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Clean Energy | Betting on hydrogen is the right way to go ahead

Globally, investment commitment for hydrogen adds up to $500 billion in 359 projects, including 131 announced since February. Top companies in India have done well to join the competitive, futuristic race. It is time for the government to ensure proper support

September 14, 2021 / 03:51 PM IST

Hydrogen is the new aspiration in India’s energy landscape that has the potential to wipe out the country’s annual fossil-fuel import bill of a staggering $160 billion, and place Indian entrepreneurship at the forefront of the green industrial revolution that is sweeping the planet.

Hydrogen is increasingly being seen as the ideal green fuel that can replace polluting fossil fuels in the world where a strong consensus against fossil fuels has emerged as climate change has caused severe droughts, floods and extreme temperatures.

However, hydrogen as a source of genuinely clean energy is still work in progress. The problem is that globally, almost the entire production of hydrogen is based on the use of fossil fuels, which dents its green credentials even though its use to power fuel-cell based motors is totally emission free.

The solution is to use clean electricity to split water into hydrogen and oxygen, but the cost of doing this is currently prohibitive. Hydrogen produced with fossil fuels is available at $1.80 a kg, and producing it with renewable resources costs between $3 to $6.6 per kg, according to a report by S&P Global.

This cost needs to fall below $2 to make it compelling. Here, Mukesh Ambani, the chairman and managing director of Reliance Industries Ltd. has made an important statement: The company will achieve this target in this decade. “I’m sure that India can set an even more aggressive target of achieving under $1 per kg within a decade,” Ambani said at the International Climate Summit 2021.

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The company has announced a Rs 75,000 crore (about $10 billion) plan to build four factories for clean energy, including a plant to make green hydrogen, and one for fuel cells to convert hydrogen into energy.

This is a globally very significant investment, and is perhaps the first time in India’s history when a company is seriously striving to be a world leader in an emerging technology. India’s automobile industry is also taking important steps in this direction, and the government needs to passionately support all such initiatives.

The government has begun well by announcing its hydrogen mission and support for various initiatives for hydrogen-power vehicles. These include six fuel cell buses by Tata Motors and 50 hydrogen-enriched CNG buses from the Indian Oil Corp with the support of the Delhi government. Mahindra & Mahindra has been involved in developing two hydrogen-fuelled engines, hydrogen-diesel dual fuel cars and three-wheelers that use hydrogen. Government institutions such as the Council of Scientific and Industrial Research (CSIR), the National Chemical Laboratory and the Central Electrochemical Laboratory have also developed fuel cell cars.

Vehicles powered by hydrogen have clear advantages: No battery or charging required, no heavy dependence on metals and materials where China dominates supply, and much quicker refuelling. Global auto majors such as GM, Hyundai and Toyota are investing heavily in hydrogen. Hyundai plans to be the first automaker to use fuel cells in all its commercial vehicles by 2028, according to a report.

Globally, investment commitment for hydrogen adds up to $500 billion in 359 projects, including 131 announced since February 2021, according to a report prepared by McKinsey & Co and the Hydrogen Council, a CEO-led initiative of companies pursuing hydrogen technology.

India and its top companies have done well to join the competitive, futuristic race. Now, it is time for the government to ensure proper support. It has declared its intention to mandate green hydrogen purchase for refiners and fertiliser makers, starting with 10 percent and raising it later to 25 percent. It is also planning a Viability Gap Funding for green hydrogen funding in heavy mobility, and considering initiatives for the steel sector.

Such initiatives are necessary to create demand, just as solar and wind energy have been supported by Renewable Purchase Obligations in power distribution and Viability Gap Funding in highways.

The government needs to make sure that such initiatives are rolled out in consultation with industry, and that they are not derailed by politics. Opposition parties have made it a habit to criticise every initiative that helps the corporate sector, but this should not derail sensible policies, as the Union government has already demonstrated.

But in formulating policies, the government should remember that India’s world-scale advances in wind and solar energy are primarily based on private investment. Politicians who may oppose appropriate policies for hydrogen, the most abundant element in the universe, should remember that rock music legend Frank Zappa probably had them in mind when he famously said: “There is more stupidity than hydrogen in the universe, and it has a longer shelf life.”

Disclosure: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.
Himangshu Watts

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