What is Green Hydrogen?

India has committed to reducing carbon emissions as a signatory to the Paris Agreement on climate change¹. Hydrogen has the potential to reduce and replace the demand for fossil fuels in industries such as steel, refineries, and fertilisers and in the transport and power sectors. It can help in advancing India’s decarbonisation efforts. 

Chemically, hydrogen is colourless; however, its source of production determines its colour-coded description. For example, green hydrogen refers to hydrogen produced via renewable energy sources; grey hydrogen is produced via natural gas; and black/brown hydrogen is produced via coal. In 2020, India consumed approximately 5.6 million tonnes of hydrogen and most of this was produced from natural gas². The demand for hydrogen is expected to increase five-fold by 2050³. Hydrogen produced from renewable energy can go a long way towards catering to this demand and can help decarbonise industries and the transport and power sectors, thus enhancing the country’s energy security.  

Green hydrogen is produced via the electrolysis of water. It is a zero-carbon energy-vector and chemical feedstock and can deepen renewable energy markets across industries, sectors, and geographies and can be used for both grid-scale supply and off-grid storage. Globally, green hydrogen production is at a nascent stage and accounts for only one per cent of the global demand for hydrogen. It is also the most expensive hydrogen production process and is at least two times more expensive than grey hydrogen⁴. A comparison of green hydrogen with other forms of hydrogen is presented in the table below.

Table 1 – Hydrogen production: technology, cost, and market

Source: CEEW analysis

Relevance

Green hydrogen can play an important role in enhancing India’s decarbonisation efforts, particularly in its industrial, transport, and power sectors. Realising its potential, the finance minister announced the launch of the National Mission on Hydrogen in her budget speech of 2021–22⁵The focus of the mission is lowering the cost of hydrogen production and commercialising green hydrogen. Industrial and energy firms, as well as government departments and ministries, have responded enthusiastically to this announcement. For example, recently, to give a fillip to the hydrogen ecosystem, the Ministry of Petroleum and Natural Gas (MoPNG) notified the roll out of 7–8 green hydrogen pilot plants by its oil and gas PSUs by 2021⁶. Further, on the industry side, a consortium of industrial and energy firms called India H2 Alliance has been formed to explore opportunities in India for green hydrogen production⁷. India’s transition to a green hydrogen economy can have huge macroeconomic dividends for the country in terms of jobs, growth, and sustainability.

Who should care?

• Policymakers
• Steel manufacturing companies
• Fertiliser manufacturing companies
• Refineries
• Electricity distribution companies
• Companies in the transport sector
• Renewable energy developers and investors