India to reduce green hydrogen cost; seeks ‘cheap finance’ for speedy transition

Green hydrogen is a fuel generated from water and renewable electricity, though the fuel is still far from commercial viability

Amitabh Kant
Niti Aayog CEO Amitabh Kant said that green hydrogen will be used to decarbonize “hard-to-abate" sectors like refiners, fertiliser makers and steel producers | File Photo: PTI

India is seeking to reduce the cost of producing green hydrogen to $1 per kilogram from $5-$6 at present in order to encourage industry to utilise greener energy, Niti Aayog CEO Amitabh Kant said in an interview with Bloomberg Television. India also wants access to cheaper financing to help fund the transformation.

In February, India, the world’s third-largest carbon emitter, unveiled a plan to become a centre for the production and export of green hydrogen, a fuel generated from water and renewable electricity, though the fuel is still far from commercial viability.

“Unless cheap finance is available to be able to rapidly enhance both renewable and non-renewable, this transition will be difficult to speed up for a long period of time,” said Niti Aayog CEO Amitabh Kant. “Finances at low costs are critical.”

Also read: Why does India need green bonds?

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Green hydrogen is defined as hydrogen produced by splitting water into hydrogen and oxygen using renewable electricity. This is a very different compared to both grey hydrogen and blue hydrogen, which are traditionally produced from coal or methane (CH4), split with steam into CO2 – the main culprit for climate change – and H2, hydrogen. The only difference between grey and blue hydrogen is that the latter uses additional technologies to capture the CO2 produced when hydrogen is split from methane (or from coal) and store it for long term.

Reliance shows interest

In January, Reliance Industries chairman Mukesh Ambani announced intentions to invest $75 billion in renewable energy infrastructure, including power plants, solar panels, and electrolyzers. According to analysts, Reliance Industries is likely to choose hydrogen to sidestep India’s wholesale energy market, which is controlled by financially distressed companies and plagued by late payments, reports Livemint.

New Delhi wants global funders including the World Bank to structure guarantee programs to help access funds at low rates, Kant said. Green hydrogen will be used to decarbonize “hard-to-abate” sectors like refiners, fertiliser makers and steel producers, he said.

Also read: What’s driving Centre’s latest ₹12,031-crore green energy plan

India, one of the world’s largest importers of fossil fuels, is also looking to reduce its dependency on oil, since its import bill is set to nearly treble to $300 billion in the next decade, according to Kant.

Path to net-zero carbon emission by 2070

Prime Minister Narendra Modi announced intentions in November to make India a net zero carbon emitter by 2070 and a 50 per cent renewable energy consumer by the end of the decade, prompting policy changes.

It needs about $25 billion to create a domestic supply chain with national installed electrolyser capacity of 25 GW producing 5 MT of Green Hydrogen by 2030, according to the India Hydrogen Alliance, which counts Reliance Industries Ltd and JSW Steel Ltd among members.

India will continue to focus on electrifying two and three-wheelers as well as public buses, Kant said. The government will not push for electrification of four wheelers in the Indian market given private sector interest, he said.

As it is, the cost of electrifying transport is expected to fall after India’s recent tender for more than 5,000 electric buses got bids at prices cheaper than diesel and combustion buses, Kant said.

(With agency inputs)

Also read: Green energy is on surge, but can it fill the bottomless pit of demand?

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