A case for equity as India bets big on green hydrogen  

The promise of green hydrogen-fuelled heavy vehicles, industries and power grids offers arguably the best answer to one of the 21st Century’s most complex riddles, particularly for still-growing economies such as India—how to reconcile rising energy hunger with decarbonisation pledges made in view of the climate crisis.  

For India, with less than five decades to go for our net-zero target and with energy demand set to grow 25 per cent by 2030, the National Green Hydrogen Mission is more than a stepping stone to a carbon-neutral future. Quite rightly, industry and policy makers view it as an opportunity to seize market leadership in the production and export of clean energy while decarbonising the domestic economy.  

Green hydrogen, or hydrogen produced using renewable electricity to split water through electrolysis, has raced to the front of the global energy transition march. Riding that wave and official targets of 500 GW of installed capacity of renewable energy by 2030 from the current 172 GW from non-fossil fuel sources, India has recorded a flurry of investments in green hydrogen and associated technologies, including by large players such as Reliance, Adani, JSW Energy and public sector firms National Thermal Power Corporation Ltd and Indian Oil Corporation.  

Green hydrogen will be central to India’s energy transition, for hydrogen is a versatile provider of solutions for energy storage, freight and feedstock in a variety of industries, including many with hard-to-abate carbon emissions. Though technology for various aspects of this switch are still in development, the possibilities for India are vast. India plans to push green hydrogen in petroleum refineries, in production of iron and steel, and in production of fertilisers. Our ambitions include becoming a green hydrogen fuelling hub for maritime transport. Other important applications will include fuel cell electric vehicles (FCEVs), fuel cell electric buses, material handling forklifts and more.     

The hydrogen mission administrators have sweetened the deal for producers by offering a PLI scheme for domestic manufacturing of electrolysers, which will be key to cost-effective green hydrogen production, and a 25-year waiver of inter-state transmission charges for renewable energy plants set up to feed green hydrogen production facilities. India expects domestic green hydrogen to achieve cost parity by 2030 with natural gas-based hydrogen (grey hydrogen, different from blue hydrogen that is produced using fossil fuels but with carbon capture systems cutting emissions). 

To boost demand, on the anvil is a green hydrogen consumption obligation (GHCO) mechanism for certain industries, such as petroleum refineries or fertiliser manufacturing (the two currently consume the lion’s share of India’s grey hydrogen), and alongside those will be a bevy of measures to incentivise other uses.  

It is the girding of loins for a rapid scale-up of production that makes India’s green hydrogen ambition so tantalising. By all accounts, the supply of green hydrogen is set to remain scarce worldwide in the coming years. One study said global capacity would have to grow 6,000–8,000-fold from 2021 to 2050 to achieve the carbon-neutral scenarios envisioned in the Paris Agreement. Even the Union Budget 2023-24 only envisages a production capacity of 5 MMT of green hydrogen in India by 2030. Assuming that electrolyser manufacturing grows as rapidly as wind and solar power generation projects, green hydrogen would still miss those targets by a long, long way, contributing less than 1 per cent of energy globally in 2035.  

Deep decarbonisation is a global undertaking that will inevitably pick up greater speed, and the National Green Hydrogen Mission’s stated objectives to make India a green hydrogen and green ammonia export hub fit snugly into projections of exponential global demand. If it achieves its ambition of becoming a net exporter of clean energy, India is poised to decouple growth and emissions rapidly at home while assuming pole position in providing newly carbon-neutral energy to the world’s industries.   

However, every opportunity within the presumed green hydrogen economy—electrolysis technologies; storage; transportation; industrial production of feedstock, methanol, iron and steel; policies to enable commercially viable deployment of all these; the creation of conditions that will enable easy adoption of these—will require nuanced governance and policy oversight, which remain currently amorphous.  

India needs a thoughtful policy framework for its green hydrogen ecosystem at every stage, from the ramping of up technology to deployment in end-use applications and integration of these applications with the broader energy landscape.  

With regard to measures to build an enabling framework, the union government’s January 2023 mission document for green hydrogen mentions, among other things, legal provisions for enforceability of consumption targets, model bidding guidelines for procurement of green hydrogen-based fertilisers, an evolving body of financial incentives to encourage production, regulations for certification of green hydrogen, and coordination across government departments to facilitate a nurturing ecosystem.  

The mission document promises a robust regulatory architecture, safety codes and quality standards, all harmonised with internationally accepted norms to ensure interoperability of technologies and incorporation of global best practices. It also declares the intent to form a National Green Hydrogen Advisory Group comprising experts from academia and civil society apart from business leaders. It also mentions skill development to meet employment goals.  

These are all essential elements of policy, but additional ground must be covered to reap the best, most equitable and widely dispersed dividends from the ‘fuel of the future’. 

Until availability of green hydrogen is limited, priority applications must be picked based on transparent norms of costs and benefits. Besides academia and ‘civil society’, environmentalists and stakeholders in land conflicts must be seen as having credible stakes in policy design. Innovative R&D funding must help disperse these technologies beyond the handful of corporate behemoths capable of undertaking the capital-intensive early investments. Six lakh jobs are proposed to be created by 2030 in the green hydrogen economy, and India would do well to start meeting those phase-wise employment targets early, ensuring that these are not concentrated in a few regions. 

What will India’s power and industry landscape look like ten years into the green hydrogen revolution? The wide availability of renewables and green hydrogen in some regions will be a pull-factor for industry. Planning and policy design must consider the impact of industry relocation on existing land use, water and local communities.  

The industrialised world will be, doubtless, net importers of green hydrogen. It is too early to know how global prices will impact exports, but domestic green hydrogen consumption obligations must include harnessing it for the benefit of disadvantaged communities, particularly those adversely impacted by emissions. A clear and early determination to build an equitable hydrogen economy will put the justice into this transition, and will transform ‘net zero’ into a truly meaningful goal for diverse communities worldwide.     

A final cautionary note, and it is a pivotal one: Our underlying principles in creating a green hydrogen value chain are still to be enunciated. How will we ensure that big industry-driven green hydrogen markets do not grow at the expense of wider domestic access to renewable energy? This sunshine sector presupposes an abundant supply of water, at a time of localised water scarcities. What ground rules shall we lay down to ensure that underserved communities’ access to water is not adversely impacted by industry’s clean energy goals? Will solar and wind energy resources be developed without hurting these communities’ lands and livelihoods?  

We must, collectively, know the answers. We are indeed at the right place at the right time. It is upon us now to adopt not just a good strategy, but a thoughtfully crafted one. There is a natural straining between corporate goals prioritising bottom lines and the more long-term nature of an intentional focus on equitable outcomes, and we owe it to future generations to hold policymakers accountable to ensure that India’s clean energy transition is for all.  

Views are personal. The author is MD, Head-Asia, FSG