Script by Jay Cheema, Petro Economist
Hydrogen is primarily used in petrochemicals and fertiliser industry and is produced largely from natural gas, thereby emitting enormous amounts of carbon dioxide. Depending on the nature of the method of its extraction, hydrogen is categorised into three categories, namely, grey, blue and green. There is a growing focus on increasing production of green and blue hydrogen due to its no carbon emission and use of carbon offset technology, respectively. Additionally, several leading organizations are exploring technologies which can convert bio and plastic waste into hydrogen, thereby providing a huge scope for investment in this technology which can combat India’s twin problems of waste management and energy security.
Recently, the Finance Minister in the Union budget for 2020-21 formally announced the NHM which aims for generation of hydrogen from green power resources. The Ministry of New and Renewable Energy (“MNRE”) has also disclosed that the draft regulations for NHM will be finalised by the end of this month and will thereafter proceed for approval of the Union Cabinet. Though it is speculated that NHM will emphasize generating green hydrogen and enabling its commercial use as a transportation fuel, however, it is yet to be seen what roadmap the Government has envisioned in its draft regulations.
Several countries in Asia-Pacific sub-continent, including the likes of Japan and South Korea, are on the front foot in terms of hydrogen policymaking. In 2017, Japan formulated the Basic Hydrogen Strategy which sets out the country’s action plan till 2030, including the establishment of an international supply chain. It has also entered memorandums agreeing to cooperation on the exchange of information and personnel and developing technology with countries like New Zealand. Likewise, South Korea is operating hydrogen projects and hydrogen fuel cell production units under the auspices of its’s Hydrogen Economy Development and Safe Management of Hydrogen Act, 2020.
India has a huge edge in green hydrogen production owing to its favourable geographic conditions and the presence of abundant natural elements. The Government has given impetus in scaling up the gas pipeline infrastructure across the length and breadth of the country and has introduced reforms for the power grid, including the introduction of smart grids. Such steps are being taken to effectively integrate renewable energy into the present energy mix. With appropriate capacity addition to renewable power generation, storage and transmission, producing green hydrogen in India can become cost-effective which will not only guarantee energy security but also ensure self-sufficiency gradually.
The NHM should aim to establish appropriate physical infrastructure and legal framework for the usage of hydrogen. To head start the NHM and its smooth approach, there is an imminent need to plug in the policy vacuum by bringing in the regulations as soon as possible.
Currently, multiple regulatory authorities regulate hydrogen use tangentially, for instance, Ministry of Road Transport and Highways regulates vehicle’s fuel carrier specification, MNRE regulates renewable energy sources, Petroleum and Natural Gas Regulatory Board regulates pipelines and Petroleum and Explosives Safety Organisation regulates explosive substances, storage and fuel station’s specifications. Hydrogen being a versatile resource which can be used as a transport fuel, generate electricity, can be transported via pipelines and is highly flammable. The commercial use will require coordination among the various ministries and regulators. The NHM can also highlight the need for global cooperation and generate opportunities for exchange of technology.
The draft regulations for NHM shall have a roadmap for targets and capacity installation. Designated hydrogen hubs can be established to attract investment by providing infrastructural support like pipelines and renewable electricity for production, storage and transportation of green hydrogen. Producers and major users of hydrogen can be placed in these hubs for logistical convenience. A ‘Hydrogen Valley Platform’ to create an integrated hydrogen ecosystem which will cover the production, storage, distribution and end-use is in the works under the Department of Science and Technology.
To augment the NHM, constructive synergies among leading industries from different sectors like automobiles, power generation, refining, chemicals are necessary. Countries like Germany are already using alliance which aims to put up 400 hydrogen fuelling stations by 2023. Similarly, market leaders in India may consider following a similar strategy to invest in hydrogen-related technologies and infrastructure. Not only it will benefit India in reducing emissions but will also benefit the companies in achieving their net emissions goals.