Green hydrogen initiatives: Is India overlooking key challenges?

By NS Venkataraman*

As nations worldwide grapple with the urgent need to minimize or completely phase out fossil fuels—specifically crude oil and coal—to combat the release of harmful greenhouse gases like sulfur dioxide, carbon dioxide, and nitrous oxide, there has been a significant global momentum towards promoting eco-friendly green hydrogen production. This strategy aligns with the pressing environmental imperatives of our time.

India is considered by some sections as a proactive player in this arena, implementing a variety of measures to enhance green hydrogen production and positioning itself as a key contributor to these sustainability efforts. They site the Indian government's Strategic Intervention for Green Hydrogen Transition Programme as a significant step for the advancement of green hydrogen initiatives.

India's National Green Hydrogen Mission aims to produce 5 million metric tons of green hydrogen annually by 2030, backed by an allocation of ₹12,500 crore in incentives. To achieve this goal, India plans to develop a substantial electrolyzer manufacturing capacity of 15,000 MW, requiring an investment of over ₹40,000 crore. About 15 companies are currently in the planning stages to develop this capacity. Reportedly, several green hydrogen projects are now in either advanced implementation phases or in the planning stages, taking advantage of government incentives.

The Indian government’s initiatives appear to have attracted interest from international firms. For instance, U.S.-based Ohmium has launched a 2,000 MW plant in India and intends to establish a new electrolyzer and green hydrogen facility in Tamil Nadu with an investment of approximately ₹400 crore.

Similarly, A M Green Ammonia B V has finalized plans for a 5 million metric ton green hydrogen project in Kakinada, Andhra Pradesh, aimed for completion by 2030, while Singapore's Sembcorp Industries has announced a green ammonia plant in Tuticorin, Tamil Nadu, with a projected capacity of 200,010 metric tons per year, representing an investment of ₹36,388 crore.

Identifying weak links

Despite the enthusiasm from governments and industry players about green hydrogen, there are critical weaknesses in the development chain that warrant attention before embarking on large-scale projects. It’s easy to overlook these gaps amid the flurry of announcements regarding investments and future capacities.

One of the main concerns is the production cost of green hydrogen, which is currently significantly higher than that of grey hydrogen produced from fossil fuels. Presently, green hydrogen generated through water electrolysis costs around $5 to $6 per kilogram, compared to approximately $2 for grey hydrogen.

Reducing electrolyzer costs and improving their efficiency—much of which is still in developmental stages—will be crucial in making green hydrogen competitive. Additionally, producing green hydrogen demands renewable energy sources like solar and wind power. While the cost of renewable energy has decreased, questions remain about its reliability and consistency.

Given uncertainties about viability and affordability of green hydrogen production, one wonders if we are putting the cart before the horse

Solar and wind energy production is subject to seasonal variations, and their capacity utilization averages only about 20%. This unpredictability raises concerns about whether sufficient renewable energy can be generated to meet the demands of burgeoning green hydrogen initiatives.

Current global demand for grey hydrogen stands at around 96 million metric tons per year, and plans to replace even a quarter of this with green hydrogen over the next decade may be overly optimistic, given the uncertainties regarding production costs and renewable energy supply stability.

Transportation challenges

The logistics of transporting green hydrogen also present unresolved issues. There are no clear, globally accepted guidelines for the costs associated with transporting green hydrogen, nor is there consensus on whether existing natural gas pipelines can be adapted for hydrogen transport. Technical complexities, such as the risk of embrittlement in pipelines and challenges related to hydrogen leakage and compression, further complicate these matters.

Given these uncertainties about the viability and affordability of green hydrogen production, the current fervor surrounding it raises questions about whether we are putting the cart before the horse. Countries, including India, are investing millions with the hope that production costs will drop and that renewable energy sources will become more stable and widely available.

It appears likely that massive subsidies will be essential for sustaining green hydrogen and ammonia projects. Given the expense associated with producing green ammonia—integral for fertilizers—costly green hydrogen could push production expenses beyond farmers' reach, emphasizing the need for persistent government support.

In contrast, the Dutch government has initiated a subsidy scheme worth €998 million to bolster green hydrogen production, providing grants covering up to 80% of investments along with additional support over several years, highlighting the global commitment to green hydrogen as a future fuel.

Ultimately, while the backing for green hydrogen projects reflects a global push towards sustainable energy, the current investments must be viewed as calculated risks amidst significant challenges ahead.

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*Trustee, Nandini Voice For The Deprived, Chennai

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