Syllabus: Climate and Energy
Source: DTE
Context: A recent joint report by FICCI & EY highlighted that India can capture 10% of the global green hydrogen market by addressing economic and infrastructural challenges.
- The report urges redirecting fossil fuel subsidies and introducing an industry use mandate to create reliable domestic demand.
About Green Hydrogen
What is Green Hydrogen?
- Produced by electrolysis of water using renewable energy → hydrogen + oxygen.
- Zero-emission fuel with applications in steel, mobility, fertilisers, and shipping.
- Crucial for reducing greenhouse gas emissions and achieving net-zero goals.
India’s Current Efforts
- National Green Hydrogen Mission (2023)
- Outlay: ₹19,744 crore.
- Target: 5 million tonnes (MMT) production capacity annually by 2030.
- Requires 125 GW renewable capacity, electrolyser manufacturing, and water logistics.
- Pilot Projects
- Five pilot projects funded with ₹208 crore.
- Deployment of 37 hydrogen-powered vehicles (15 fuel cell, 22 hydrogen ICE).
- 9 refuelling stations to be operational in 18–24 months.
- Cost Trends
- Current cost: $4–4.5/kg.
- Projected by 2030: $3–3.75/kg (due to cheap renewable power, tax incentives, and efficiency gains).
Challenges
- High Early-Stage Costs: Green hydrogen costs are ~2x grey hydrogen, due to transmission losses, capex gaps, and efficiency issues.
- Fossil Fuel Incentives: Subsidies for carbon-intensive fuels distort markets, making hydrogen adoption less competitive.
- Infrastructure Deficit: Need for large-scale renewable integration, water logistics, storage, and pipelines.
- Demand Uncertainty: Industry adoption is limited; investors hesitate without guaranteed offtake.
- Global Competition: EU, Japan, South Korea already investing heavily in hydrogen import corridors.
Recommendations from Report
- Redirect Subsidies: Shift financial incentives from fossil fuels to renewables and hydrogen projects.
- Industry Use Mandate: Introduce green hydrogen purchase obligations across industrial sectors (steel, fertiliser, shipping).
- Carbon Pricing Mechanism: Implement carbon tax to make green hydrogen more competitive against fossil fuels.
- Demand Aggregation: Structured procurement + payment security mechanisms to ensure competitive prices and reliable contracts.
- Export Strategy: Position India to export 10 MMT annually to EU, Japan, South Korea.
- Innovation & Research: Boost domestic electrolyser production, scale startups, and incentivise private sector R&D.
Global Context
- Market Size: $8.78 bn (2024) → projected $199.22 bn (2034) at 41.5% CAGR.
- India’s Market Projection: $2.81 bn by 2030, CAGR 56% (2024–30).
- Global concern: 14.3 million zero-dose children (2024) indicate immunity gaps, but for hydrogen, analogy is adoption gaps across developing nations.
Conclusion
India has the strategic potential to emerge as a green hydrogen leader, leveraging its vast renewable base, low-cost power, and geographic advantages. But success will depend on redirecting fossil fuel subsidies, creating domestic demand mandates, scaling infrastructure, and ensuring global partnerships. With timely reforms, India could secure a 10% global market share by 2030, becoming a cornerstone in the global clean energy transition.
