Green hydrogen is hydrogen generated from renewable sources of energy. In a far-sighted move, India has launched an ambitious Hydrogen Mission in August 2021 and further the Indian government announced the Green Hydrogen Policy in February 2022. In this article, Lata Vishwanath says that production of clean/green hydrogen gas is being seen as the answer to climate change mitigation in the decades to come. Because of its vital role in oil and gas industry, refineries, fertilizers, and a host of other applications as an energy carrier the world can be made less dependent on fossil fuels.
Following the launch of National Hydrogen mission in August 2021, the Indian government announced Green Hydrogen policy in February 2022. The policy for meeting the decarbonization goals towards net zero emissions by 2050 is in line with the UN climate targets of capping the earth’s temperature to 1.5°C as pledged by India and other countries at COP26 summit in Glasgow in November 2021.
The policy comes with a host of benefits for industry leaders keen to install green hydrogen plants and develop its value chain. As the Indian government’s policies worked in favour of renewable energy sector to develop over the last decade, the following decades are expected to see green hydrogen becoming the key driver to the nation’s economy and to the rest of the world.
Hydrogen: An Overview
Hydrogen produced from water as a potential source of energy was envisioned by writer Jules Verne in 1874. Though scientists had been working towards making the fiction a reality, hydrogen didn’t get much boost after oil gained popularity as a mainstay fuel in the 20th century. Some experiments proved disastrous, and hydrogen was looked at as a light and highly flammable gas, with its storage at room temperatures a challenge.
In the island country of Iceland with abundant geothermal energy, much study and experiments were carried out by diligent scientists before proposing a Hydrogen economy for the country and the world. Though the industry didn’t take off due to oil price going to rock bottom levels at the time, hydrogen had found its use as a key fuel in rocket and space industry and had been a part of other major industries across different sectors—in refineries as a basic component of oil and natural gas (hydrocarbons like methane or CH4), a feedstock for the fertilizer industry as ammonia (NH3), and in steel, and cement like industries.
The industry processes result in production of hydrogen, a potential resource for various uses. But the resulting carbon emissions alongside, in the form of carbon dioxide and carbon monoxide have been posing a serious threat to the environment resulting in global warming and the need for serious actions and policies as required by the UN charter.
Production of clean/green hydrogen gas is thus being seen as the answer to climate change mitigation in the decades to come. Because of its vital role in oil and gas industry, refineries, fertilizers, and a host of other applications as an energy carrier the world can be made less dependent on fossil fuels.
Colour Coding of Hydrogen
Hydrogen in its basic form is a colourless gas. However, due to its extensive use based on industry and processes, and fuel used for its production, and amount of CO2 emission, it has been classified into different colours across the light spectrum.
One kilogram of hydrogen when produced with natural gas using a process known as steam methane reformation, releases 8–9 kg of carbon dioxide, a part of the process in ammonia production. It is grey hydrogen when the carbon emissions are released in atmosphere and blue hydrogen when produced with carbon capture and storage (CCS) facility mitigating the release of CO2.
Black and brown hydrogen are produced by gasification of coal, bituminous and lignite respectively, a very polluting process, which produces approximately 50 kg of CO2 and CO emissions with every 1 kg of hydrogen produced.
Hydrogen is turquoise when produced using pyrolysis—splits methane of natural gas at a very high temperature into hydrogen and solid carbon and does not result in air pollution. The solid carbon is a valuable commodity.
Hydrogen produced from electrolysis of water by electricity produced in nuclear plant is pink. It is purple when nuclear and thermal power are used for electrolysis, and red when nuclear thermal power is used for catalytic splitting of water at high temperatures.
Green hydrogen is produced with clean renewable energy using a process called electrolysis of water and there is no carbon emission during H2 production. When the electricity on grid is produced from both renewable and fossil fuels it is called yellow hydrogen.
Why the Buzz About Green Hydrogen?
Green hydrogen production is a process of splitting water into hydrogen and oxygen molecules by electrolysis using electricity generated by renewable energy sources like solar and wind power. Apart from need for energy and pure water to produce green hydrogen, a huge need is for electrolytes or catalysts. The electrolysis process in industry is presently of two types of technologies—alkaline and proton exchange membrane (PEM), each with different efficiency and cost. The third solid oxide electrolysis (SOE) technology is under demonstration stage and the fourth anion exchange membrane technology is under research stage. The green hydrogen so produced, presents an advantage of production possibility in small or large scale at any renewable energy plant location.
Favourable Policies for Atmanirbhar India
With favourable policies of the Ministry of New and Renewable Energy (MNRE) towards renewable energy sector, India like other countries has seen transition from fossil fuel-based energy to cheap and clean/renewable energy system with extensive deployment of solar and wind farms. Today, the renewable energy costs INR 2/kWh. According to an estimate by an Industry body for Hydrogen Alliance, India needs an investment of about USD 25 billion from public and private sectors, to create a domestic hydrogen supply chain with an installed electrolyzer capacity of 25 GW producing 5 million tonnes per annum of green hydrogen by 2030.
The Green Hydrogen policy aligned towards making India atmanirbhar (self-dependent) emphasizes upon green ammonia production with several enablers for development of the industry. Though some deviations are expected from state to state, the key enabler is easy access to grid connectivity in 15 days, which was a major hurdle in the past. Land availability and fast banking approvals in 30 days, the Interstate transmission charges (ISTC) waiver for 25 years for projects commissioned before June 30, 2025 are some of other policy highlights that will help build integrated hydrogen/ammonia production units near the renewables units.
The developers will get land allotment in renewable energy parks in the proposed manufacturing zones and for bunkers for storage near ports for use by maritime industry or exports. The oil refineries using green hydrogen/ammonia along with natural gas will benefit by way of using the existing pipelines and other infrastructure.
Saving on Foreign Reserves
India had been importing 80 per cent of oil and 50 per cent of natural gas worth USD 160 billion annually, and ammonia worth nearly USD 1.4 billion to add to its domestic production of nearly 20–25 million tonnes of ammonia per annum. If the plan for hydrogen mission is met, India will be saving USD 30–40 billion annually, significantly bringing down the import exchange bill, in the first decade itself. With the installed green ammonia plants taking care of domestic needs, the surplus ammonia can be exported to other countries making it a net exporter of green ammonia.
Major Use Cases: Green Ammonia and Mobility
Ammonia fertilizer, which has played a major role in feeding our planet since the last century and has seen continuous rise in its production touching 170 million tonnes globally today, is forecast at 200 million tonnes needed by 2030. With its high energy density at 3 kW/litre, green ammonia’s major use is not only in decarbonization process, but also has potential to be a key medium to store and transport chemical energy and thermal energy for future needs.
With green hydrogen application in mobility areas such as fuel cell, forklifts and refuelling stations gaining traction, the major demand market share worldwide is forecast in transportation of heavy-duty vehicles and energy storage by 2030.
Global Markets and Demand Projections for 2030
In the world where half of its hydrogen production is grey from natural gas, 30 per cent brown and 18 per cent black from coal, and 4 per cent green and yellow, decarbonization goal is not only imperative for every country but an urgent need. Depending on available resources and infrastructure, renewable energy and demand centres created, every country has its own decarbonization process and policies towards net zero emission.
By an assessment by PwC, green hydrogen demand worldwide will grow steadily till 2030 to 100 million tonnes and reach 600 million tonnes by 2050, to meet net zero emission target. The market size is projected to reach USD 72 billion by 2030.
EU’s target for production of hydrogen is set at 10 million tonnes by 2030 with need for import of another 10 million tonnes to meet the demand emerging in mobility areas. Germany and Japan, where wind is the predominant source of renewable energy and makes up for only 50 per cent of energy, are also emerging markets for green hydrogen in fuel cells for mobility. South Korea, France, and China are planning for a large share of green hydrogen in mobility areas of fuel cells and refuelling stations. The proposed energy transition towards hydrogen in Iceland got a head start in 1999–2000 with introduction of few hydrogen-run buses and cars. The world’s first hydrogen refuelling station was opened by Shell in Reykjavik in April 2003. The country has committed to net-zero by 2040.
Australia has a masterplan to be the major global player and supplier of green hydrogen by 2030. Canada released a Hydrogen strategy to achieve net zero emission by 2050. The United States today produces 10 MMT of hydrogen for its petroleum and ammonia industry but plans to join the clean energy race by 2030 with investments to the tune of USD 400 billion, with considerable part on zero emission cars and heavy-duty vehicles.
Middle East countries with abundant natural resources and established energy projects of solar and wind, and strategic location between Asia and Europe have a competitive advantage of production and export of green hydrogen. Some African countries also enjoy the same advantages of abundant energy and good location to produce blue hydrogen and green hydrogen though water demand is a critical issue in water scarce Africa. Germany has partnered with Namibia committing USD 45.7 million for green hydrogen strategy.
ASEAN countries too are gearing towards green hydrogen for their decarbonization goals and for transportation and energy storage sectors in near future.
Green Hydrogen for Energy Security
With the onset of Ukraine war, and oil and gas availability becoming tough, energy security is taking precedence over net zero emissions. Need for hydrogen in this scenario appears more immediate than in few years or decades. Green hydrogen is thus poised to be one of the world’s most tradable commodity in the coming decades.
Investments and Financials
According to the World Energy Council’s 2021 working paper, to meet the projected global market size of green hydrogen, there is a need for a multipronged approach towards the development of hydrogen ecosystem. As the cost of renewable energy and electrolyzers fall over the next decade with improved technologies and mass production, both linked to Operating Expenses (OPEX) and Capital Expenses (CAPEX) respectively, the production cost of hydrogen can be brought down to USD 2–6/kg in 2030 to USD 1.5–5/kg by 2050. With improvement of electrolyzer capacities from 50 MW in 2030 to 100 MW in 2050, the time in between is best suited to build infrastructure such as pipelines, import, export terminals to handle the increased production of hydrogen.
Increasingly the countries are looking to investing in hydrogen. According to financial analysts, the current political instabilities make it the best time to invest in hydrogen. Not surprisingly, share prices of green hydrogen companies increased between 2019 and 2021 with areas of investment mostly in carbon capture in oil and gas industry and in transportation areas like hydrogen fuel cells, refuelling stations, of which 50 per cent is directed towards improving efficiencies. It is encouraging that the vital area of electrolysis technology has received some investors’ attention in recent years.
With India’s ambitious renewable energy drive continuing in the next decades, installation of hydrogen production units with large capacities of electrolyzers seems the way forward to handle grid system imbalances. It will also help meet the major demand for green hydrogen projected for oil refineries, maritime industry, transportation industry, buildings, battery storage, etc. Hydrogen used for energy storage upgrade system has use for regeneration of electricity in off-grid locations. The production and use of green ammonia is a great policy and political move, given that huge subsidies of billions of dollars are given for fertilizers, other than it being a big leap towards decarbonization goal. According to clean energy experts, today, in India, to kickstart the industry and to make green hydrogen a viable project, with falling renewable energy prices, there should be some mandate/obligations, such as minimum blending of hydrogen in oil refinery. By using the ISTS waiver, green hydrogen can be made into a central subject of the entire renewable energy ecosystem, meaning that renewable energy plant can be at one place in a state like Rajasthan and hydrogen plant can be in a demand place like refinery or a port.
From power purchase agreement (PPA) to hydrogen purchase agreement (HPA) in contracts, mandatory payment for the hydrogen produced will make it a viable bankable business. As new electrolyzer technologies will emerge with better efficiency and economies of scale, and round-the-clock (RTC) projects with battery storage, with maintaining of debt structure as per the financial instrument, hydrogen cost can be expected to fall to INR 150/kg in 2030 to INR 80/kg in 2050, from INR 400/kg today.
Indian energy giants like Reliance, Adani, NTPC, ACME have recently installed and commissioned pilot projects for integrated green hydrogen ammonia plant in some states such as Rajasthan, Gujarat, and Karnataka. As the production of green hydrogen/ammonia increases to the projected capacities in coming years, India will be well positioned to become a hub for export of green hydrogen to countries in EU and other demand centres of the world.
Lata Vishwanath is author of Autumn Showers, a creative non-fiction narrative published by TERI in 2017. An Electronics engineer and a Material scientist by training, she took to writing after working for many years in test and research labs in India and Singapore. Besides reading and writing, she is interested in gardening, travelling, cooking, music, and movies.
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