India’s stake in the global hydrogen economy
By Ajay Shankar, The Energy and Resources Institute, New Delhi
The pursuit of a hydrogen economy has become the new frontier in technologically advanced countries.
Hydrogen can be used to generate clean energy — a key development for many nations transitioning towards net carbon zero. India is the latest to display an ambitious hydrogen push.
In August, Indian Prime Minister Narendra Modi announced the country’s plan to become a global hub for hydrogen production and exports through a National Hydrogen Mission worth Rs 850 crores (US$114.3 million) over the next three years.
He said green hydrogen — energy storage created by using renewables to power the electrolysis of water — will greatly reduce India’s carbon emissions.
India is the second Asian nation to announce a pivot towards green hydrogen, but certainly not the first in the world.
Japan has been pioneering the green hydrogen economy after becoming the first country to adopt a national hydrogen framework in 2017.
It showcased the use of hydrogen gas to run buses, cars, and to generate electricity at the Tokyo Olympics and placed hydrogen as one of its priority technology areas in the 2020 Green Growth strategy.
In Germany, Economy Minister Peter Altmaier last year announced Berlin’s aim to become “number one in the world for hydrogen technologies”, more recently allocating around 8 billion euros (US$9.2 billion) to fund its hydrogen projects.
Germany’s National Hydrogen Strategy relies on building a strong domestic market and will be mainly used in the industrial and transport sector.
In comparison, India’s current hydrogen production is still minuscule.
But it’s trying to leapfrog the competition by creating a cost-effective ecosystem, hoping innovation and mass production will push it into a major hub.
It plans to do this by creating partnerships and providing momentum to catch up via the National Hydrogen Mission.
Several organisations have already begun working on the Mission, with the nation’s largest industrial group, Reliance, announcing its plan to produce the cheapest green hydrogen in the world at US$1 a kilogram before the end of the decade.
Mistakes to avoid
India will need to avoid common missteps such as trying to reinvent the wheel or spreading resources too thin if it is to succeed.
Getting electrolysers to be cheaper and more efficient through innovation is the key to reducing the cost of green hydrogen, with renewables already being the cheapest source of electricity in the country.
India would also need to get companies to use hydrogen in shipping, steel and cement plants and other hard to abate sectors through trial runs.
As well as providing government grants and subsidies to these plants to offset the initial higher cost of using hydrogen. Public sector enterprises should be encouraged by the national government to invest in a coordinated manner, such as in storage and the supply chain of hydrogen.
Doing so could enable fossil fuel-based government energy companies to transform themselves in a decarbonised economy.
Government support through demands, subsidies and regulatory changes and regulations will be crucial.
The Indian government can also enact policy and regulatory instruments to create markets with a competitive industry structure.
Competitive procurements by government agencies have created a robust industry structure in renewable energy over the last decade.
In due course, it can also mandate a progressive increase in the use of hydrogen in steel production or other industrial areas to drive competition and decrease prices.
Firms that are developing cutting edge technologies will seek new markets and set up production plants if India can ensure its viability in the industry through attractive returns.
At stake: The Global Share
The costs of the hydrogen supply chain have come down sharply over the last decade in conjunction with the success of cost reduction in renewables, electric cars and battery storage for the grid.
Hydrogen is currently seen as a competitive solution for heavy-duty trucks travelling long distances.
It’s the only substitute for fossil fuels in many industrial sectors, particularly where the use of batteries will not suffice.
We are also likely to see it used in future aviation services, as Airbus plans to develop planes using hydrogen fuel by 2035.
But pure hydrogen does not occur in nature and so far it has been too expensive to use on any significant scale — holding back much of its possibility for progress.The hydrogen car, for example, is more costly than the lithium-ion battery electric car, with Toyota’s Mirai hydrogen car costing twice as much as its similar sized Camry.
And while green hydrogen can be made from readily-available water through electrolysis, it’s an energy intensive process.
Hydrogen also needs costly high-pressure containers made of specialised materials for storage and transportation.
How to make it work
The global effort to develop a competitive hydrogen market should be aided by government investments to create a market large enough for economies of scale, therefore facilitating innovation and lowering overall costs.
Government interventions and incentives would cover the process of turning gas and methane to hydrogen, the cost of electrolysers for green hydrogen and the infrastructure for hydrogen fuelling stations.
Subsidies could aid the price of hydrogen vehicles, the switch to hydrogen fuel in steel and cement plants, shipping and other sectors which may struggle with the transition from traditional forms of energy.
The Indian Hydrogen Mission will need to do the same.
Originally published under Creative Commons by 360info™.
Ajay Shankar is Distinguished Fellow at The Energy and Resources Institute, New Delhi.