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India’s $2-billion green hydrogen mission needs push from government: Industry

National Green Hydrogen Mission scheme guidelines and implementation details yet to be detailed 

January 05, 2023 / 10:05 AM IST
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India has made a serious bet of over $2 billion on green hydrogen and entered the global race for developing green energy to ensure the country’s energy security, but the devil lies in the details. The industry which made a beeline to enter the sector even before the country announced its policy, now awaits the details of the plan.

On January 4, the Union Cabinet approved the National Green Hydrogen Mission with a total initial outlay of Rs 19,744 crore. The country wants to develop manufacturing capacity for the clean energy source and emerge as a global hub for it.

While Prime Minister Narendra Modi launched the ‘National Hydrogen Mission’ from the Red Fort on Independence Day in 2021, this is the first concrete commitment towards the ambition to boost the growth of green hydrogen in the country. The ministry had launched a part of the national hydrogen policy on February 17, but that did not include incentives that the industry was vying for.

“The Indian government is among the first few to have put the money on the table for green hydrogen; it is in the top four-five countries that have committed money. Now that the ministry knows that they have this kitty to work with, they will work out the exact mechanics of who gets what, and the procedure. Unfortunately, there is no existing template for the incentives, as this is a new space. So, they will have to work it out, but they have been engaging with the industry closely,” Rajat Seksaria, Chief Executive Officer, ACME Group, told Moneycontrol.

But while India has thrown its hat in the ring, its success hinges on how the incentives would be planned and executed, and how the country manages to create demand locally.

Union Cabinet approves National Green Hydrogen Mission

The big push

India aims to produce at least five million tonnes (MT) of green hydrogen per annum by 2030, with a potential to reach 10 MT per annum that could even cater to the export market. The country hopes to progressively replace hydrogen produced from fossil fuels with the cleaner green hydrogen in petroleum refining and fertiliser production.

Industry players told Moneycontrol that the timing of the Cabinet approval, just ahead of the Union Budget that is scheduled to be announced on February 1, indicates that the government is making sure that resources are made available to finance this initiative.

Of the Rs 19,744 crore outlay announced, around Rs 17,490 crore will be towards incentives for production of green hydrogen and manufacturing of electrolysers. The government is referring to this as the Strategic Interventions for Green Hydrogen Transition Programme (SIGHT). Another Rs 1,466 crore will be for pilot projects, while Rs 400 crore is committed to research and development (R&D), and Rs 388 crore to other mission components, respectively.

The Ministry of New and Renewable Energy (MNRE) will formulate the scheme guidelines for implementation of the respective components, Union Minister Anurag Thakur said in a briefing to reporters after the approval. Industry players are hopeful that this will be done in the next two months since the government has been engaging with the industry for over a year and has already received feedback.

“Indian hydrogen demand is anticipated to see a five-fold jump to 28 MT by 2050, along with tremendous opportunities that exist for exports. The impetus will translate into increased cooperation between the government, private players and innovators to make green hydrogen, the fuel of the future, and India, a leader in the green energy space,” said Vineet Mittal, Chairman, Avaada Group.

“This intervention will help Indian developers cater to the requirement and augment the ongoing efforts to reach the target of 500 gigawatts (GW) of renewable energy by 2030 and net zero emissions by 2070,” he said.

Road ahead

Even before India had a stated policy for green hydrogen, private sector conglomerates like Reliance Industries Ltd, Adani Group, Larsen & Toubro, state-run companies like Indian Oil Corporation Ltd, NTPC Ltd, GAIL India Ltd, and renewable energy companies like ReNew Power, and ACME Group, had made big-bang announcements to enter the sector. Reliance Industries aims to reduce the production cost of green hydrogen to under $1/kg by the end of this decade. Whereas billionaire Gautam Adani has stated that Adani Group aspires to be among the biggest producers of green hydrogen in the world.

The advances in technology, drop in prices, growing competition and government incentives have given these companies the confidence that the green hydrogen sector will take off over the next few years. But for that to happen, execution of policies by the government and projects by the companies would be key, experts said.

"It is a crucial policy measure in establishing India as a leader in manufacturing and production of green hydrogen. What will be required alongside this ambitious mission is to create adequate demand by transiting hard-to-abate user industries through incentives and obligations towards green hydrogen,” said Shubhranshu Patnaik, Partner, Deloitte India.

Seksaria of ACME Group believes that to some extent the ball is in the court of the developers now. “The government has indicated their plan and to a significant extent, done or is doing, what they have to do. Green hydrogen requires a lot of business development activity to ensure that we find a global customer and comply with global regulatory norms.”

A big challenge, going ahead, would be to harmonise standards and certification systems for green hydrogen globally. While this is a challenge for countries across the world, India could play an important role in facilitating it, given its G20 presidency, industry players said.

“While there is a long way to go, the Cabinet approval sends a positive signal to private and international investors, which is essential for this sector to develop. Moreover, the Mission will give the much-needed direction to the states to undertake their own priority-based actions that align with the overarching decarbonisation goal…If well synchronised and executed, this will enable India to achieve its intended long-term strategy,” said Tirthankar Mandal, Head of Energy Policy in the Energy Program at World Resources Institute, India.

Disclaimer: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.

Rachita Prasad
Rachita Prasad heads Moneycontrol’s coverage of conventional and new energy, and infrastructure sectors. Rachita is passionate about energy transition and the global efforts against climate change, with special focus on India. Before joining Moneycontrol, she was an Assistant Editor at The Economic Times, where she wrote for the paper for over a decade and was a host on their podcast. Contact: rachita.prasad@nw18.com
first published: Jan 4, 2023 08:55 pm

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