Is green hydrogen the 'energy of the future' for India?

Prime Minister Narendra Modi launched the country's hydrogen strategy on Independence Day, but experts say the road ahead is challenging

Smoke rises from brick kiln chimneys on the outskirts of New Delhi. India is the world's third-largest carbon emitter, and under the Paris Agreement has pledged to reduce its emissions intensity to between 33 per cent and 35 per cent by 2030. APShow less

India is increasingly looking towards hydrogen as an alternative source of fuel to reduce its carbon footprint and meet its growing energy needs.

Prime Minister Narendra Modi launched India's national hydrogen mission on August 15, the country's Independence Day, saying: “The thing that is going to help India with a quantum leap in terms of climate is the field of ​​green hydrogen.

“We have to make India a global hub for green hydrogen production and export,” he added, in his address to the nation from the ramparts of the Red Fort in New Delhi.

However, achieving such ambitions will be challenging, given the relatively high cost of hydrogen production, analysts and industry insiders say.

Despite obvious headwinds in terms of regulations, costs and technology, the sector needs development efforts and investment from India's public and private sectors, as it can potentially change the country's energy landscape.

“Hydrogen is going to make a significant contribution towards decarbonisation as well as making India self-sufficient in energy,” says JP Gupta, managing director of Greenstat Hydrogen India.

“India has a number of obstacles [to overcome] in terms of technology, storage, transportation, new materials research, electrolysis development, safety standards and a regulatory framework”, adds Mr Gupta, who is also the chairman of the environment committee at the PHD Chamber of Commerce and Industry.

India's hydrogen strategy is part of its plan to develop alternative sources of energy to move away from its costly dependence on fossil fuel imports and as a way to reduce its carbon output.

Under the Paris climate change agreement, India, which is the world's third-largest carbon emitter, has pledged to reduce its emissions intensity to between 33 per cent and 35 per cent by 2030, from 2005 levels.

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It is also critical for the country to boost its power generation capacity. The International Energy Agency (IEA) has forecast that demand for energy in India will grow more than any other country over the next 20 years, driven by expanding economic activity and urbanisation.

In his speech, Mr Modi highlighted that India spends more than 12 trillion rupees ($161.3 billion) a year on importing energy.

“For India's progress and to build a self-reliant India, India's energy independence is the need of the hour,” he said.

Given that the country is looking to lower its carbon footprint, its hydrogen mission is largely focused on “green” hydrogen.

Green hydrogen is produced by using renewable energy to power electrolysis, which splits water molecules into hydrogen and oxygen.

India has been scaling up its renewable energy production, with a focus on solar, as it targets renewable energy capacity of 450 gigawatts by 2030. Experts say that a lot of India's existing capacity is already committed to other uses, but with additional supply being developed, this can be used for hydrogen production.

A move towards green hydrogen could also help to accelerate the addition of renewables and act as a means of storing this energy.

“A focus on green hydrogen could help achieve renewable targets, as well as decarbonisation by replacing fossil fuels in the manufacturing, transport and energy sectors,” says Savio Monteiro, senior vice president of energy, oil, gas and utilities at Praxis Global Alliance, a consulting and advisory company.

But Mr Monteiro warns: “The technology and scale for green hydrogen are still nascent and at a pilot stage, and hence there could be a need to focus on blue hydrogen first to meet the hydrogen production requirements, as green hydrogen technology develops.”

“Blue” hydrogen comes from fossil fuels by using steam to extract the hydrogen, while the carbon dioxide that is released is captured and stored underground.

Although renewable energy prices have reduced substantially in India of late – with solar power tariffs hitting record lows – producing, storing and transporting green hydrogen is still expensive and this could slow India's plans for the fuel.

An Indian farmer works near solar panels. Solar power tariffs recently hit record lows in India. AFP

“The new mission will help to give a big push to green hydrogen – but as far as I can see, it will be a combination of blue and green hydrogen for many years,” according to RK Malhotra, president of the Hydrogen Association of India, S&P Global Platts reported.

“Until such time green hydrogen processes are fully developed, blue hydrogen can supplement overall hydrogen supply.”

Going by current solar tariffs and assuming electrolysis costs at $600 per kilowatt, green hydrogen would be priced at $2.40 per kg, according to S&P.

While S&P says that blue hydrogen costs will be below those levels, it notes there are concerns about where to store the carbon dioxide.

Focusing on blue hydrogen does not really “make sense” for India given that it would only add to its dependence on imported fossil fuels, says Amit Bhandari, a fellow of the energy and environment studies programme at Gateway House, a Mumbai-based think tank.

The Energy and Resources Institute (Teri), however, has said that the cost of green hydrogen could fall over the next decade as renewable energy sources are scaled up in India and it could start to compete with blue hydrogen.

India's hydrogen is currently derived from fossil fuels, but Teri estimates that by 2050, almost 80 per cent of the country's hydrogen will be green.

However, there is a lot of work that needs to be done to achieve these levels.

Hydrogen's density is far less as compared to other fuels and hence it needs to be handled carefully

Amit Banka,
founder and chief executive of WeNaturalists.

“On the supply side, the availability of low solar and wind tariffs in India will help hydrogen output produced at a lower cost,” says Mr Monteiro. “However, the entire infrastructure creation from production, storage and transportation would need to be set up to witness success in increasing hydrogen output.”

As it currently stands, companies in the highly polluting manufacturing and transport sectors would need to be incentivised to make the switch to hydrogen, or costs would have to come down, he says.

But given the government's interest in developing the sector, Mr Monteiro expects “policies and regulations to come up to help facilitate this growth”.

Infrastructure will need to be added to support the plans.

“Hydrogen's density is far less compared to other fuels and hence it needs to be handled carefully,” says Amit Banka, the founder and chief executive of WeNaturalists. “Dedicated pipelines are required for efficiently transporting it and that infrastructure needs to be created in India.”

There are some signs of progress, though, as state-owned and private energy companies are showing interest in hydrogen production.

Indian Oil Corporation, which is owned by the government, last month announced plans to build the country's first green hydrogen plant at its refinery in the northern city of Mathura.

The company plans to source power from its wind power project in Rajasthan to produce green hydrogen at its refinery.

“As we see it, the green hydrogen will replace carbon-emitting fuels used in the refinery to process crude oil into value-added products such as petrol and diesel,” says Shrikant Madhav Vaidya, Indian Oil's chairman, in a statement. “Moreover, we have got several expansion plans down the line which are already approved.”

He adds that the company has a research and development institute that is working on solutions for production, storage and applications like fuel cells.

“There is a fresh momentum for scaling up hydrogen use across sectors globally,” says Mr Vaidya.

In the private sector, Reliance Industries, controlled by India's richest man Mukesh Ambani, and Adani Group, are adding green hydrogen projects to their portfolio.

There are also likely to be growing opportunities for foreign investment, analysts say.

Abu Dhabi National Oil Company in April said it was interested in exploring opportunities in hydrogen with India's public and private sector.

“A more likely possibility [than importing hydrogen] is UAE or Saudi energy companies investing in hydrogen production and distribution in India as a way of de-risking their hydrocarbons business,” says Gateway House's Mr Bhandari.

There is a still long way to go for India in the sector, but Mr Gupta remains confident that once the challenges are addressed, hydrogen will be “the energy of the future”.

“In the near future, once hydrogen technologies are scaled up, cost will come down,” he says. “India is among the best-suited countries to produce green hydrogen from solar and wind energy.”