technology and market leadership’.
• In this context, government should consider constructing a pilot green hydrogen plant for making green steel.

Green Hydrogen

• Green hydrogen is hydrogen that is produced using renewable energy through electrolysis.
• Green hydrogen has significantly lower carbon emissions than grey hydrogen.

National Green Hydrogen Mission

• It was first announced in his Independence Day speech of Prime Minister in 2021.
• Aim: To facilitate demand creation, production, utilization, and export of Green Hydrogen.
• Mission outlay of Rs 19,744 crore.
• It will fuel key sectors of the economy using hydrogen that is made by splitting water through an electrical process called electrolysis, using a device called an electrolyser that is powered entirely by renewable energy.
• A public-private partnership framework for R&D (Strategic Hydrogen Innovation Partnership – SHIP) will be facilitated under the Mission.
• Regions (such as Kerala) capable of supporting large-scale production and/or utilization of Hydrogen will be identified and developed as Green Hydrogen Hubs.
• Strategic Interventions for Green Hydrogen Transition Programme (SIGHT):
• Aim: To achieve a reduction in fossil fuel imports and abatement of annual greenhouse gas emissions by 2030.
• It will promote two financial incentive mechanisms: Targeting domestic manufacturing of electrolysers and the Production of green hydrogen.

Benefits

• Creation of export opportunities for Green Hydrogen and its derivatives.
• Decarbonisation of industrial, mobility, and energy sectors; reduction in dependence on imported fossil fuels and feedstock.
• Development of indigenous manufacturing capabilities.
• Creation of employment opportunities.
• Development of cutting-edge technologies.

Mission outcomes by 2030:

• Development of green hydrogen production capacity of at least 5 MMT (Million Metric Tonne) per annum with an associated renewable energy capacity addition of about 125 GW in the country.
• Over Rs 8 lakh crores in total investments.
• Creation of over Six lakh jobs through a skill development programme.
• Cumulative reduction in fossil fuel imports over Rs. 1 lakh crore.
• Abatement of nearly 50 MMT of annual greenhouse gas emissions. 

Overcoming the challenges of the Green Hydrogen Plant

Competitive Procurement

• Competitive Procurement creates a competitive industry structure so that movement down the cost curve is accelerated through successive bids enabling India to also get the full benefit of the global decline in prices that is likely.
• Example: This approach gave India exceptionally good results in the National Solar Mission when the price of solar power was initially about four times the price of thermal power and has now become clearly much cheaper.

Minimum size of plants for least cost production

• It would need to be determined for the production of green hydrogen and its downstream uses at the outset.
• Example: the minimum size of a new fertilizer plant, a green ammonia manufacturing unit, and a green hydrogen-producing plant may be determined.
• Then working backward from the fertilizer plant, the supply and demand of green ammonia and green hydrogen would have to be matched for the supply chain.

Competitive bids

• It may be invited to get the least cost of production of green hydrogen.
• With this green hydrogen cost, the price of green ammonia may be competitively determined.

Subsidy from Budget

• Subsidy for each tonne of green fertilizer produced can be given to bridge the gap between the market-determined price of green fertilizer and the price fixed by the government for sale to farmers.
• This subsidy would naturally be far higher than the subsidy being given per tonne for normal fertilizer production.

Long-term procurement contract

• The government could enter into a long-term procurement contract for the entire production of a green steel plant.
• As this would be one of the first green steel plants in the world, our major steel producers should be persuaded to form a consortium and set up the plant so that they all learn the new technology.

Using green steel in government projects

• More expensive green steel may be used by the government in all its own construction projects as well as by its agencies.
• The impact would be marginal and could be easily absorbed and that too at affordable costs. of the construction projects.

Supply chain and shipping

• The supply chain up to green ammonia would be the same as for fertilizer production.
• Competitive procurement of green shipping services could be done through a long-term contract indicating the price at which green ammonia would be supplied.
• This would completely de-risk the investment in building a cargo ship that would use green ammonia.
• The higher cost of the shipping service can easily be absorbed by the Indian user as freight costs are a fairly small portion of his total cost.

Promoting green hydrogen in chemical, pharma, and other industries

• It can be done by a combination of a lower GST rate as has been done for Electric Vehicles (EVs), or a direct subsidy per kg of green hydrogen used.
• This would also need to be done for the use of green ammonia for electricity generation for meeting seasonal spikes in electricity demand.
• However, storage and transport of hydrogen have high costs.

Empowering private sector

• Financing the private sector in partnerships with our research institutions to work to develop scalable outcomes would be the challenge needing leadership.

India can use creative policy instruments with speed, flexibility, and agility to become the global frontier in green hydrogen production in this decade, and that too at an affordable cost.