Decarbonizing not only the energy sector but also those of steel, cement, transportation, refining, etc., is essential if India is to reach its net zero goal by 2070. One of the most promising approaches is the use of green hydrogen. While geopolitics forced several nations to return to burning fossil fuels in 2022, 2023 offers a great reason to celebrate as India appears to be leading the world in the energy revolution.

The recent announcement of a Rs 19,774 crore first capital outlay for the Green Hydrogen project is a step toward making India a hub for the production, use, and export of green hydrogen and its byproducts.

The hydrogen mission aims to manufacture 5 million tonnes of environmentally friendly hydrogen annually, attract investment of Rs. 8 lakh crore (around US$100 billion), generate employment, ease the burden of imports and subsidies, and reduce greenhouse gas emissions.

Until now, only a few pilots have been conducted due to the expensive expenditures. The price of electrolysers must fall for this technology to be commercially feasible, and 24/7 renewable energy is essential. The feasibility of such projects will increase with the funding of strategic interventions and research and development (R&D), which will also encourage more private-sector investment.

Since green hydrogen requires a lot of capital, the private sector has been reluctant to invest in it. Pump-priming the green hydrogen industry by the government will increase investor confidence and draw substantial investments from both local and foreign capital. Additionally, the government’s introduction of the framework for sovereign green bonds and the RBI’s discussion paper on climate risk and sustainable finance will aid in luring investors to green hydrogen and its derivatives.

The Indian government is set to provide extra funding for the domestic production of electrolysers under the Production Linked Incentive (PLI) plan in the upcoming budget. Additionally, for the upcoming few years, imports are probably going to be subject to concessional duties while domestic production of electrolysers grows.

It is essential to decarbonize not only the energy sector but also other industries including steel, cement, transportation, refining, etc. if India is to reach its net zero goal by 2070. Green hydrogen can assist businesses in reducing their carbon footprint.

As was already noted, creating a green hydrogen ecosystem requires a significant capital investment. These ventures won’t be able to be funded by conventional financing. The financial sheets of the promoters will have to provide a significant portion of the capital. A corporation must therefore take many risks and invest a lot of money to diversify along the entire value chain for green hydrogen. Collaborations are therefore required for India to successfully create green hydrogen and its derivatives.

Collaborations can assist businesses in conducting their core operations while also decarbonizing and switching to clean energy.

One such instance is the signing of a joint venture (JV) agreement by the Indian Oil Corporation (IOC) and NTPC in July 2022. By December 2024, the JV will supply up to 650 MW of continuous renewable energy to the IOC refineries to meet their energy needs.

IOC is investing heavily in green hydrogen. A tripartite agreement was also inked by Larsen & Toubro (L&T) and ReNew Power with IOC for the delivery of green hydrogen on an industrial scale. The trilateral partnership combines the expertise of L&T in engineering, procurement, and construction (EPC) projects with that of IOC in petroleum refining and its presence throughout the energy spectrum, as well as ReNew Power’s strength in producing utility-scale renewable energy solutions.

According to worldwide trends, industrial clusters include the creation of green hydrogen. Industrial clusters will be home to several organisations, each with a unique set of skills, such as end users, logisticians, and manufacturers of green hydrogen. Therefore, cooperation between all of these groups inside a cluster is crucial. India is using this model as well. The country’s most popular location for green hydrogen projects in Mangalore.

Indian businesses are cooperating and utilising their skills. They have already begun working together. Given that the government is laying out its specific net zero aims or consumption targets for certain sectors, if such partnerships are effective, many more players will probably follow.

Since green hydrogen is a new technology, all businesses are experiencing learning curves. Government support in the form of appropriate frameworks and policies, financial investment, and—most importantly—strategic cooperation between participants in the value chain can improve India’s position as a global leader.

source: Money Control