On India’s 75th Independence Day (15th August 2021), the Prime Minister of India had launched the National Hydrogen Mission. The two goals of the National Hydrogen Mission are – To make India a Green Hydrogen Hub and to help India meet its climate targets.
On 17th February 2022, the Ministry of Power (MoP) announced the long-anticipated Green Hydrogen Policy (GHP). It is a watershed moment in India’s energy transition journey, and by doing so, India has become the 18th country to release a comprehensive Green Hydrogen Policy. Ammonia and Hydrogen are seen to be the future fuels to replace fossil fuels.
When renewable energy is used to produce these fuels, they are termed Green Hydrogen and Green Ammonia. Such green fuels are vital for any nation’s environmentally sustainable energy security. The new Green Hydrogen Policy has laid a solid foundation for developing a competitive green hydrogen sector in India. Green Hydrogen has cross-sectoral applications and decarbonization potential, and it can particularly help in the decarbonization of the power sector.
India has already committed to achieving net-zero carbon emissions by 2070, and green hydrogen will play a significant role as a disruptive feedstock in India’s transition from oil and coal. Incentives provided by the Green Hydrogen Policy.
The Green Hydrogen Policy mainly focuses on enabling access to low-cost Renewable Electricity (RE) power for green hydrogen as the purchase of RE amounts to a significant share in its total cost of production. For this, multiple modes for procuring RE have been enabled, including acquiring RE from power exchanges and expedited access to open access mechanisms. Further, for RE power procurement, the policy offers a plethora of incentives for the green hydrogen producers such as access to RE through State utilities with 30 days of banking facility; waiver of Interstate Transmission System (ISTS) charges for 25 years for projects commissioned before June 30, 2025; and priority access to connectivity with the ISTS network.
The green hydrogen producers can also avail themselves of land in solar parks across states for establishing their production units. The policy directs the Distribution utilities to procure and supply RE power to hydrogen producers at nominal wheeling charges. The GHP allows the green hydrogen producers to establish bunkers near ports for the maritime sector and export. The Ministry of New and Renewable Energy (MNRE) has been directed to consolidate demand from various industries and procure green hydrogen through the competitive bidding route.
Issues to ponder over
The policy document shows the supply-side aspects, but it does not throw light upon mechanisms or incentives for demand creation. Industrial sectors such as chemicals, fertilizers, steel and refineries are unlikely to transition to low carbon alternatives because of the higher associated costs. Such industries might not find the transition viable with no incentives to reduce emissions. The cost of grey hydrogen produced from natural gas in the current scenario is nearly one-fourth of green hydrogen. How would some of the federal issues be resolved is not clear. Renewable Electricity (RE) through open access, banking, and wheeling are concurrent subjects that require consensus and buy-in from the states and Centre. Many public sector electricity utilities are unwilling to let go of their monopoly in power distribution, and the open-access mechanism for RE procurement is already facing issues across certain states.
The Government must retain the driving force in the Green Hydrogen direction with further policy initiatives to address critical challenges. With more stakeholders getting involved and constant feedback from the market forces, the policy must evolve to address other key factors essential for establishing a green hydrogen economy.
Source: PTI
