{"id":7752,"date":"2023-08-23T12:00:00","date_gmt":"2023-08-23T06:30:00","guid":{"rendered":"https:\/\/ijpiel.com\/?p=7752"},"modified":"2023-08-23T10:24:46","modified_gmt":"2023-08-23T04:54:46","slug":"green-hydrogen-how-it-can-be-a-game-changer-for-india","status":"publish","type":"post","link":"https:\/\/ijpiel.com\/index.php\/2023\/08\/23\/green-hydrogen-how-it-can-be-a-game-changer-for-india\/","title":{"rendered":"Green Hydrogen: How it can be a Game Changer for India?"},"content":{"rendered":"\n

Abstract<\/span><\/strong><\/p>\n\n\n\n

India has set for itself some ambitious targets when it comes to renewable energy and its\ndependence on fossil fuels. Under the National Green Hydrogen Mission, India hopes to\ndevelop a production capacity of at least 5 MMT (Million Metric Tonne) per annum, by 2030.\nThis shall further lead to an addition of 125 GW of renewable energy capacity in India. This blog\naims to analyse the various flagship policies, economic measures, and regulatory measures, that\nhave been started in support of this milestone. Further, the blog analyses how the transition to\ngreen hydrogen could bring out a significant transformation in the Indian landscape.\n<\/span><\/p>\n\n\n\n

Introduction <\/span><\/strong><\/p>\n\n\n\n

India, accounting for approximately 4.5% of global greenhouse gas emissions, ratified the Paris\nAgreement<\/a>, also known as the "Paris Climate Accords," on October 2, 2016. This commitment\nrequires India to generate at least 40% of its electricity from non-fossil fuel sources by 2030. The\ninternational consensus recognizes the critical need to keep global warming levels below 2\u00b0C and\ncap it at 1.5\u00b0C above pre-industrial levels if possible. Hence, harnessing green hydrogen can help\nachieve the above outcome. This is because green hydrogen is a clean energy source which,\nunlike coal and oil, leaves no residue in the air and only emits water vapour.<\/span><\/p>\n\n\n\n

Green hydrogen possesses the capacity to decarbonize sectors such as transportation,\nproduction, and manufacturing, and significantly transform our society. However, before delving\ninto the potential effects of green hydrogen, it is necessary to note that conclusive evidence\nindicating its impact may only be detected over a long period of time, owing to the field's early\nlevel of development. Market risk is one of the primary macroeconomic concerns affecting the\nimplementation of green hydrogen projects in India, as there is currently no market for green\nhydrogen. As a result, the government's primary responsibility must be to take measures toward\nbuilding an ecosystem that will boost both the demand and supply sides of the equation, by\nmaking hydrogen as a potential fuel alternative. Active steps<\/a> have been taken to establish a green\nhydrogen ecosystem such as:<\/span><\/p>\n\n\n\n

i) Setting up green hydrogen projects in states that have well-established steel and fertiliser\nindustries, refineries, ports etc., to ensure a sufficient level of demand.<\/span><\/p>\n\n\n\n

ii) Establishing green hydrogen projects in states that possess operational and potential\nrenewable  energy generation capacities to guarantee an abundant supply; and<\/span><\/p>\n\n\n\n

iii) Ensuring the ability to utilise the city gas distribution network for offtaking green\nhydrogen to prevent any obstacle between the demand and supply. <\/span><\/p>\n\n\n\n

The Central Government has implemented the following flagship policies to support the\naforesaid:<\/span><\/p>\n\n\n\n

i) Green Hydrogen Policy<\/a> (\u201cGH Policy<\/strong>\u201d), issued by the Government of India on February\n17, 2022, to aid India in meeting its climate targets and incentivise its green hydrogen-\nproducing capabilities;<\/span><\/p>\n\n\n\n

ii) National Green Hydrogen Mission<\/a> (\u201cNGH Mission<\/strong>"), approved by the Union Cabinet\nwith an initial financial outlay of INR 19,744 Crores for the establishment of the regulatory\nand policy framework; and<\/span><\/p>\n\n\n\n

iii) Strategic Interventions for Green Hydrogen Transition Programme<\/a> (\u201cSIGHT<\/strong>\u201d), for\nproviding incentives for domestic manufacturing of electrolysers and production of green\nhydrogen.<\/span><\/p>\n\n\n\n

Several states have also taken key policy measures to create a demand-supply chain for green\nhydrogen and its derivatives. However, the availability of cheaper polluting alternatives,\nuncertainty in the policy framework, and the lack of adequate research and development, have\nposed challenges for the green hydrogen industry.<\/span><\/p>\n\n\n\n

The first section of this article addresses certain economic measures\u00a0that will encourage the\ngrowth of the green hydrogen industry, while the second section discusses regulatory measures\nand recent developments in the field that will supplement such growth.<\/span><\/p>\n\n\n\n

Economic Measures<\/span><\/strong><\/p>\n\n\n\n

Demand and supply are fundamental economic concepts<\/a> that influence the growth of an\nindustry. In this regard, demand refers to the number of goods or services that consumers are\nwilling and able to purchase at a given price within a specific period, whereas supply, refers to\nthe number of goods or services that producers are willing and able to offer for sale at\ndifferent price levels. It represents the availability or production capability of a product or\nservice. The supply of a product or service is influenced by factors like cost of production cost,\ntechnology, raw material availability, and government regulations. The growth of an industry\ndepends on the interplay between demand and supply. When the demand for a product or\nservice increases, it creates opportunities for businesses to expand their operations to meet the\nrising consumer needs. This increased demand incentivises producers to increase their supply to\ncapitalise on the market opportunity and potentially earn higher profits. Conversely, if the\ndemand for a product or service decreases, businesses may face challenges as there is lesser\nconsumer interest. In such situations, producers may need to adjust their supply levels to avoid\nexcess inventory and potential losses. This could involve reducing production, scaling back\noperations etc. In this section, we are discussing some commercial measures that may be\nundertaken to increase the demand and supply, and in turn the popularity of green hydrogen:<\/span><\/p>\n\n\n\n

i) Steel Manufacturing<\/em><\/span><\/p>\n\n\n\n

The use of green hydrogen in the steel industry offers significant potential<\/a> for two key\napplications. Firstly, it can be utilised for induction in blast furnaces, to enhance the\nefficiency and reduce the carbon emissions associated with the steel production process.\nAdditionally, green hydrogen can serve as an alternative reductant in the production of\ndirect reduced iron, which can then be further processed into steel. To embark on this\ntransformative journey, the industry can initiate the integration of a small percentage of\ngreen hydrogen into their existing processes. As cost economics improve and\ntechnology advances, the blending proportion can be gradually increased, leading to a\nmore sustainable and decarbonised steel industry. The widespread adoption of green\nhydrogen in this sector will have far-reaching implications, not only in terms of\nenvironmental benefits but also in terms of driving innovation and fostering a circular\neconomy within the steel production domain.<\/span><\/p>\n\n\n\n

ii) Petroleum refining<\/em><\/span><\/p>\n\n\n\n

In the petroleum refining industry, green hydrogen holds tremendous potential for the\ndesulphurisation<\/a> of various products, including diesel and petrol. By employing green\nhydrogen in the refining process, the sulphur content in these petroleum products can be\nsignificantly reduced, resulting in cleaner and more environmentally friendly fuels.\nHowever, the feasibility of this application is contingent upon factors such as the demand\nfor petroleum products and the implementation of policies aimed at limiting the sulphur\ncontent in these products. To maximise the deployment of green hydrogen, it may be\nnecessary to establish new refineries and city gas projects, thereby enabling a wider scope\nfor integrating this sustainable energy source into the petroleum refining sector. Such\nendeavours will contribute to the overall decarbonisation efforts and foster a greener\nfuture for the industry.<\/span><\/p>\n\n\n\n

iii) Automotive and Transportation<\/em><\/span><\/p>\n\n\n\n

The automotive industry<\/a> stands to benefit significantly from the utilisation of green\nhydrogen, particularly for heavy-duty, long-haul vehicles, as well as fuel cell electric vehicle\n(FCEV) buses and trucks. Green hydrogen can address the challenges associated with\ndecarbonising transportation in these sectors by providing a clean and efficient energy\nsource. The advantages of green hydrogen in terms of zero-emission operation, extended\ndriving range, and quick refuelling make it an attractive option for this category of vehicles.\nThe widespread adoption of green hydrogen in the automotive industry will not only\naccelerate the development of necessary projects but also necessitate the establishment of\ndistribution infrastructure and refuelling stations along highways. These advancements will\nplay a crucial role in supporting the growing demand for green hydrogen-powered vehicles\nand promoting the transition towards a more sustainable and eco-friendly\ntransportation sector.<\/span><\/p>\n\n\n\n

iv) Ports and ancillary infrastructure<\/em><\/span><\/p>\n\n\n\n

Furthermore, there are additional prospects<\/a> and opportunities that arise from the\nutilisation of green hydrogen and ammonia. These include the development of refuelling hubs specifically designed for green hydrogen and ammonia at various ports across India.\nThese hubs would serve as crucial infrastructure for the distribution and supply of these\nsustainable fuels, enabling their widespread adoption in the maritime industry. In line with\nthis, the development and operation of vessels fuelled by green hydrogen can significantly\ncontribute to reducing emissions in the shipping sector. By embracing these alternative\nfuels, ships can operate with lower environmental impact, aligning with global efforts to\ncombat climate change and promote sustainable maritime transportation. Moreover, green\nhydrogen can be utilised to power zero-emission technologies for vehicles and terminal\nequipment at ports. Another significant opportunity lies in developing supply chains and\ncapabilities to support the future export of green hydrogen and ammonia from India. As\nthese sustainable fuels gain traction globally, there is a growing market for their\nimportation. By establishing efficient supply chains and fostering the necessary\ninfrastructure, India can position itself as a major exporter of green hydrogen and\nammonia, thus contributing to both its own economic growth and the global transition to\nrenewable energy sources.<\/span><\/p>\n\n\n\n

Regulatory Measures<\/span><\/strong><\/p>\n\n\n\n

To establish the production and use of green hydrogen as a clean energy source in India, it is\ncrucial to develop a facilitative regulatory framework. This framework must address key\nconsiderations to ensure a smooth transition to green hydrogen. The following aspects need to\nbe addressed:<\/span><\/p>\n\n\n\n

i) Procurement of renewable energy<\/em><\/span><\/p>\n\n\n\n

The production of green hydrogen requires access to a substantial amount of renewable\nenergy. To facilitate the establishment of green hydrogen projects, fiscal and operational\nincentives should be provided. The Electricity (Promoting Renewable Energy Through\nGreen Energy Open Access) Rules, 2022 (\u201cOpen Access Rules<\/strong>\u201d), GH Policy, and NGH\nMission, already specify certain incentives. However, relevant government agencies need to\ntake significant actions to realise these incentives. Fiscal incentives can be provided\nthrough regulatory intervention, for allowing green hydrogen producers to purchase\nrenewable energy on an open-access basis at favourable rates. Legislative amendments may\nbe needed to waive applicable charges and facilitate inter-state transmission of electricity, thereby reducing operating costs for green hydrogen projects. Banking of power should\nalso be considered, and state electricity regulatory commissions should align their\nregulations with the Open Access Rules and relevant policies to support energy banking.<\/span><\/p>\n\n\n\n

ii) Establishment and operation of green hydrogen projects<\/em><\/span><\/p>\n\n\n\n

Land availability is essential for establishing green hydrogen projects. Land can be\nprocured through private agreements, government land rights, or private acquisition of\ngovernment lands. Regulatory intervention is necessary for each scenario to ensure a\nsmooth land acquisition process. Additionally, fostering a domestic electrolyser\nmanufacturing ecosystem in India will lower production costs. The Ministry of New and\nRenewable Energy has already released incentive schemes for manufacturing electrolysers\nand producing green hydrogen, but further measures should be taken to promote their\nadoption.<\/span><\/p>\n\n\n\n

iii) Storage and transportation of green hydrogen<\/em><\/span><\/p>\n\n\n\n

Relevant storage infrastructure<\/a> is essential for green hydrogen production. This\ninfrastructure should include bunkers, regasification facilities, and ancillary equipment,\nideally located in logistics parks or port premises. Governmental agencies such as the\nMinistry of Road Transport and Highways and the Ministry of Ports, Shipping, and\nWaterways should develop policies and guidelines for the establishment and operation of\nsuch infrastructure. Transportation can occur via shipping fleets or pipelines. However, to\nestablish dedicated pipelines for green hydrogen transportation there is a need to make\namendments to the existing regulations, as current regulations only permit the usage of\npipelines for hydrocarbons.<\/span><\/p>\n\n\n\n

iv) Consumption of green hydrogen<\/em><\/span><\/p>\n\n\n\n

Aggregating demand through an enabling framework is crucial in the early stages of\ntechnology deployment. The government can establish bidding and procurement processes\nfor green hydrogen and its derivatives, ensuring technology-agnostic guidelines. The\nquantum of green hydrogen\/green ammonia consumed to meet the minimum renewable purchase obligations should be determined by the relevant electricity regulatory\ncommission.<\/span><\/p>\n\n\n\n

Recent Developments<\/span><\/strong><\/p>\n\n\n\n

The green energy market in India is all set to revolutionise the country. The approval of $1.5\nbillion in financing by the World Bank shall help India\u2019s transition to low-carbon energy. Several\nother initiatives have also been implemented to promote the adoption of green hydrogen in\nIndia. One such significant move is the introduction of the Framework for acceptance of Green\nDeposits<\/a> by the Reserve Bank of India (\u201cRBI<\/strong>\u201d) (\u201cGreen Deposits Framework<\/strong>\u201d) vide its\nnotification dated April 11, 2023. The framework is effective from June 01, 2023, and shall be\napplicable to:<\/span><\/p>\n\n\n\n

      i) all the scheduled commercial banks (including small finance banks but excluding regional\nrural         banks, local area banks and payments banks); and<\/span><\/p>\n\n\n\n

      ii) all deposit-taking non-banking financial companies including housing finance\ncompanies registered         with the RBI.<\/span><\/p>\n\n\n\n

Several banks including HDFC Bank, DBS India, and IndusInd, have previously introduced their\nrespective green deposit programs<\/a> with an intention to use the deposit proceeds for financing\ngreen projects. Therefore, by channelling the savings of the depositors towards\nenvironmentally beneficial projects, depositors could earn potentially higher returns. However,\ngiven the absence of regulatory framework support, the RBI has launched the Green Deposits\nFramework to protect depositors and promote a culture of transparency and\naccountability. The introduction of the Green Deposits Framework is further expected to\nincentivise investments in the emerging sectors of green hydrogen, green buildings, electric\nvehicles, etc.<\/span><\/p>\n\n\n\n

Furthermore, in 2015, the RBI took proactive policy measures to encourage and support green\nfinancing initiatives by adding renewable energy to its Priority Sector Lending<\/a> (PSL). The\nNew Development Bank is also actively considering opportunities to collaborate on the\nfinancing of green hydrogen projects in India. This is in line with the bank's investment focus on\ngreen infrastructure, green energy, and climate mitigation projects within the country. Currently,\nthe New Development Bank (NDB) has granted approval to a total of 22 projects<\/a> in India, amounting to approximately $7.5 billion. Moving forward, the bank will maintain a commitment\nto allocate 40% of its lending towards projects aimed at mitigating climate change.<\/span><\/p>\n\n\n\n

Similar efforts have been taken by the Securities and Exchange Board of India (\u201cSEBI<\/strong>\u201d), in\nrelation to green bonds. Green bonds are financial instruments which are used in\nenvironmentally beneficial projects, to raise capital and support sustainability. SEBI has recently\nreleased the Revised Disclosure Requirements for Issuance and Listing of Green Debt Securities<\/a>\non February 06, 2023. Nevertheless, problems continue to persist<\/a> not only in its domestic\nimplementation owing to a lack of accountability and the risk of corruption, but also due to the\nabsence of conformity with international standards, such as the Green Bond Principles<\/a> and\nClimate Bonds Initiative<\/a>. Therefore, while the efforts of SEBI are laudable, further efforts are\nnecessary to broaden the scope of green bonds.<\/span><\/p>\n\n\n\n

The Solar Energy Corporation of India<\/a> (\u201cSECI<\/strong>\u201d) has also floated a tender on July 10, 2023, for\nsetting up a production plant of 4.5 lakh tonne per annum (4.1 lakh tonne under Technology\nAgnostic Pathways and 40,000 tonnes under Biomass Based Pathways) of green hydrogen in\nIndia. The SIGHT programme has been a major financial measure under the Union Cabinet\u2019s\napproved NGH Mission, with projections up to 2029-30<\/a>. SIGHT has proposed distinct financial\nincentive mechanisms for supporting the domestic production of electrolysers and green\nhydrogen, and SECI is the implementing authority<\/a> for the scheme. Therefore, this tender has\nbeen prepared for furthering the objectives of the scheme, in line with the NGH Mission.<\/span><\/p>\n\n\n\n

Conclusion<\/span><\/strong><\/p>\n\n\n\n

In conclusion, the momentum surrounding India's hydrogen transition efforts must be placed in\nthe context of a low-carbon economy, energy security, and the nation's larger economic\ndevelopment goals. India\u2019s current push towards a low-carbon economy currently hinges on an\naccelerated transition to a greater proportion of renewables in the electricity grid, in addition to\nthe electrification of end uses such as transportation. However, it is widely acknowledged that\ncertain materials crucial for industrialisation and urbanisation, such as steel, ammonia, cement,\nand plastic, do not have viable alternatives and cannot be effectively decarbonised solely through\nthe use of electricity. Therefore, green hydrogen is a necessary lever to achieve a truly low-carbon\neconomy.<\/span><\/p>\n\n\n\n

For India, the transition towards adopting green hydrogen can be synergistic with the scale,\nambition, and economic competitiveness of its renewable industry. Given that India has\nintroduced financial incentives for manufacturing electrolysers, it will benefit greatly from\nenabling domestic manufacturing of electrolysers (and relatedly fuel cells). This will enable the\nnation to attain technical proficiency, participate in an emerging global market supporting the\ntransition to clean energy, and capture a greater share of the economic benefits of this transition.\nFurther, with the expected growth in global demand and the disparity between producing and\nconsuming nations, the need for a hydrogen trade is bound to emerge eventually. If\nvolume,\u00a0growth and price decline expectations can be met, this hydrogen transition will allow\nIndia's industries to focus on exports of green hydrogen and hydrogen-embedded low-carbon\ngoods such as green ammonia and green steel.<\/span><\/p>\n\n\n\n

About the Authors<\/span><\/strong><\/p>\n\n\n\n

Mr. Avinash Khard, Partner, DSK Legal<\/span><\/p>\n\n\n\n

Ms. Supriya Upadhyayula, Associate, DSK Legal<\/span><\/p>\n\n\n\n

Editorial Team<\/span><\/strong><\/p>\n\n\n\n

Managing Editor: Naman Anand<\/em>
Editors-in-Chief: Abeer Tiwari & Muskaan Singh<\/em>
Senior Editor: Abeer Tiwari<\/em>
Associate Editor: Muskaan Aggarwal<\/em>
Junior Editor: Nalin Arora<\/em><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Abstract India has set for itself some ambitious targets when it comes to renewable energy and its dependence on fossil fuels. Under the National Green Hydrogen Mission, India hopes to develop a production capacity of at least 5 MMT (Million Metric Tonne) per annum, by 2030. This shall further lead to an addition of 125 […]<\/p>\n","protected":false},"author":262,"featured_media":7823,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":"","wp_social_preview_title":"","wp_social_preview_description":"","wp_social_preview_image":0},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/ijpiel.com\/index.php\/wp-json\/wp\/v2\/posts\/7752"}],"collection":[{"href":"https:\/\/ijpiel.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ijpiel.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ijpiel.com\/index.php\/wp-json\/wp\/v2\/users\/262"}],"replies":[{"embeddable":true,"href":"https:\/\/ijpiel.com\/index.php\/wp-json\/wp\/v2\/comments?post=7752"}],"version-history":[{"count":70,"href":"https:\/\/ijpiel.com\/index.php\/wp-json\/wp\/v2\/posts\/7752\/revisions"}],"predecessor-version":[{"id":7822,"href":"https:\/\/ijpiel.com\/index.php\/wp-json\/wp\/v2\/posts\/7752\/revisions\/7822"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ijpiel.com\/index.php\/wp-json\/wp\/v2\/media\/7823"}],"wp:attachment":[{"href":"https:\/\/ijpiel.com\/index.php\/wp-json\/wp\/v2\/media?parent=7752"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ijpiel.com\/index.php\/wp-json\/wp\/v2\/categories?post=7752"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ijpiel.com\/index.php\/wp-json\/wp\/v2\/tags?post=7752"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}