Transforming India through hydrogen

(Mains GS 3 : Government Policies and Interventions for Development in various sectors and Issues arising out of their Design and Implementation.)

Context:

• India's Green Hydrogen Policy 2022 released recently addressed several critical challenges such as open access, waiver of inter-state transmission charges, banking, time-bound clearances, etc., and is expected to further boost India’s energy transition.

Energy security:

• India’s per capita energy consumption is about one-third of the global average and one-twelfth of the U.S.
• Increasing growth and economic prosperity would significantly increase India’s energy appetite furthering import dependence.
• This, coupled with volatility in prices, as seen during the Russia-Ukraine crisis and the roller-coaster ride of energy prices from historic lows in 2020 to record highs in 2021, could pose a serious threat to our energy security, accentuating an unequivocal need to strive for energy independence.
• Thus, the new age fuel, hydrogen, has a multifaceted role to play in the futuristic energy landscape, be it energy storage, long-haul transport, or decarbonisation of the industrial sector.

Game-changer:

• Hydrogen has a major role to play in the decarbonisation of India’s transport sector.
• The advantages of fuel cell vehicles over battery electric vehicles are faster fueling and long-driving range thereby making them ideal for long-haul transportation which is a major constraint with Li-Ion batteries. 
• In the industrial segment, hydrogen can de-carbonise ‘hard-to-abate’ sectors such as iron and steel, aluminium, copper etc.
• Hydrogen will further complement and accelerate renewables into India’s clean energy transition, thereby supporting India’s ambitious plan to achieve 500 GW renewable capacity by 2030.

Holistic and targeted:

• India’s hydrogen consumption was around 7 Mt in 2020 and according to The Energy and Resources Institute (TERI), it is anticipated to leapfrog to about 28 Mt in 2050.
• But the high cost of hydrogen manufacturing and water scarcity pose a challenge as production of 1 kg of hydrogen by electrolysis requires around nine litres of water.
• Therefore, hydrogen project planning should be holistic and targeted in areas that are not water-scarce.

Strategy to follow:

• Creating a hydrogen economy is a chicken and egg problem as consumers seek lower costs which could be possible with scalability and large investments, but for those, producers seek assured demand.
• Thus for creating an initial demand, a mandate should be given to mature industries such as refining and fertilisers, with adequate incentives.
• Industries manufacturing low emission hydrogen-based products inter alia green steel and green cement need to be incentivised by government policies.
• Blending hydrogen with natural gas can act as a big booster shot which can be facilitated by framing blending mandates, regulations and promoting H-CNG stations.
• Further, to promote FCEVs, hydrogen fuel stations may be planned on dedicated corridors where long-distance trucking is widespread.

Plugging the supply side hurdles:

• Investment in R&D should be accelerated to bring its cost at par with fossils. 
• Sustainable Alternative Towards Affordable Transportation (SATAT) scheme with a target to produce 15 MMT of compressed biogas could be leveraged by exploring biogas conversion into hydrogen.
• To commercialise and scale-up nascent technologies, a Viability Gap Funding (VGF) scheme may be introduced for hydrogen-based projects.
• Further, to secure affordable financing, electrolyser manufacturing and hydrogen projects need to be brought under Priority Sector Lending (PSL).
• Lastly, since two dominant cost factors for green hydrogen are renewable energy tariffs & electrolyser costs the thrust should be on reducing the cost of electrolysers by implementing the Production Linked Incentive (PLI) scheme because this could help India become a global hub for electrolyser manufacturing and green hydrogen.

Transforming sector:

• Hydrogen could completely transform India’s energy ecosystem by shifting its trajectory from an energy importer to a dominant exporter over the next few decades.
• Hydrogen can be stored on a large scale and for a longer duration explicitly affirming its huge potential to become a great balancer to the ever-increasing supply of variable renewable energy.
• Hydrogen fulfills the three Es of India’s energy road map — energy security, energy sustainability and energy access — and India should strive to seize one more E, viz. economic opportunity so that industry can be encouraged to its full potential.

Conclusion:

• With hydrogen, India could lead the world in achieving the Paris Agreement’s goal to limit global warming to 2°C compared to pre-industrial levels.
• Hydrogen could lay the foundation of a new India which would be energy-independent; a global climate leader and international energy power.