The year 2023 started with a bang for the country’s fledgling green hydÂroÂgen sector. On January 4, 2023, the Union Cabinet approved the NaÂtioÂnal Green Hydrogen Mission with an initial budget outlay of Rs 197,440 million, which led to excitement amonÂgst inÂdustry players. The landmark annoÂunceÂment was followed by the release of the detailed mission document a few days later, giving an overÂview of the overall mission goals, strategies to deÂveÂlop the green hyÂdrogen ecosystem, various components under the mission, the governance framework, the imÂplementation roadmap, exÂpecÂted outcomes and the financial outlay. NeeÂdless to say, the approval of this transformative mission and the related budget allocation has been a much-awaited and necessary intervention to generate confidence in India’s emerging green hydrogen market.
The National Hydrogen Mission had first found a mention in the finance minister’s budget speech in February 2021. It was then formally launched by the priÂme minister on India’s 75th IndepenÂdence Day the same year, theÂreby showing the strategic importance of the sector. A formal policy announcement caÂme a few months later, in FebÂruary 2022. It laid out many encouraging provisions for greÂen hydrogen and green ammonia manufacturers, incluÂding the waiver of interstate transmiÂssion charÂges till June 2025, priority for grid connectivity, grant of open access, energy banking and renewable purchase obligation benefits. However, this policy document was just the first phase of the laÂrgÂer policy framework and more policy interventions are expected soon.
Mission aims and approaches
Green hydrogen is an important piece of the energy landscape in the current gloÂbal energy crisis owing to its versatile apÂplications and its potential to help decarbonise hard-to-abate industries, as well as the transport and power sectors. This powerful fuel is non-polluting and is generated using renewable energy and water, thereby addressing the twin challenges of emission reduction and energy security. The main aim of the mission is to scale up the production and consuÂmÂption of green hydrogen in the country and further make it a global hub for greÂen hydrogen export. To achieve this goal, the mission will enÂable the scale-up of grÂeÂen hydrogen caÂpacities to at least 5 miÂllion metric tonÂnes per annum (mmtÂpa) by 2030, with a further potential to reach 10 mmtpa. This will be supported by the growth of associated renewable enÂergy capacity of about 125 GW.
As the country aims to be net zero by 2070, this mission has been formulated to make all major fossil fuel-based proÂcesses switch to renewable energy and green hydrogen application. This will include the replacement of hydrogen produced from fossil fuel sources in various industrial processes such as ammonia production, steel manufacturing and petroleum refining with green hydrogen. Further, green hyÂdrogen is proposed to be blended in city gas distribution systems and green hyÂdroÂgen derivatives can replace fossil fuels in various sectors including mobility, shipping and aviation. To ensure secure eqÂuipÂment suÂpply chains and promote domestic manufacturing of key components, this mission will support technology advanÂceÂments and the scale-up of electrolyser production as well.
The green hydrogen industry is at a nascent stage not just in India but at a global level, with a lack of proven case stuÂdies and experiences. Therefore, this missiÂon strategy will focus on ensuring strÂeamlined development of the green hyÂdrogen market. Interventions will be aimed at demand creation to make greÂen hydrogen competitive for both doÂmÂestic consumption and exports. Further, suÂpply-siÂde constraints will be addressÂed through an incentive framework. An enabÂling ecoÂsystem will be created thÂrough the requirÂed demand- and suppÂly-related interventions. To facilitate this, the mission is proposed to be imÂplemented in two phases:
- Phase I (2022-23 to 2025-26): This will focus on green hydrogen depÂloyÂment in sectors that are alÂreaÂdy using fossil fuel-based hydrogen. These include refineÂries, fertilisers and city gas distribution. Pilot projects will be taken up in green hydrogen application in steel production, long-haul heavy duty moÂbility and shipping. While these will help in creating demand for grÂeen hyÂdrogen, there will be adequate foÂcus on increasing domÂesÂtic electrolyser manufacturing capacity on the supply side. Further, the formulation of regulations and standards will commence in this phase.
- Phase II (2026-27 to 2029-30): The cost of green hydrogen is expected to beÂcome more competitive by the beginning of the second phase, increasing the scope for greater adoption. In this phaÂse, green hydrogen projects will be taken up in the steel, mobility and shipping sectors. Their potential will be explored across railways and aviation as well. Further, R&D initiatives will conÂÂtiÂÂnue to increase green hydrogen penetration across various sectors for the decarbonisation of the economy.
The actual implementation of these plans will require massive investments from boÂth public and private entities. FuÂrÂther, significant risk mitigation strÂaÂtegies will have to be formulated by the government to allow such large investments to take place in a niche area with the lack of historical data. According to the mission doÂcument, the total budget outlay of Rs 197,440 million comprises an allocation of Rs 174,990 million for the Strategic InterÂvenÂtions for Green HyÂdrogen transition (SIGHT) Programme, Rs 14,660 million for pilot projects, Rs 400 million for R&D, and Rs 388 million toÂwards other components. This incluÂdÂes two financial incentives that are being planned under the SIGHT programme for domestic manufacturing of electrolysers and production of green hydrogen. Further, support will be provided for pilot projects and green hydrogen hubs will be developed.
Owing to the far-reaching applications of green hydrogen development in the country, the mission will witness the inÂvolvement of various central and state government agencies. The Ministry of New and Renewable Energy will be resÂponsible for the overall coordination. An empowered group chaired by the cabinet secretary will be formed. It will comprise high-ranking officials including the principal scientific adÂviser to the GoÂvernment of India, chief executive officer of NITI Aayog, secretaÂries of various ministries and departments as well as industry experts. This group will be responsible for overseeing the activities under the mission, monitor its proÂgÂress and provide policy recommendations wherever required.
In the near future, an enabling policy fraÂmework will be developed along with a robust standards and regulations framework. Continued technological advanceÂmeÂnts are necessary to develop cost-competitive technologies. In view of this, the Strategic Hydrogen InnoÂvation PartÂnerÂship (SHIP), a public-private partnership framework for R&D, is planned to be facilitated under the mission. A national portal is also being proposed for green hyÂdrogen project application, sanction, and funds disbursal wherever required. This will also help create awareness and facilitate the connection of stakeholders. In the past year, the government has laÂunÂÂched portals for rooftop solar and open access projects, which have proven to be successful in building sector confidence. This same is envisaged for the green hydrogen space as well.
As these plans come to fruition, it is exÂpected that the mission will be successful in facilitating over Rs 8 trillion in total investments and creating 600,000 jobs. Moreover, it will lead to a cumulative reduction in fossil fuel imports of Rs 1 trillion and 50 mmtpa of greenhouse gas emissions.
Outlook
The recent financial outlay for the NaÂtional Green Hydrogen Mission and the detailed mission document with an imÂplementation roadmap have come out a few days beÂfore the Union budget addÂreÂss by the fiÂnance minister in the monÂth of FeÂbruary. The clean energy industry, which had been expecting certain budget provisions for green hydrogen, can now confidently move ahead in its project planning with the upcoming poÂlicy and capital boost in the sector.
While this mission and the related budget have been widely appreciated across the clean energy industry, a few concerns have been raised, especially regarding the actual implementation of the proposed plan as well as the timely formulation of the required supportive policy and regulatory regime. While green hydrogen mandates for industries are required to create demaÂnd, incentives are also required to promote domestic manufacturing of electrolysers. Some industry experts have also voiÂced concerns regarding the cost competitiveness of green hydrogen versus grey hydrogen. For this, it is critical to have doÂmestic caÂpabilities for producing cost-effective yet world-class electrolysers.
In addition, the affordable cost of round-the-clock renewables is essential for running green hydrogen electrolysers. It is imperative to have proper transmission infrastructure, large tracts of land for setting up additional renewable energy projects, as well as generation balancing meÂÂchanisms in the form of battery storage and pumped storage. The challenges that have long slowed down renewable energy developments, especially those linked to approvals, contracts, grid and land acquisition, need to be urgently adÂdressed so that they do not become an impediment to green hydrogen uptake as well. Another key issue that needs to be tackled well in advance is the requirement of large volumes of clean water to produce green hyÂdrogen on electrolysis. Thus, projects need to be planned in reÂgions that have sufficient reserves of waÂter, but wastage of this precious resource must be avoided.
On a positive note, India is planning to develop large green hydrogen hubs or clusters that will be located close to demand centres. They will reduce the issÂues associated with bringing renewables and water to the projects as well as transporting ready hydrogen to industries and ports for export.
India is one of the first countries to anÂnounce such an extensive policy roadÂmap specifically for green hydrogen. It is expected that this mission will help the country build large capacities and beÂcoÂme a green hydrogen leader on the global stage. n
Khushboo Goyal
