Green Hydrogen refers to hydrogen produced using electricity generated by clean energy sources like solar or wind power. The government on June 30 announced a ₹17,490-crore Green Hydrogen package. Where should the money be spent?

Despite its potential, the government should not subsidise its production and use. Green Hydrogen is 6-8 times more expensive than regular fuels, and the technology is still evolving. The money would be best spent on research and development of Green Hydrogen production and subsequent supply chain.

Why world is talking about the Green Hydrogen?

As the world transitions away from fossil fuels towards cleaner energy sources, we have hit a road block. Solar or wind energy are not suitable for energy dense applications like aircraft or automobile fuel or melting steel. Green Hydrogen overcomes this limitations by storing energy in a dense chemical form, enabling its use in energy-intensive sectors.

For example, it can power fuel cells in vehicles, trucks, and ships. It can replace coke in steel-making, facilitating the production of green steel. Moreover, it can be burned in combustible turbines to generate electricity for distribution. These applications of Green Hydrogen are free from carbon dioxide emissions.

Not the best option

Seven Factors make Green Hydrogen an unviable option for India for at least next 10 years.

High cost: Here is a rough guide to the average cost of electricity generated in cents/kilowatt-hour (kWh) from various sources. Natural Gas (2-5), Coal (5-10), Grey Hydrogen (4), Dark Blue Hydrogen (6), Light blue Hydrogen (8). Wind (2-4), Solar (4-6). The cost for Green Hydrogen made from solar/wind is the highest at 22.5 cents per kWh.

Low production efficiency: The production process called electrolysis starts when the electricity from wind or solar sources is passed through a large box called an electrolyzer filled with clean hot drinking water. The platinum cathodes and anodes in the container use electricity to break water molecules into Hydrogen and Oxygen. The Hydrogen thus produced is called Green Hydrogen. One-third of energy is lost in this process. Electrolyzers are expensive as they are yet to be standardised and mass-produced.

Pressure on drinking water supply: The primary raw material for making Green Hydrogen is clean drinking water. In Electrolysis, industrial use of clean drinking water will pressure the municipal water supply.

Low supply chain efficiency: The low density of hydrogen necessitates compression, which increases costs. Transportation requires specialised infrastructure due to hydrogen’s flammability and corrosiveness. Additionally, storage tanks must be designed to handle high pressure and low temperatures. Energy losses can occur at various stages throughout the supply chain, highlighting the importance of addressing efficiency challenges in the Green Hydrogen industry.

High safety concerns: Hydrogen is highly flammable and corrosive and needs special containers/pipelines to withstand high pressure and wear and tear. Addressing these concerns increases costs.

Green Steel cost exceeds 40-60 per cent of regular steel. To produce two million tonnes of hydrogen-based steel, about 1.5 lakh tonnes of Green Hydrogen is required which will need power from 600 to 1000 wind turbines. This would require significant capital expenditure to set up the necessary infrastructure and facilities. Furthermore, the technology still needs to be proven on a large scale.

Loss of 70 per cent of hydrogen during production to end use. Hydrogen is very light and highly volatile and hence leaks at each stage, from production to end-use.

Hydrogen is called grey, dark blue, light blue or green based on the intensity of carbon dioxide emissions into the atmosphere during its production. Grey Hydrogen accounts for almost all the hydrogen used in the world. When about half the carbon atoms emitted during grey hydrogen production are captured, the hydrogen is termed dark blue.

And if over 90 per cent of carbon atoms are captured, the hydrogen is called light blue. Hydrogen quality remains unchanged, but the name changes based on the emissions captured. The cost increases as the carbon capture increases.

Green Hydrogen is 6-8 times more expensive than the standard energy options. To bridge the cost gap the EU has committed to spending $350 billion on adopting Green Hydrogen by 2030. The US offers a $3/kg subsidy for the Green Hydrogen produced through its Inflation Reduction Act.

India Strategy

Yet, despite all hype, the private sector, globally has invested less than $30 billion on Green Hydrogen projects so far. As a result, less than one per cent of 80 MMT of Hydrogen produced annually is green. Its global energy use share may be at most five per cent by 2050.

Green Hydrogen technology and ecosystem is expected to take at least 20 years to mature and become a competitive fuel option.

At the current price, for Green Hydrogen to become widely adopted in any country, massive government subsidies and policies would be required. Therefore, while India can engage in research-level activities related to Green Hydrogen, subsidising its use may not be advisable.

Developing Green Hydrogen ecosystem is expensive. For India, experts have estimated the government support of $100 billion to produce 5.5 MMT of Green Hydrogen in the next few years. India should better invest on stabilising grid power and elevating its renewable energy share to meet our net zero goals by 2070.

In the absence of stabilised grid power, firms install captive power plants resulting in higher emissions.

India already faces hefty bills for importing minerals like Copper, Lithium, Nickel, Gallium, and Indium, crucial for setting up wind and solar facilities and producing energy storage batteries.

Indian industry should explore optimising costs by combining use of grid power and grey and blue hydrogen. This will be more cost-effective than using green hydrogen. The government must finance pilot projects for doing this.

The writer is founder, Global Trade Research Initiative