Green hydrogen makes a debut

Green hydrogen makes a debut

Rapidly bringing down green hydrogen costs is clearly a laudable national goal and worthy of government support

Till January, hydrogen featured as an afterthought in all energy-related discussions in India. It, however, caught the attention of policymakers when the finance minister in her Budget speech in February set aside Rs 800 crore for a Hydrogen Mission. At the Reliance annual general meeting (AGM) in June, Mukesh Ambani said that as part of the group’s “new energy” vision, Reliance would bet big on hydrogen and set up fuel-cell and electrolyser factories to produce green hydrogen. Markets suddenly got excited about hydrogen. Then, on August 15, the prime minister from the ramparts of the Red Fort added to the buzz when he announced: “Green Hydrogen is the future of the world. Today I announce the setting up of the National Hydrogen Mission. We have to make India a global hub for green hydrogen production and export.” This time, the nation took note; and hydrogen got firmly established as a key component of India’s energy journey henceforth.

It did not take long for corporate India to announce its plans. In mid-September, the Adani group announced its intention to set up one of the largest green hydrogen projects in the world. Indian Oil announced the setting up of the country’s first green hydrogen plant at its Mathura refinery. NTPC announced plans for a green hydrogen fuelling station in Ladakh.

So, what is green hydrogen? To decipher that it is instructive to understand the process of producing hydrogen. While hydrogen is one of the most abundant elements, it cannot be sourced as a gas from the atmosphere since it is lighter than air; instead, it has to be separated from other compounds like water. Two of the most common ways to do that are steam methane reforming (SMR), and electrolysis or water-splitting. While SMR is less expensive, the process produces greenhouse gas emissions that defeat the main purpose of opting for hydrogen in the first place. Currently, 90 per cent of global hydrogen production uses SMR. Electrolysis involves passing electricity through water to separate it into basic elements, hydrogen and oxygen.

Electrolysis is an energy-intensive process. About 50 units of electricity is required to produce a kilogram of hydrogen, not counting the energy costs of the total plant system as well as for storage and transportation. So, if fossil fuels are used to generate the electricity to produce the hydrogen, then the question is: What is so “renewable” about it? But if the required electricity is produced from renewable sources, then the resultant hydrogen is termed green; and the by-product is water, making it a most environmentally friendly fuel.

Thus, hydrogen gas has a chameleon-like character depending on its method of production. It is termed grey if it is produced using fossil fuels, blue if produced using fossil fuels but with carbon capture; and green when using renewable energy. Pink hydrogen is generated through electrolysis powered by nuclear energy. More niche definitions go on to add brown, black, turquoise, and yellow variants of hydrogen.

Since “green” it has to be, there are two challenges to contend with— cost of production, and cost of transportation. Grey hydrogen from fossil fuels costs between $1 and $2 per kg, whereas green hydrogen costs between $4 and $6 per kg. It is expected that green hydrogen will become competitive to fossil fuel-based hydrogen by about 2030. Mr Ambani in his AGM speech said he expected green hydrogen costs to come down to $1/kg in a decade. Transportation options would require serious attention as this link again takes another large dose of energy utilisation. After converting electricity to hydrogen, shipping it, storing it, and then converting it back into electricity, the delivered energy can be below 30 per cent of the initial electricity input. Thus, the point is that rapid growth of green hydrogen requires vast amounts of energy to be generated from renewable sources.

Hydrogen will be used in industry, transport and power applications. About 85 per cent of the “green” hydrogen produced now is done in situ so that transportation is avoided. In the industrial sector, the main in situ users are metals, ammonia and refineries. Others will gradually follow.

Its use in transport has to compete with batteries. Hydrogen is best used in heavy duty, long-distance terrestrial transportation and shipping because batteries have low energy-to-weight ratios and they take a long time to charge compared to fuel cells. Hydrogen solves both the problems. For smaller distances, clearly, battery-charged vehicles are the most viable option economically. The best use of hydrogen in the power sector is for storage. Hydrogen-based storage is ideal for inter-seasonal storage to take care of the lean months of renewable generation.

Rapidly bringing down green hydrogen costs is clearly a laudable national goal and worthy of government support. The Union government plans to implement the Green Hydrogen Consumption Obligation in production of fertiliser, metals, and petroleum refining, similar to what was done with renewable purchase obligations (RPOs). This is expected to start at 10 per cent, and increased in later years to 20-25 per cent. Viability gap funding for green hydrogen in heavy mobility is also being considered along with possibly production-linked incentive scheme for manufacturing electrolysers to produce green hydrogen. The draft Electricity Rules-2021 have allowed green hydrogen purchase to meet RPOs. It is reliably understood that the Union government is expected to initiate a serious play in this area by calling bids for 4GW electrolyser capacity to be ramped up to 20GW in the medium term.

India has latched-on to hydrogen fairly early in the game. Globally 120 mt (million tonnes) of hydrogen is produced annually. Only 1 per cent is green! The current annual demand for hydrogen in India is about 6 mt. It needs to go up ten times if net-zero targets are to be met. It promises to be a game-changer across industry, power and mobility; and of course, to meet the country’s decarbonisation goals.

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