The latest buzzword in the world of global energy aspirations sounds like the title of a blockbuster Sci-Fi movie — Green H2 -1-1-1 ($1 for 1 kg of green hydrogen in 1 decade). The buzzword may be new but the science behind it was dreamt up way back in the 19th century. “Water will one day be employed as fuel, that hydrogen and oxygen which constitute it, used singly or together, will furnish an inexhaustible source of heat and light, of an intensity of which coal is not capable,” Jules Verne wrote in his 1875 novel, The Mysterious Island.

Hydrogen, nature’s lightest and most abundant element, can be used as energy after being taken out from coal (brown hydrogen), natural gas (grey hydrogen), renewable energy (green hydrogen) and water (blue hydrogen). Technologies for doing so have been around for decades but are yet to become commercially viable as output is less than the energy used to produce the gas. But this is set to change with governments and companies making hydrogen an important part of their carbon neutrality goals.

The ball was set rolling by Prime Minister Narendra Modi when he unveiled the 25-year roadmap for hydrogen development in his address on India’s 75th Independence Day and announced the National Hydrogen Mission to meet the larger goal of self-reliance in energy production by the 100th Independence Day in 2047. “The thing that is going to help India with a quantum leap in terms of climate is green hydrogen. We have to make India a global hub for green hydrogen production and export,” he said.

Some years ago, government had launched a similar mission for solar power under which India is chasing 500 gigawatt (GW) capacity by 2030 and has achieved much success —100 GW, from less than 30 GW six years ago. Will hydrogen see a similar takeoff? It will, but with time. “Hydrogen will drive economies not now but in near future. Today’s electrolysers (used to separate hydrogen from water using cathode, anode and membrane) consume 40-50 units of electricity to split water and generate 30-35 units. Energy consumed is more than energy produced,” says M.V.S Seshagiri Rao, joint MD & group CFO of JSW Group.

Why Hydrogen?

For energy-starved India, which is aiming for carbon neutrality by 2070, the path to energy security goes through a mix of oil, coal, blended fuels, natural gas, renewables and electricity. At present India’s $3.12 trillion economy needs 1,650 billion units (BU) of power, made from nearly 400 GW of capacity. Of this, green electricity is only 17%. When the economy touches $5-7 trillion in the next decade, it will need at least 3,000-4,000 GW. Further, at current rate, the energy import bill will triple by 2040. The only way out of these massive challenges is tapping as many green and locally available energy sources as possible.

New Delhi-based climate and energy research firm, Council for Energy, Environment and Water Research (CEEWR) has estimated that net zero emissions by 2070 will require 5,630 GW solar capacity, 99% reduction in coal use between 2040 and 2060 and 90% fall in crude oil consumption between 2050 and 2070. By that time, green hydrogen should meet 19% of industry’s needs, it says. CEEWR’s Centre for Energy Finance says India requires $10 trillion (₹750 lakh crore) energy investments, including $8.4 trillion for augmenting renewable capabilities. Another $1.5 trillion will be required for creating a green hydrogen ecosystem in the industrial sector, it says.

The Energy and Resources Institute (TERI) estimates 23 MT hydrogen demand by 2050. India’s current output is 6.7 MT, produced mostly from natural gas through steam-methane reforming process (methane reacts with steam under pressure in presence of a catalyst to produce hydrogen, carbon monoxide and a small amount of carbon dioxide). The biggest consumers of this hydrogen are refineries, chemical companies and fertiliser plants.

However, the game changer will be green hydrogen, as other ways of generating this new-age fuel are not 100% carbon neutral. “Green hydrogen accounts for just 0.1% global hydrogen production. However, declining cost of renewable electricity (70% cost of producing hydrogen) and electrolysis technology indicates it could be the next best investment in the world of clean energy,” says J. P. Gupta, chairman, Expert Appraisal Committee (Industry-II), Ministry of Environment, Forest & Climate Change.

Pashupathy Gopalan, an investor in Ohmium, India’s first integrated green hydrogen electrolyser gigafactory in Bangalore, says production of 20 MT green hydrogen (at $1 per kg) will be a $20-25 billion opportunity. India can produce green hydrogen from 15-20 GW installed capacity by 2030. For that, it will need to invest $4-5 billion in electrolysers, according to the India Hydrogen Alliance (IH2A), a grouping of industry stakeholders.

“Inclusion of hydrogen as an energy carrier in future energy portfolio presents a unique opportunity to address emerging energy vectors, including power to gas, power to power, power to mobility and even vehicle to grid applications,” Dharmendra Pradhan, former Union minister for petroleum and natural gas & steel said at a seminar. “We are working on a pilot on blue hydrogen, hydrogen CNG and green hydrogen. We are blending hydrogen with compressed natural gas for use as transportation fuel and industrial input in refineries,” he said. The government is planning to blend 15% green hydrogen with piped natural gas for domestic, commercial and industrial consumption.

In order to meet these goals, Union Budget 2021 earmarked ₹800 crore for pilot projects, infrastructure, research and development, regulations and public outreach. The Ministry of New and Renewable Energy is also working on a policy document for the national hydrogen energy mission.

Corporate India has got the drift and is working overtime to tap the opportunity at hand.

Corporate Interest

Mukesh Ambani, chairman, Reliance Industries Ltd (RIL), is anticipating a New Green Revolution. “India can set an even more aggressive target of achieving under $1 per kg within a decade. This will make India the first country to achieve $1 per 1 kg in one decade – the 1-1-1 target for green hydrogen,” he said at the International Climate Summit 2021.

RIL has kicked off its green initiatives with a slew of deals in recent months and plans for setting up four giga factories in Jamnagar at an investment of ₹60,000 crore for making solar photovoltaic modules, advanced energy storage batteries, electrolysers and fuel cells. RIL’s new renewable subsidiary, Reliance New Energy Solar, has partnered with Danish climate change technology company Stiesdal A/S to develop and manufacture hydrogen electrolysers at one of these four factories. It has also invested $50 million in US-based energy storage company Ambri, besides acquiring Norwegian solar equipment maker REC Solar Holdings AS and a 40% stake in renewable project specialist Sterling & Wilson Solar. Bernstein Research analysts estimate that RIL is building a clean energy business worth $36 billion but say it will have to master more fuel cell technologies to tap opportunities in hydrogen. “It is too early to comment as we are working out the detailed plans,” says an RIL spokesperson.

Gautam Adani plans to build the world’s largest renewable energy company with 45 GW capacity by 2030. He is also aiming to become the largest hydrogen producer in the world. The group plans to spend 80% capital expenditure in green businesses, including $20 billion in renewables, green component manufacturing and enabling infrastructure, over the next decade. The group’s large capabilities in energy (both fossil and renewable), transmission & distribution infrastructure and logistics can make it a big green hydrogen player.

India’s oil marketing companies (OMCs) are also in the game. The leader, Indian Oil Corporation (IOC), is working on plans to convert a part of the grey hydrogen it produces to blue hydrogen. “Our Mathura refinery will be turned into a green hydrogen-powered refinery,” says S.M. Vaidya, chairman and managing director, IOC. The company has floated an expression of interest (EoI) for setting up green hydrogen plants in Mathura and Panipat refineries. Mathura is envisaged as the largest plant in India with 40 Mega Watt Hour (MWH) capacity. The plant in Panipat will have a capacity of 15 MWH. The company has also tied up with L&T and ReNew to set up hydrogen plants. “We also intend to run blue hydrogen buses from Gujarat refinery to Statue of Unity,” says Vaidya. IOC has asked Tata Motors to build 15 hydrogen-based fuel cell buses for the purpose.

Other state-run fuel companies are not far behind. Bharat Petroleum Corporation Ltd. (BPCL) will soon float a tender for a 20 MW electrolyser at its Bina refinery in Madhya Pradesh for building India’s largest green hydrogen plant. “We will scale up after seeing the results. We are also exploring use of green hydrogen as a transportation fuel. Indian refineries are the first in the world to adopt green hydrogen,” says Arun Kumar Singh, CMD, BPCL. Hindustan Petroleum Corporation (HPCL), is setting up a 370 MT green hydrogen plant at Vizag refinery. “It is just to get a hang of it. We had set up a green hydrogen plant a year ago to run our R&D centre. We are also researching on next-generation battery technologies,” says M.K. Surana, CMD of HPCL.

While GAIL (India) will build one of India’s largest proton exchange membrane (PEM) electrolyser at Guna in Madhya Pradesh to produce green hydrogen by the end of 2023, India’s largest integrated power generator, NTPC Ltd, has floated an EoI for a pilot on blending hydrogen with natural gas in city gas distribution networks. Its renewable energy subsidiary, NTPC REL, is setting up a green hydrogen fuelling station at Leh where it plans to begin with five fuel cell vehicles. The station will be powered by a 1.25 MW solar plant at Leh.

Even solar power players are looking at the opportunity. On December 2, renewable energy company ReNew Power and engineering conglomerate Larsen & Toubro (L&T) entered into a memorandum of understanding to develop, own, execute and operate green hydrogen projects. “This will allow both to pool knowledge, expertise and resources to take advantage of this transition,” says ReNew chairman & CEO Sumant Sinha. “We are already looking at some interesting opportunities in the Indian market for green hydrogen by developing end-to-end competitive solutions for the industry. ReNew brings its renewable energy development expertise to the table which, combined with our expertise in EPC, will contribute to sustainable and eco-friendly profitable growth,” says Subramanian Sarma, whole-time director & senior executive vice president (energy), L&T. The infrastructure major has also signed an MoU with Norway’s HydrogenPro to set up a joint venture in India for gigawatt-scale manufacturing of alkaline water electrolysers.

Seshagiri Rao says JSW Energy and JSW Steel’s R&D teams are also working on cutting-edge hydrogen technologies. “JSW Future Energy is working with Australian Fortescue Future Industries for production of green hydrogen and utilising it for mobility, making green steel, green ammonia, and other industrial applications,” he says.

Even the railways are interested. The Indian Railways Organization For Alternate Fuels has invited bids to develop a hydrogen fuel cell-based hybrid power train for retrofitting the 700 HP diesel-hydraulic locomotives running on the Kalka-Shimla narrow gauge section.

The initiatives have piqued the interest of global technology providers too. Hyderabad-based cleantech firm Greenco teamed up with Belgian alkaline electrolyser maker John Cockerill to make electrolysers in India. Before that, Ohmium International had shipped its first proton exchange membrane electrolysers to the US. “We are a 100% Indian company. Our factory now has a capacity to produce about 500 MW of electrolysis equipment per annum. This is eventually planned to be expanded to two GW per annum,” says Pashupathy Gopalan.

Once these companies manage to develop their capabilities, it’s clear that green hydrogen will change the country’s energy consumption patterns, especially in industries where hydrogen is a key input even today.

Refining & Industry

Global hydrogen demand was 90 MT in 2020. More than 70 MT was used as pure hydrogen. The rest was mixed with gases containing carbon. Almost all of this demand came from oil refining and industrial sectors, mainly for production of ammonia and methane. Hydrogen produced from fossil fuels for these applications results in close to 900 MT CO2 emissions per year, according to IEA data.

Oil refiners are largest consumers (40 MT). The gas they use is usually produced onsite by either steam methane reforming, separated from by-product gases through petrochemical processes or sourced externally as merchant hydrogen. Since use of low-carbon hydrogen in refining is not economically viable yet, refiners are trying to move to carbon capture, utilisation and storage (CCUS) technologies to lower carbon footprint. In this process, carbon monoxide and carbon dioxide formed during the ‘coal to hydrogen’ process are trapped and stored in an environmentally sustainable manner. Estimates say use of low-carbon hydrogen in refining rose from 250 KT in 2019 to more than 300 KT in 2020, and based on the current pipeline of projects, 1.2-1.4 MT low-carbon hydrogen is likely to be used in refining by 2030.

Industry demand for hydrogen was 51 MT in 2020, with chemical production consuming 46 MT, mainly to make ammonia and methanol, while the remaining five MT was consumed mainly for making steel. Only 0.03% hydrogen used in industry has low carbon content.

New CCUS-equipped projects can supply only one-three MT electrolytic projects for low-carbon hydrogen demand by 2030. In order to meet net zero emission goals by 2050, the industrial sector has to use at least 21 MT low-carbon hydrogen. Similarly, total hydrogen demand in traditional applications (ammonia and methanol production) will reach 54 MT by 2030, and to meet sustainability goals, at least nine MT has to come from low carbon hydrogen technologies. However, projects in the pipeline will be able to supply only up to 3.1 MT low-carbon hydrogen by 2030.

The steel industry, which accounts for 0.7% of the world’s economic output but contributes 7% to global emissions, is facing its unique set of challenges. In iron and steel production, hydrogen demand is expected to triple to 18 MT by 2030, but commercial scale 100% hydrogen-based direct reduced iron (DRI) technologies are still at an experimental stage (iron reduction through hydrogen needs a lot of heat; DRI plants can generate such heat due to presence of carbon monoxide in synthesis gas being produced from the coal gasification process).

Tata Steel is among the few steel makers attempting to master technology to make steel from green hydrogen. The project is being implemented at its Netherlands facility. A Roland Berger study says Tata Steel’s aim of making green steel before 2030 is possible provided it gets policy support. Hans Dan Ven Berg, chairman of Tata Steel Netherlands, says the company has already started implementing technologies for making green steel. “Our preference would be to start using hydrogen immediately. We are doing a lot of preparatory work,” he said in a recent announcement.

“We are watching how hydrogen technologies are evolving. Once possible, we can retrofit existing equipment with hydrogen injection instead of coal injection into blast furnaces to make green steel,” says JSW’s Seshagiri Rao. JSW Steel is already trying to reduce carbon emissions from 2.5 tonnes to 1.8-1.95 tonnes per tonne of steel.

“Viable green steel production could be more than a decade away even though several of the world’s major steelmakers are developing plans to meet carbon-neutral goals,” says JSW Group chairman Sajjan Jindal. “While prices of renewable electricity and green hydrogen are falling fast, the cost of setting up new plants—and shuttering old ones—will be a major barrier to change,” he said while addressing a Bengal Chamber of Commerce audience.

A TERI report, Towards a Low Carbon Steel Sector, authored by Will Hall, Thomas Spencer and Sachin Kumar, is more hopeful. It expects that more radical decarbonisation technologies will be commercially available by 2040s. “Of particular interest is the hydrogen route, which involves substitution of coal or natural gas as a reducing agent with hydrogen. If hydrogen is produced from emission-free electricity, total iron and steel emissions can be reduced by 94%,” they say.

Building an Ecosystem

Industry and experts say building a policy-driven ecosystem is a must for a green hydrogen revolution. This includes setting up of electrolysation units and storage tanks close to manufacturing locations, building cryogenic tanks and incentives such as PLI scheme for electrolysers. IH2A says there is an opportunity to create a National Electrolyser Manufacturing Mission, aligned with existing FAME II scheme, and create three-four large electrolyser manufacturing companies. It has recommended a PLI scheme for hydrogen-related domestic manufacturing similar to the one for solar power and EVs, tax and policy incentives, state offtake guarantees similar to that for renewable energy, new natural gas pipelines to accommodate hydrogen blending and incentives for large consortia hydrogen projects.

Costs, after all, are the biggest concern. For instance, the proton exchange membrane, which is the most stable, doubles the cost of an electrolyser. To reduce costs and increase manufacturing in India, development of alternative membranes should be prioritised. At present, annual coal cess collections of about ₹24,000 crore are being used to support projects to improve India’s renewable energy output. This should be extended to hydrogen technology development, says Gupta, while batting

for inclusion of fuel-cell EVs in FAME II. “Incentivised dollar-denominated loans for projects, concessional T&D lines and schemes like PLI can bring down project costs,” says Gopalan. “There is also a huge amount of research going on to increase capacity of electrolysers for scaling up production. That will happen soon,” says Seshagiri Rao.

Once these efforts bear fruit, industry will be well on its way to herald a green hydrogen revolution.

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