Renewable energy forms the basis for the production of Green Hydrogen. Removal of renewable energy means very clearly that hydrogen production would again depend on feedstock sourced from fossil fuel-based material, completely defeating the purpose of this clean alternative to fossil fuel-based energy. MNRE or the Ministry of New and Renewable Energy, has set a threshold for emissions that need to be met by the produced hydrogen sourced from renewables to be classified as ‘Green Hydrogen.’
This category includes all electrolysis or biomass conversion processes used to produce green hydrogen. Renewable energy also includes electricity generated from renewable sources that are stored in energy storage systems or banked with the grid.
National Green Hydrogen Mission
India has inclusively set ambitious targets under its National Green Hydrogen Mission-to be added up to 5 mmt of Green Hydrogen per year by 2030-which calls for about 125 GW of renewable energy production.
This goal also aligns with the larger renewable energy targets that India has set, including the achievement of 500 GW renewable energy capacity by the year 2030. India’s growth in renewable capacity jumped 396% over the last nine years. To help reach these goals, and has floated a number of tenders for projects around offshore wind and pumped storage.
The Solar Energy Corporation of India, or SECI, introduced initiatives that have single-handedly driven the growth of solar energy, and plans for concentrated solar power are currently being considered to increase this capacity.
India presently is the fourth contributor in global renewable energy installed capacity and wind power capacity, and fifth in solar power capacity. The all-renewable, including large hydro installed capacity reached 190.57 GW as of March 2024. Renewable energy addition in the country grew 9.83% year-on-year in 2022, with the country moving on to meet its commitment to clean energy. The Union Cabinet has approved the National Green Hydrogen Mission with an initial outlay of ₹ 19,744 crore and is expected to reduce carbon intensity by 45% by 2030 over 2005 levels.
It also aims at 50% of energy requirements from renewable sources by 2030 and is projected to reduce carbon emissions by one billion tonnes from 2023 to 2030. The Mission will create Green Hydrogen production capacity, over six lakh jobs, and decrease fossil fuel imports over INR one lakh crore, thereby reducing greenhouse gas emission abatement.
Why is India betting big on hydrogen?
- 1. Energy security: Energy security is one such aspect that has taught a lesson to the whole world in the recent pandemic situation-that diversification of energy sources and their availability across the globe is indispensable. Oil and gas market fluctuations have disrupted supply chains, causing fuel price variations. In order to achieve energy security, India needs alternatives with which one can strengthen national energy security.
- 2. Emission Targets: India currently ranks as the third-largest emitter of CO2 into the atmosphere, accounting for about 7%, and it has vowed to reduce the economy’s emission intensity by 45% no later than 2030, updating an earlier pledge made under the Paris Agreement of a 33-35% decrease.
- 3. Economic Dependencies and Balance of Trade: India is the third-largest importer of crude oil, with over 80% import dependency. It imports 54% of its natural gas and 24% of its coal requirements, hence affecting the financial balance of the country. In FY20 and FY19, India’s oil import bills were around US$101.4 billion and US$111.9 billion, respectively.
- 4. Energy Subsidies: India spends nearly US$30 billion per year on energy subsidies for oil and gas, coal, transmission and distribution, renewable energy, and electric vehicles. A small part of this subsidy can be used efficiently to build the hydrogen ecosystem and allow India to capture the full value chain of hydrogen, inclusive of its export to other countries.
State-Level Green Hydrogen Policies
Subsequently, various states of India have come up with their own policy on Green Hydrogen, which is complementary to the national mission. It has specified objectives and incentives.
Maharashtra Green Hydrogen Policy
In October 2023, Maharashtra announced its ambitious “Maharashtra Harit Hydrogen Policy” with aspirations to become the leading Green Hydrogen producer and consumer state. The policy aims at 500 KTPA of production capacity for Green Hydrogen by 2030, decarbonization in industries and the energy sector, and also exports of Green Hydrogen and its derivatives.
For this, the policy provides a gamut of incentives that includes a 30% capital cost subsidy for the first three anchor Green Hydrogen production projects, a subsidy for the first 500 hydrogen-based fuel-cell passenger vehicles for MSRTC on a maximum cap of ₹60 lakh per vehicle, the development of HRS with a maximum cap of ₹4.5 crore, and constructing hydrogen transportation pipelines up to 10 km with a limit of ₹2.5 crore.
Additionally, there is a 1% interest subsidy on hydrogen transport projects, a 100% exemption on stamp duty charges for land conversion, a 60% discount on electricity transmission and wheeling charges for 10 years, mandatory use of renewable energy for hydrogen production, and waivers and exemptions on electricity duties and surcharges. Furthermore, a grant of ₹50 per kg is provided for blending Green Hydrogen with CNG/PNG for vehicles for five years.
Odisha Hydrogen Policy
Odisha has developed an integrated Renewable Energy policy that includes Green Hydrogen and its derivatives, offering various incentives to promote green energy initiatives. Under the Industrial Policy Resolution (IPR) 2022, industries focusing on green energy, particularly Green Hydrogen and Ammonia manufacturing units, receive substantial benefits.
These include a 100% exemption from electricity duty for 20 years, exemption or reimbursement of cross-subsidy charges and additional surcharges, and a reimbursement of Rs. 3 per unit of RE purchased from local Discoms/GRIDCO for 20 years. Additionally, there is a 30% capital subsidy for plant and machinery, land provided at 50% of the prevailing concessional industrial rate, and a 50% incentive for innovations and R&D activities up to ₹10 Crore. Furthermore, a 100% incentive is provided for ESI and EPF contributions for seven years.
Complementing the IPR, the Renewable Energy Policy 2022 encourages RE projects that indirectly benefit Green Hydrogen production. This policy includes an exemption from electricity duty for RE used for 15 years, reduced wheeling charges for consuming RE, and exemption from stamp duty and other land-related charges for RE projects. Together, these policies aim to create a favorable environment for the growth and development of Green Hydrogen and its derivatives in Odisha.
West Bengal Green Hydrogen Policy
This policy launched in December 2003, by the state government of West Bengal, has recently promulgated its Green Hydrogen Policy, which will be effective for five years from the date of notification or to such time period as may be amended from time to time by the state government.
The policy aims to identify the demand centres of Green Hydrogen through GIS mapping; promote investment intention in GH₂ and GA production facilities; and establish a State Centre of Excellence to help R&D activities for techno-economic innovation to support other states. It also works on formulating procurement and trading strategies for the supply and exchange of GH₂/GA resources and employment generation through GH₂/GA development.
The key incentive component includes 100% exemption from stamp duty and land conversion charges; 100% waiver of electricity duty charges during the policy period; and banking of renewable energy power allowed for 30 days for GH₂/GA production units.
Andhra Pradesh: Green Hydrogen and Green Ammonia Policy
The Government of Andhra Pradesh notified its Green Hydrogen and Green Ammonia Policy in June 2023, with the aim of establishing the state as a major producer and feeder for export of Green Hydrogen and Green Ammonia. This policy shall be applicable for a period of five years from the date of notification thereof or till the featuring of a new policy, whichever is earlier.
The key objectives will be to achieve 0.5 million metric tons Per annum of production capacity of Green Hydrogen or equivalent to 2.0 MMTPA of Green Ammonia by utilizing the State’s Renewable Energy potential, developing a supporting ecosystem for GH₂ and GA production, attracting investments, generating employment opportunities, and bringing economic development to the State through 12,000 jobs/ per MMTPA of Green Hydrogen Production. Equally, the policy encourages the setting up of the manufacturing units for Green Hydrogen, Green Ammonia, and mechanical equipment corresponding therewith.
Incentives include a 100% reimbursement of net SGST revenue from the sale of GH₂/GA within the state, 100% exemption from Electricity Duty for power consumed in producing GH₂/GA from renewable energy plants, and 25% reimbursement of intrastate charges with an upper limit of Rs. 10 lakhs per MW per year of installed electrolyser capacity. Any renewable energy plant built in the state that produces GH₂/GA will get a cross-subsidy surcharge reimbursed. RE plants built in the state that produce GH₂/GA will also get priority grid connectivity. Developers will also be given land at a lease rate of ₹31,000 per acre per year, with a 5% increase every two years, and they will not have to pay any stamp duty or land use conversion charges.
Uttar Pradesh
Uttar Pradesh notified the Green Hydrogen Policy of Uttar Pradesh, which was to stay in effect for five years or until amendment. Ambitious targets were set for the policy, including achieving 1 MMTPA of Green Hydrogen production and 1.2 lakh jobs by 2028.
It provides capital incentives of 10%–30%, depending on the location of investment, and incentivizes green hydrogen and green ammonia production. It also has suggested the creation of two SCoEs for research and development.
The incentive package consists of a capital subsidy of 40% for the first five investments, excluding Meerut, subject to a ceiling of ₹225 crore in one year per project, lease of government land at ₹1 per acre for PSUs and ₹ 15000/acre for private investors. There will be complete exemption of stamp duty on the leased land for projects, and SCoEs shall be given financial assistance up to ₹50 crore.
In addition to this, projects will be entitled to a 100% exemption in electricity duty for the first 10 years or for the project lifetimes.
Rajasthan
The Rajasthan Green Hydrogen Policy, 2022, shall be effective up to March 31, 2030, or until superseded, with the objective of making the state a leader in green hydrogen production and export.
Inclusion of the policy will be the development and promotion of a Green Hydrogen production ecosystem, incentivizing industry and research institutions for R&D, meeting targets like 2000 KTPA production capacity by 2030, establishment of a Green Hydrogen valley, establishment of a Giga factory for manufacturing of electrolysers or its components, contribution to 20% of India’s Green Hydrogen exports, and blending green hydrogen up to 10% in natural gas pipelines within Rajasthan.
Incentives include: 50% rebate for 10 years on transmission and distribution charges for the first 500 KTPA of Green Hydrogen; 100% exemption on additional and cross-subsidy surcharges for 10 years on renewable energy purchase from third parties; hydrogen generation from treated or brackish water shall have priority in land allotment; subsidy of 30% up to ₹5 crore for setting up research centers; no ceiling on capacity of captive power plants or electricity banking; and 100% exemption on wheeling and transmission charges, along with banking charges reimbursement for 7-10 years.
Conclusion
The Green Hydrogen mission of India is a serious and major move toward energy independence and sustainability. With the full support of both national and state governments, India is all set to become a global leader in the production of green hydrogen.
Ambitious targets, supportive policy, and substantial incentives will join together in creating major growth for this clean energy sector, which helps meet the climate objectives and makes the economy resilient. It is here that one can see the perceivable commitment of India to a greener future, while these policies translate from paper into practice, promising a sustainable and energy-secure future for the nation.