EDITORIALS & ARTICLES

The 2023 Union Budget has allocated ₹19,700 crore for the National Green Hydrogen Mission to set the motion a programme that can position India as a green hydrogen super power. In this context identify the key priority areas for government and industries.

India has committed to 50% electricity capacity from non-fossil sources by 2030. Most industrial greenhouse gas emissions in India come from steel, cement, fertilizers and petrochemicals. India is also geographically blessed to become one of the lowest-cost producers of green hydrogen. It has the potential of becoming global super power in Green Hydrogen Technology.

Key Priority areas for government and industries

  1. Domestic demand
  • National Green Hydrogen Mission introduces a Strategic Interventions for Green Hydrogen Transition (SIGHT) fund for five years, with ₹13,000 crore as direct support to consume green hydrogen.
    • This will encourage heavy industries to increase demand, offering economies of scale by which suppliers can reduce prices.
  • Blending mandates: It can be another demand trigger for refineries.
    • Urea plants have been exempted.
    • Over time, targets can be ratcheted up with blending mandates rising (including for urea fertilizers).
  • Leveraging government procurement: A share of government procurement of steel could be nudged towards green steel.
    • India could later position itself as a green steel exporter.
    • India is second-largest steel producer in the world, it can aspire to become largest green steel producer with reducing price by economies of scale and changes in production technologies.
  1. Domestic and Foreign Investment
  • India can be an attractive destination for domestic and foreign investment.
  • Green hydrogen production projects announced/underway in India are far fewer compared to others.
  • Green hydrogen is difficult and expensive to transport.
  • The mission envisions green hydrogen hubs to consolidate production, end use and exports.
  • A mission secretariat can ensure project clearance is streamlined and reduce financial risks.
  1. Electrolyser manufacturing
  • Electrolyser technology must be improved to achieve higher efficiency goals, specific application requirements, be able to use non-freshwater, and substitute critical minerals.
    • If India does not work on Electrolyser Capacity, China could end up controlling 38% of electrolyser capacity by 2030.
  • SIGHT fund offers ₹4,500 crore to support electrolyser manufacturing under the performance-linked incentive (PLI) scheme.
  • Indian manufacturers are importing stacks and assembling them.
    • India must become more competitive with targeted public funding in manufacturing the most critical and high-value components of electrolysers in India.
  1. Building resilient supply chains
  • Indian companies should consider joint projects in countries with good renewable energy resources and cheap finance.
  • Globally out of 63 emerged bilateral partnerships Germany, South Korea and Japan have the most.
    • Using yen or euro denominated loans for sales to Japan or to the European Union, respectively, could reduce the cost of capital and help India become export competitive.
  • Technology transfer & Investment deals: India must cooperate with like-minded countries on trade, value chains, research and development, and standards.
    • The mission allocates ₹400 crore for R&D, which can be leveraged to crowd in private capital into technology co-development.
  1. Rules for green hydrogen economy
  • Coordination between major economies to develop rules for a global green hydrogen economy is required in the absence of global common framework.
  • Attempts for rules and standards are being driven by collectives of private corporations rather than through structured intergovernmental processes.
  • There are already signs of conflicting regulations and protectionist measures in major markets.
    • These put India’s ambitions at risk.

India’s presidency of G20 is an opportunity for framing the rules for the global green hydrogen economy. India should promote a global network on green hydrogen via which companies could collaborate. Green hydrogen will be a critical industrial fuel of the 21st century. India is well-positioned to show leadership — in our collective interest and that of the planet.







POSTED ON 10-03-2023 BY ADMIN
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