Govt charts course for usage of new-age fuel

India is considering a proposal to make it mandatory for fertilizer plants and oil refineries to use green hydrogen as part of plans to cut the nation’s dependence on fossil fuels.

A draft note prepared for the Union cabinet and seen by Mint said fertilizer plants and oil refineries may have to use green hydrogen to meet 0.15% of their total hydrogen requirements, starting 2023-24, and ramping it up to a tenth of their total requirements within six years.

Indian companies, including Reliance Industries Ltd, have been gearing up to leverage opportunities presented by the transition to cleaner energy. RIL has announced plans to build an electrolyzer giga factory and a fuel cell giga factory as part of its pivot towards clean energy.

The government plans to implement the Green Hydrogen Consumption Obligation (GHCO) in fertilizer production and petroleum refining, similar to what was done with renewable purchase obligations (RPO). RPOs require electricity distribution companies to buy a fixed amount of renewable energy to cut reliance on fossil fuels. India’s total hydrogen demand is expected to touch 11.7 million metric tonnes (mmt) by 2029-30 from the current 6.7 mmt.

India’s strategy will be to leverage scale for its ambitious green hydrogen plan on the likes of its renewable energy programme, leading the country to run the world’s largest clean energy programme.

According to the draft cabinet note, GHCO is proposed to be raised from 0.15% in 2023-24 to 0.25% in 2024-25 and 0.5% in 2025-26. Subsequently, it may be raised to 1.5%, 3.5% and 6.5% in 2026-27, 2027-28 and 2028-29, respectively, with the 10% mark targeted for 2029-30.

The draft cabinet note has been circulated by the ministry of new and renewable energy (MNRE) to the departments of fertilizer, economic affairs, heavy industries, science and technology, revenue, promotion of industry and internal trade, NITI Aayog and the ministries of petroleum and natural gas, power, road transport and highways.

Around 54% or 3.6 mmt of India’s annual hydrogen consumption of 6.7 mmt is utilized in petroleum refining and the rest in fertilizer production. This is, however, ‘grey’ hydrogen produced from fossil fuels such as natural gas or naphtha. “The proposal for mandating green hydrogen consumption by fertilizer producers and petroleum refineries is under consultation. Details of quantum of mandated share, required RE (renewable energy) capacity, etc., are yet to be firmed up,” said an MNRE official.

Power and new and renewable energy minister Raj Kumar Singh told reporters recently that the government plans to start green hydrogen purchase obligations on the lines of RPOs.

Given India’s dependence on energy imports, the playbook involves leveraging the country’s large landmass and low solar and wind tariffs to produce low-cost green hydrogen.

With the current cost of green hydrogen produced by electrolysis estimated at around ₹350 per kg, the plan is to more than halve it to ₹160 per kg by 2029-30. The government also aims to extend the production-linked incentive (PLI) scheme for manufacturing electrolyzers to produce green hydrogen.

Green hydrogen is produced by splitting water into hydrogen and oxygen using an electrolyzer that may be powered by electricity from renewable energy sources such as wind and solar. Hydrogen can be used for both fuel cell and internal combustion engines. It is also being leveraged for applications in sectors such as chemicals, iron, steel, transport, heating and power.