Current Affairs 2022: Green Hydrogen Policy

By Ponnila SM 

The announcement of the Green Hydrogen Policy is a reflection of India's commitment to net-zero emissions.

Green Hydrogen Policy

Prime Minister Narendra Modi on India’s 75th Independence Day had made a compelling case for renewable energy and introduced the National Hydrogen Mission. The mission's objective is to help the government in achieving its goal of producing 5 million tonnes of "green hydrogen" by 2030, as well as the development of renewable energy capacity that goes along with it.

On February 17, 2022, the Union Power Ministry announced the green hydrogen and green ammonia policy. Green Hydrogen and Green Ammonia are two alternative fuels and chemicals that can be used to replace fossil fuels. Because the production of these fuels requires a lot of energy, one of the most significant factors for the country's long-term power generation is utilising renewable energy to produce green hydrogen and green ammonia.

As a result, the government has been promoting a variety of steps to make the shift from fossil fuels to green hydrogen and green ammonia easier. It allows manufacturers to deposit any excess renewable energy generated with Dis-Coms (power distribution companies) for up to 30 days and then use it as needed.

Highlights of the Green Hydrogen Policy:

The policy includes a variety of incentives to encourage investors in participating in green hydrogen and green ammonia production. The policy promotes the generation of renewable energy, as it is the primary element in the production of green hydrogen. In turn, this will contribute to achieving international clean energy goals, as outlined by the Ministry of Power.

• Green hydrogen and green ammonia producers can obtain renewable energy from the power exchange or build their own renewable energy production or collaborate with any other producer worldwide.
• Within 15 days after receiving the application, open access will be provided.
• The green hydrogen and green ammonia producers can deposit their surplus renewable energy with the distribution firm for up to 30 days and then take it back when needed.
• Distribution licensees can also obtain and deliver renewable energy to green hydrogen or green ammonia producers in their states at reduced prices, which will only comprise procurement costs, operating charges, and a minimal margin defined by the State Commission.
• Manufacturers of green hydrogen and green ammonia will be granted a 25-year waiver of inter-state transmission tariffs for projects completed by June 30, 2025.
• To prevent any administrative delays, producers of green hydrogen & green ammonia and renewable energy plants will be granted priority access to the grid.
• The value of the Renewable Purchase Obligation (RPO) will be offered as an incentive to green hydrogen and green ammonia manufacturers and distribution licensees, who are using renewable energy.
• Priority will be given to renewable energy capacity put up for the purpose of producing green hydrogen and green ammonia connecting to the ISTS at the generating end and the green hydrogen and green ammonia at the production end.
• Green hydrogen and green ammonia manufacturers will be allowed to build warehouses near ports to store green ammonia for export or usage by shipping. The respective port authorities will provide land for this purpose at reasonable prices.
• The Ministry of New and Renewable Energy (MNRE) will establish a single platform for engaging in all activities, including legislative permissions, in a reasonable timeframe, to enhance the ease of doing business.

Significance of the Green Hydrogen Policy:

Indian Oil Corp. (IOC), India's largest oil refiner, expects that GHP methods would cut the cost of green hydrogen generation by 40 to 50 per cent. Energy sources like green hydrogen and green ammonia are critical for any country's long-term energy security. Green hydrogen will play a crucial role as a competitive feedstock in India's shift from oil and coal. The GHP establishes a strong foundation for India's development of a successful green hydrogen sector.

Problems Associated with the Green Hydrogen Policy:

• India's current hydrogen consumption is at 6.7 million tonnes (MT), with the need predicted to increase by 2030. The majority of it is used as processing fuel in oil refineries, fertiliser plants and steel mills to generate manufactured goods. It's currently grey hydrogen that comes from fossil fuels like natural gas or naphtha.
• The cost of renewable power has dropped dramatically as a result of expanded renewable power generation installation, making green hydrogen more practicable, but it is still too costly to be competing with grey hydrogen.
• The policy's incentives will help cut the cost of green hydrogen generation, but the fundamental problem will be to make it as economical as grey hydrogen, which is now four to six times cheaper.
• Waiving centralized open access costs would cut manufacturing charges, but there are state-level open access costs that may negate the intended incentives. Consequently, coordinated initiatives are required to eliminate this variance in charges and maximise the positive impact of policy incentives.

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