Hydrogen mission may undermine climate goals

Pritam Singh, Professor Emeritus, Oxford Brookes Business School
Simon Pirani, Honorary Professor, University of Durham, UK

THE National Green Hydrogen Mission adopted by the Union Government in January is a major policy initiative, and it is a sign of the poverty of Indian politics that it remains so obsessed with the elections that this policy has not been subjected to the public debate it deserves. The absence of any critical evaluation by India’s Opposition parties of this initiative, which has major implications for India’s development path, is staggering.

The Indian Government is poised to offer energy companies subsidies to set up hydrogen ‘hubs’, but how this aligns with climate policy and social justice goals remains unexplained. As part of the hydrogen mission, companies such as Reliance and Indian Oil will be invited to bid for money from the Rs 20,000 crore ($2.4 billion) fund. There will also be money to manufacture electrolysers, needed to make green hydrogen, and subsidies for fertiliser and steel makers to buy it.

But the hydrogen mission has been surrounded by hype that raises unjustified expectations. The External Affairs Ministry claimed recently that hydrogen could be “our main source of energy in future.” But that will never happen.

Even if the government meets its ambitious target of producing 10 million tonnes of green hydrogen each year, it would still only provide about 1/15th of the energy that India gets from coal. The very idea which runs through government documents, that India will become a major exporter of hydrogen, is questionable.

India may need 6 million tonnes/year of green hydrogen to displace the grey hydrogen it now uses for fertiliser manufacture and in oil refineries.

Ending the use of grey hydrogen is a priority; it is a global warming nightmare, as for each tonne manufactured, 10 to 18 tonnes of carbon dioxide is released into the atmosphere.

Before exporting hydrogen, India should also weigh up whether it can be used to displace some of the 160 million tonnes of coal, and more than 30 billion cubic metres of gas, which it imports annually.

Green hydrogen is made by electrolysis — feeding an electric current, produced from renewables such as wind or solar power, into water. There are no direct greenhouse gas emissions, but the process requires a huge amount of electricity and water.

A public discussion is urgently needed about the comparative costs of hydrogen and the burden on resources, and about whether investing in hydrogen will help or hinder climate policies and tackling social inequality. On costs, the Ministry of New and Renewable Energy asserts that green hydrogen will be cost-competitive with grey hydrogen by as early as 2026.

This is risky. Green hydrogen now costs between $3 and $8 per kg, compared to $0.8-1.7 per kg for grey hydrogen. The International Energy Agency projects that the cost of green hydrogen could fall to $1.4-3.2 per kg, but only by 2050. The International Renewable Energy Agency is more optimistic, and reckons green hydrogen costs “could” (not “will”) fall below $2 per kg by 2030, while the CRU, commodity markets analysts, say they do not expect green hydrogen to be available for less than $3 per kg, even in 2050.

Markets have failed many times to bring about the economic shift needed to tackle climate change, and the danger is that they will fail once again.

As for resources, the Renewable Energy Ministry claims that India can supply ‘abundant’ electricity from renewables. But energy researchers urge caution. Scholars at the Florence School of Regulation estimate that to implement the National Green Hydrogen Mission, India would need 50 billion litres/year of demineralised water supply, and several parts of India are “already severely water-stressed”. Analysts at The Energy and Resources Institute (TERI) caution that shortage of unused land will impede solar and wind capacity construction.

The manufacture of electrolysers is also a bottleneck. Now, the world’s manufacturers are turning out 8 GW (gigawatts) of electrolysers each year. To meet the government targets, India could need 12 years’ worth of current world supply, and its own electrolyser production capacity right now is negligible. Many of these obstacles may be overcome, even if not at the speed that officials suggest.

But there is a more fundamental question — to contribute to averting dangerous climate change, should India prioritise hydrogen, or use its renewable electricity to displace coal consumption? The hydrogen mission aims to produce 5 million tonnes/year of green hydrogen by 2030, which would need about 120-125 GW of renewable electricity generation capacity. That means doubling the amount of electricity India gets from solar panels and wind farms.

But that electricity could be fed into the electricity grid, which would allow India to retire 30 or 40 large (1.5 GW) coal-fired power stations. Coal burning and coal imports could be cut, helping to deal with the global warming threat and air pollution. A report by TERI points out: “Hydrogen production from renewables is an energy-intensive process, and direct electrification should always be preferred wherever possible.”

That is because if you use 10 units of energy (as electricity) to make hydrogen, the hydrogen you produce only contains seven units of energy. If you compress it and transport it, you use up another three units. So it is always more energy-efficient to use electricity directly, than to turn it into hydrogen. Despite such expert opinion, the government is offering hydrogen producers preferential terms to buy electricity, including waiver of inter-state transmission charges.

This amounts to a privileged carveout for the industries that use hydrogen, while the electricity sector’s problems, including debts, carbon-wasteful inefficiency and patchy access, remain unresolved.

The fight to forestall dangerous climate change must go hand in hand with policies that address social inequality. But there is little evidence of this in the government’s approach.

On the contrary, the National Green Hydrogen Mission dovetails with the business plans of India’s most powerful companies, posing the danger that the poorest sections of society will be left still further behind energy-wise. India’s hydrogen enthusiasts include Reliance Industries, which is considering investing in hydrogen production in Australia, and Indian Oil, which says only half the hydrogen it makes over the next decade will be green. Last year, the Adani Group announced a $50-billion hydrogen development project in partnership with TotalEnergies, a French oil and gas company. But in the wake of the Hindenburg-Adani row, TotalEnergies pulled out, and now Adani has too.

For hydrogen to be used to meet climate and development goals, these issues need to be addressed. Otherwise, it could turn into expensive greenwashing for energy companies, which in turn would postpone the action needed to move away from fossil fuels.