Green Hydrogen - The Future of Energy

Climate Change – Burgeoning Threat to Humanity
Climate change has been one of the most talked-about issues during our time. Our actions today will have a monumental impact on the lives of our next generations. Weather patterns are increasingly becoming unpredictable, causing severe damage to a nation’s economy. Rising sea levels are likely to cause catastrophic flooding in the coming years. The impact of climate change is global in scope and unprecedented in scale, compelling global economies to join hands to tackle this burgeoning threat to humanity.

According to the International Energy Agency, global energy demand will grow by 55% by 2030. In the period up to 2030, the energy supply infrastructure worldwide will require a total investment of $26 trillion, with about half of that in developing countries. Suppose the world does not manage to green these investments by directing them into climate-friendly technologies. In that case, emissions will go up by 50% by 2050, instead of down by 50%, as science requires. Thus, decisive action is essential to the global transition into green economic growth. Most urgently, to help the world, especially the most vulnerable, adapt to impacts that are now inevitable.

Stringent emission reduction is the first step to minimize global temperature rise and the corresponding impact on climate change. However, a move towards a low-emission society requires a reorientation of global economic growth patterns. This necessitates innovative changes in the short and medium-term in technology in all sectors of the economy.

India – Major Player in the Fight against Climate Change

The Paris Agreement (COP21) is a landmark international accord adopted by nearly every nation in 2015 to address climate change and its negative impacts. The agreement aims to reduce global greenhouse gas emissions substantially. The agreement thus includes commitments from all major emitting countries to cut their climate pollution and strengthen those commitments over time. The pact provides a pathway for developed nations to assist developing nations in their climate mitigation and adaptation efforts. It creates a framework for transparent monitoring, reporting, and ratcheting up countries’ individual and collective climate goals.

As per India’s Nationally Determined Contribution (NDC), India is already on track to achieve two of the three components of its Paris target. First, India has already reduced emissions intensity by 21% against 33-35% by 2030. Second, with 38% of non-fossil fuel capacity (includes renewables, large hydro, and nuclear), India is just 2% short of its 2030 target of 40% non-fossil fuel-based installed power generation capacity. But on the third component, to achieve 2.5 to 3 billion tonnes of carbon dioxide equivalent in forest cover by 2030, much more work is needed.

Renewable Energy – Central to India’s Energy policy
The Indian government has set an ambitious target of 175 Gigawatts (GW) of renewable energy by 2022 and 450 GW by 2030. The country has already commissioned 90 GW of renewable energy, representing 24% of the total installed capacity. India’s solar tariffs are one of the lowest globally at `2.36 ($0.0316)/kWh. Due to this, India’s thermal capacity declined from 70% in 2015 to 61% in 2020. Some of the notable initiatives by the Indian government to fight climate change include energy-efficient infrastructure, reduction in usage of heattrapping hydrofluorocarbons (HFCs), and FAME-II scheme with an outlay of `10,000 crores ($1.4 billion) to boost the electric vehicle industry. The shift towards renewable energy is also a strategic move by the government. India’s energy sector is heavily import-dependent. The volatility in the prices of these fuels has a significant impact on the import bill, to the tune of $160 billion. These numbers may double over the next decade as the demand grows.

From now on, India’s energy policy will focus on more significant efforts to move towards a gas-based economy, cleaner fuels, electric mobility, and renewable energy. The policy will be industry-friendly and growth-oriented, but energy should be affordable and reliable, empowering people and improving their lives. Within the cleaner fuels, hydrogen has already garnered tremendous attention from the government.

Green Hydrogen can be a Game-changer in this Transition
Green hydrogen (H2) is made by splitting water (H20) via renewable power. In a recent study, the Global Hydrogen Council has classified India as a net exporter of green hydrogen from 2030, thanks to cheap renewable tariffs. India already consumes about 6 MT of hydrogen (8.5% of the global demand) annually, made by reforming 18 MT of import-dependent natural gas.

Globally, governments are taking initiatives to transform the existing hydrogen industry from a dirty/grey hydrogen ecosystem to a clean energy-based green hydrogen ecosystem. Green hydrogen would be an ideal power source for energy-intensive industries like refining, steel, cement, heavy mobility, and industrial heating. According to Frost & Sullivan’s latest analysis, global green hydrogen production is set to reach 5-7 MT by 2030. India is the world’s third-largest emitter, with 3.6 Giga-tonnes of CO2 equivalent across sectors. Thus, green hydrogen will play a crucial role in curbing CO2 emissions in the coming years.

Green hydrogen will provide impetus to India’s ambitious target of 450 GW of renewable energy by 2030. Electricity requirement from renewable sources for the production of green hydrogen will drive renewable energy capacity addition to help India march towards its 450 GW target. Electricity typically accounts for 70% of the production cost of green hydrogen. Hence, surplus electricity from India’s renewable plants can augment green hydrogen economics while also protecting the grid.

Ambitious Target and Strong Policy Interventions
The Union Budget for 2021-22 has announced a National Hydrogen Energy Mission (NHM). The focus of the mission is to generate hydrogen from green power resources. The usage of hydrogen will not only help India in achieving its emission goals under the Paris Agreement. However, it will also reduce import dependency on fossil fuels.

India will have a massive edge in green hydrogen production due to its favorable geographic conditions and abundant natural elements. In addition, the government has taken ample initiatives to effectively integrate renewable energy in the present energy mix. Therefore, capacity addition to renewable power generation, storage, and transmission will help cost-effectively produce green hydrogen, guaranteeing energy security and self-sufficiency.

Green hydrogen has the potential to generate a significant number of domestic jobs. Localization of electrolyzer production and development of Green-H2 projects could create a new green technology market in India. In addition, locally available green hydrogen can attract high-value green industries, like green steel and green chemicals, to shift production to India. There will also be a massive opportunity to create regional hubs to export high-value green products and EPC services. Setting out an ambitious target by the government, similar to renewables, would be the first step towards that journey.

Green hydrogen is the future of energy. It has the potential to radically reduce imports and catalyze India’s transition to climate-action leadership.

- Rudranil Roy Sharma, Director, Energy & Environment Practice,  Frost & Sullivan