| Reference Date | Version | July 21, 2023 | 1.0 |
| Keywords | Green Hydrogen, Electrolysis, Sustainability, Renewable Energy |
| Legislation(s) and Policy(ies) | Green Hydrogen Policy, 2022 National Green Hydrogen Mission, 2023 |
| Jurisdiction | India |
India needs consistent and low-cost renewable energy to decrease the cost of production of green hydrogen.
Expert guidance from energy legal advisors and infrastructure legal advisors is advisable to handle projects in these areas as an integrated approach would be required which needs to flow down to transaction and documentation structuring.
Introduction
India has set a goal of becoming energy independent by 2047 and achieving Net Zero emissions by 2070. To achieve this goal, boosting the usage of renewable energy across all economic sectors is critical to India’s energy transition. Green hydrogen is regarded as a viable option for facilitating this transition. Hydrogen can be used for renewable energy storage, fossil fuel replacement in industries, clean transportation and decentralized power generation. Green Hydrogen refers to hydrogen produced using renewable energy sources such as solar and wind energy. One of the primary methods used for producing green hydrogen is electrolysis, where water is split into hydrogen and oxygen using electricity generated through renewable energy sources. Unlike Grey Hydrogen or Brown Hydrogen derived from fossil fuels, Green Hydrogen does not leave behind carbon residue. The growing importance of Green Hydrogen has been highlighted in international climate conferences including COP26 and the Green Hydrogen Catapult initiative.India and Green Hydrogen: Legislative Framework
India’s energy usage has doubled in the last two decades and is expected to grow significantly by 2030. India imports a substantial portion of its energy requirements, leading to major foreign exchange outflows annually. Most hydrogen currently used in India is Grey or Blue Hydrogen derived from fossil fuels. This does not align with India’s climate goals of achieving Net Zero carbon emissions by 2070. The Ministry of Power released the Green Hydrogen Policy in February 2022 in line with the National Hydrogen Mission announced on 15 August 2021. The Green Hydrogen Policy aims to produce 5 million tonnes of Green Hydrogen annually by 2030. In January 2023, the Union Cabinet approved the National Green Hydrogen Mission with an initial outlay of INR 19,744 crores. The budget allocation included:- INR 17,490 crore for Strategic Interventions for Green Hydrogen Transition (SIGHT) Programme.
- INR 1,466 crore for Pilot Projects.
- INR 400 crore for Research and Development.
- INR 388 crore for other mission components.
- Phase I (2022-23 to 2025-26): Foundation building.
- Phase II (2026-27 to 2029-30): Deployment of advanced technologies in hard-to-abate sectors.
Green Hydrogen Policy
The primary objective of the Policy is to facilitate implementation of the National Hydrogen Mission.Key Initiatives Under the Policy
- Grant of Connectivity to ISTS: Green hydrogen projects are granted priority connectivity to the Inter-State Transmission System (ISTS).
- Waiver of ISTS Charges: ISTS charges are waived for 25 years for projects commissioned before 30 June 2025.
- Allotment of Land: Land within renewable energy parks shall be allotted for green hydrogen projects.
- Power Banking: Renewable energy used in green hydrogen production may be banked for up to 30 days.
- Regulation of Distribution Margins: Margins charged by distribution licensees supplying renewable energy are regulated.
Expected Outcomes
- Addition of 125 GW renewable energy capacity.
- Reduction in fossil fuel imports worth INR 1 lakh crore.
- Abatement of 50 MMT annual greenhouse gas emissions.
Green Hydrogen: Challenges and Issues
1. Reliance on Water
One of the major challenges associated with Green Hydrogen production is the requirement of large quantities of water for electrolysis. India’s current grey hydrogen consumption is approximately 6 million tonnes annually. Producing equivalent amounts of green hydrogen would require extremely high quantities of water. Although industrial and municipal wastewater are proposed as alternative feedstocks, electrolysis requires demineralized freshwater for efficient operation. Treating wastewater increases infrastructure requirements, energy consumption and overall production costs.2. Economic Feasibility
Green hydrogen production at industrial scale requires massive investments. Infrastructure for production, storage and transportation is still under development. A significant part of production cost depends on manufacturing electrolysers, which are yet to achieve standardization and mass production.3. Demand and Supply Mismatch
Policy measures encouraging demand for Green Hydrogen have not progressed at the same pace as supply-side incentives. Uncertainty surrounding consumption obligations has caused hesitation among industries considering investments in this sector.4. Energy Loss
Significant energy loss occurs during electrolysis and transportation processes. Approximately 30-35% of energy used during electrolysis is lost during conversion. Additional energy losses occur during storage, transportation and conversion into hydrogen carriers. This increases the overall renewable energy requirement for Green Hydrogen production.Future Prospects and Suggestions
The production of Green Hydrogen is closely connected with renewable energy availability and water resources. Technologies for desalination and wastewater treatment are being explored to address water-related concerns. However, treatment processes themselves require additional energy and increase production costs. India is estimated to require around INR 9 trillion investments to achieve production targets of 5 MMT Green Hydrogen. India requires reliable and low-cost renewable energy infrastructure to make Green Hydrogen economically competitive. Green hydrogen hubs should ideally be established near renewable energy generation centers to reduce transmission losses. India also needs to invest heavily in domestic electrolyser manufacturing and collaborate globally for procurement of critical minerals and advanced technologies. Research and Development will play a crucial role in improving electrolyser efficiency, reducing energy consumption and enhancing stack life.Conclusion
Green Hydrogen is not the final objective but a means to achieve India’s sustainability goals. The Green Hydrogen Policy and National Green Hydrogen Mission are important initiatives toward reducing India’s carbon footprint and creating a Green Hydrogen ecosystem. However, several challenges relating to water usage, infrastructure, production cost and energy loss still need to be addressed. Developing a cost-efficient and sustainable green hydrogen economy requires effective planning, implementation of incentives and robust legislative support. India has already begun taking significant initiatives to build a strong Green Hydrogen ecosystem through international conferences, policy support and strategic investments.Legal Support in the Technology, Infrastructure and Energy Sector
Sources
- India’s Nationally Determined Contribution (NDC)
- Green Hydrogen Catapult
- A Ajanovic, The Economics and Environmental Benignity of different colours of Hydrogen, International Journal of Hydrogen Energy 47, January 2022.
- India Energy Outlook 2021
- NITI Aayog Report – Harnessing Green Hydrogen
- Ishika Chauhan, Green Hydrogen in India, Social Policy Research Foundation, June 2021.
- Cabinet approves National Green Hydrogen Mission
- National Hydrogen Mission
- Landscape of Future Fuels in India
- Sewage Water Treatment
- Global Hydrogen Review 2021
- India needs Rs 9 lakh crore capex for National Green Hydrogen Mission
- International Conference on Green Hydrogen
Suniti Kaur (Ms) and Samridhi Gandhi (Ms)
Co-Founder & Managing Partner at Alaya Legal
