India’s clean molecule bet

India, despite being a fast-growing nation with an enormous energy appetite, believes that the end-of-century global warming goal of 2°C is not enough and we must target 1.5°C to avoid climate disasters. As the second most vulnerable country to climate change, India is now leading the climate war with a clean molecule as ammunition: green hydrogen. India presently imports $160 billion worth of fossil fuel energy and is likely to double it in the next 15 years. COP26 in Glasgow presents India with an opportunity to present its decarbonisation strategy based on renewable energy, storage and green hydrogen to the world. Electricity contributes only a fraction to the overall energy basket. Almost 80% requirements are met by fossil fuels like oil, gas and coal. Sectors that utilise solid and liquid fuels cannot be powered by electricity due to technical factors. This is where hydrogen has a critical role to play. Hydrogen will help India and the world to decarbonise ‘hard to abate’ sectors such as steel, copper, fertiliser, cement, oil refining and long-distance transport. Green hydrogen is produced using electrolysis of water with zero-carbon electric power. The steep reduction in solar and wind power prices in India makes green hydrogen an ideal production route. Green hydrogen will leverage India’s most abundant solar and wind resources and will fast-track the country towards zero-energy imports. In addition, India has rich land resources, a large coastline and world class clean-energy project execution capabilities to become a global hub for green hydrogen and derived products. The world is mandating and demanding green products with mechanisms such as the European Union carbon tariff. Green hydrogen is a stellar opportunity not only to reduce our emission and energy imports, but also to build scale and export capabilities in high-value green products such as green steel, green ammonia and high-tech components.medium nocaption87342323 On green hydrogen, India needs a five-pronged strategy.First, enabling policies to reduce green hydrogen costs. Power costs including generation and transmission contribute to more than 70% of green hydrogen cost. As it is cheaper to transport electricity than hydrogen, initiatives such as transmission and distribution waivers, surcharge waivers and low taxes/duties will help reduce green hydrogen costs by enabling the electrolysis facilities to be set up closer to demand centres. Second, reducing prices of green hydrogen. India is estimated to consume 11.7 million tons of carbon-intensive industrial grey hydrogen by 2030, primarily in the refinery and fertiliser sector, twofold of the 5.6 MTs today. India must ensure that a large proportion of the upcoming new hydrogen capacity should be green in addition to mandating a fraction of existing capacities to go green. Long distance transport sector can also provide additional demand in the form of hydrogen-derived ethanol or hydrogen fuel cells. India is targeting 5 million tons of zero-carbon hydrogen production by 2030 serving both existing and new applications. This should radically bring down the price of hydrogen from the present $4 per kg to $1 by 2030.Third, preparing sunrise sectors like green steel for green hydrogen is critical for creating vibrant clean export capabilities in India. This is one of the few countries whose steel demand is growing rapidly, it is set to triple its steel production by 2030. This is an excellent opportunity for the Indian steel industry to create the world’s largest green steel capacity. It is estimated that with government support and ambitious private initiatives, around 15 MTs of high-margin export-oriented green steel capacity can be created in India by 2030. Fourth, manufacturing and innovation capabilities are critical to achieve true Atmanirbharta in the green hydrogen industry. To address the low supply of electrolysers in the world, India is building capacities for the production of 20 GW of long-lasting electrolysers in the coming decade. As a nascent field, R&D investments become critical to the success of the Indian electrolyser industry, where the roles of venture capital and academia-industry partnerships are imperative. Fifth, decarbonisation is a global agenda and India can also enable the net-zero ambitions of our East Asian allies. Scaled-up green ammonia synthesis in the Indian coast can be a historical opportunity to export energy. A well-designed alliance with Korea, Singapore, Taiwan and Japan will enable win-win partnerships. With proactive collaboration between innovators, entrepreneurs and government, green hydrogen has the potential to drastically reduce CO2 emissions, fight climate change, and put India on a path towards net-zero energy imports. It will also help India export high-value green products making it one of the first major economies to industrialise without the need to ‘carbonise’. As highlighted by IPCC the world must achieve net zero by 2050. This should be done on the principle of common but differentiated responsibilities ensuring climate justice. Developed countries must advance their net zero years and commit to short-term goals rather than constantly shifting the goal post at the cost of the developing world. COP26 in Glasgow is the perfect context to tell ourselves that we can become a major player in climate mitigation – via green hydrogen. The writer is CEO, Niti Aayog. Views are personalIllustration by Ajit Ninan