Green hydrogen, often referred to as the future’s fuel, is swiftly emerging as a cornerstone in India’s energy transition narrative. With its unmatched potential to decarbonise a plethora of sectors and usher in novel industrial avenues, green hydrogen is likely to be at the heart of the global race to achieve economy wide net zero emissions. As the world grapples with the dire consequences of climate change, all eyes are on green hydrogen to play a pivotal role in the energy mix and offer sustainable fuel alternatives. The competitiveness of green hydrogen derived commodities with traditional fossil fuels will determine the speed and scale of the transition in future.
The Green Hydrogen Bazaar: Valued at a whopping $155 billion in 2022, the global hydrogen generation market is on a bullish trajectory, with projections indicating a CAGR of 9.3% from 2023 to 2030. While grey hydrogen currently holds the fort, green hydrogen, produced via electrolysis, is making significant inroads. The International Energy Agency (IEA) underscores the mammoth transformation and investment required, given that green hydrogen’s global share is a mere 0.04%.
Cost Dynamics and Global Endeavours: The production costs of green hydrogen are plummeting at an unprecedented rate. The Biden administration’s Inflation Reduction Act, bolstered with tax sops and grants worth $9.5 billion, is geared towards slashing the domestic cost of green hydrogen by a staggering 75% within the next decade. On the global front, a commendable 1,000+ hydrogen projects are underway, with a notable 350 being announced just in the past year, as per McKinsey.
The European Union’s Lofty Aspirations: The EU is on an ambitious spree, aiming to churn out ten million tonnes of renewable hydrogen by 2030. This endeavour demands an investment to the tune of €335–471 billion. The real challenge is to bridge the funding chasm through private coffers and tap into the lucrative opportunities in nations exporting green hydrogen to Europe.
Banking on the Green Gold: Commercial banks are now actively rallying behind green hydrogen initiatives, offering debt advisory and earmarking their balance sheets for ventures in green ammonia and green methanol. The roadmap for new projects hints at a significant uptick in green hydrogen production by 2030, with nations like India and the Middle East sprinting ahead. Around 10% of the announced projects to produce hydrogen from electrolysis to be used in refining have at least taken a final investment decision (FID), whereas no FIDs have been taken up for projects to produce hydrogen from fossil fuels with carbon capture. Europe remains the region with the most projects, followed by North America and China.
India’s Tryst with Green Hydrogen: India, with its unique blend of traditional and modern energy sectors, is poised to be a green hydrogen powerhouse. With stalwarts in the oil and gas domain like ONGC, HPCL, IOCL, and GAIL pledging their commitment, the future looks promising. The Indian government’s visionary policy to indigenously produce electrolyser technology and roll out incentives places India at the vanguard of technological strides. Further, adopting sectoral obligations to replace grey hydrogen, allowing 10% blending in gas network, dedicated pipelines and incentives to end-user sectors shall go long way to achieve national targets of Net Zero Emissions (NZE).
Regulatory Blueprint and Funding: To clinch the coveted green tag under the EU’s Sustainable Finance Disclosure Regulations, hydrogen factories must adhere to stringent norms. The inception of the European Hydrogen Bank (EHB) is a landmark move, aimed at fortifying the hydrogen value chain and instilling market confidence.
Global Market Dynamics: While nations like Denmark, Germany, and those in the Iberian Peninsula are making waves in Europe, achieving the green hydrogen milestones necessitates robust infrastructure augmentation beyond European shores, especially in North Africa and the Middle East. These regions, blessed with abundant renewable energy resources and strategic locales, are crucial to satiate global demands.
Green hydrogen is not just a buzzword; it’s India’s ticket to a sustainable future. While challenges in financing and infrastructure loom large, they are not insurmountable. With collective efforts and global synergies, early green hydrogen adopters stand a golden chance to sculpt the ecosystem and fast-track the shift to clean energy. As we stand on the cusp of this green revolution, the promise of a cleaner, brighter future beckons.