BL Explainer: Green hydrogen policy and what it seeks to achieve

What are ‘green hydrogen’ and ‘green ammonia’?

Green Hydrogen (as detailed in BL Explainer of November 28) refers to the hydrogen produced through any process that does not emit greenhouse gases. In contrast, the production of gray hydrogen results in GHG emissions, mainly carbon dioxide, because typically, hydrogen is separated from a hydrocarbon like methane (CH4), releasing the carbon. ‘Blue hydrogen’ is produced through a similar process, but the emitted GHG is captured and sequestered—not let out into the atmosphere.

Ammonia is produced by forcing nitrogen to combine with hydrogen. Again, the hydrogen is obtained in the conventional methods by separating it from methane. If ‘green hydrogen’ is used instead for making ammonia, what you get is ‘green ammonia’. Truly, however, for ammonia to be labelled green, not only should the hydrogen be green, but also the electricity used in the Haber-Bosch process, in which nitrogen and hydrogen are forced to combine at very high temperatures and pressure, should also have come from renewable sources.

What are the salient features of the Green Hydrogen policy?

The policy has essentially made it easier and cheaper for green hydrogen (GH) manufacturers to get renewable electricity. Here are its promises:

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Green hydrogen’s promise

* if a GH manufacturer wants to put up his renewable energy plant (solar, wind), permissions will be easier to get

* the GH manufacturer can ‘bank’ any surplus power with the utility for 30 days—that is, put the power into the utility’s grid and take it back within 30 days

* if the manufacturer wishes to buy RE power from a third party (and not the utility, like Tata Power, BSES, Tangedco), permission for such ‘open access’ shall be given in 15 days of application

* if the RE power supplier to the GH plant is in another state, no inter-state transmission charges shall be levied for 25 years. (These charges can vary with distance and states and can be anywhere between 25 paise to 50 paise a kWhr.) Notably, the notification does not speak about ‘cross-subsidy charges’, which is in the states’ domain, but it is expected that the government would prevail upon the state governments to waive these charges for GH

* if a ‘distribution licensee’ (power supplier) needs to buy RE to supply to GH manufacturers, the utility will sell the RE power at concessional rates

How will this notification help the cause of green hydrogen/ammonia?

The notification makes green power available cheaper and easier to GH manufacturers, addressing one of the elements required to attract them to set up plants. From the earlier policy statements, the government would likely bring more measures such as extending the PLI scheme to cover electrolyser manufacturing (supply side) and mandating green hydrogen purchase obligation on specific industries, starting with refineries and fertilisers (demand side).

Why does the notification mention ‘green ammonia’ alongside ‘green hydrogen’?

It is a demonstration of intent. Ammonia is a key chemical for fertiliser manufacture and a raw material for several other industries such as water purification, explosives, textiles and plastics. But since India does not have much natural gas, it imports ammonia around 15-17 million tonnes a year. Also, ammonia production is a significant carbon dioxide emitter, no matter where it is produced, accounting for 1.6 per cent of global GHG emissions. Now, the availability of domestically produced green hydrogen provides India with an opportunity to wean itself away from imports and make its own ammonia. Naturally, the government likes to see ammonia produced domestically. An ammonia plant linked to a green hydrogen gives a ready market for hydrogen.

What else is there to derive from the notification?

The notification says that GH manufacturers would be allowed to set up bunkers near ports for storing and exporting green ammonia. This reveals that the government is keen on it exports, which will command a premium in the market and likely fetch carbon credits. Exporting green ammonia will bring down India’s net import bill on account of this commodity.​

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