Hydrogen economy but no self-reliance

The recent announcement by the Union government of a Rs 20,000 crore (Rs 19,794 crore, to be precise) National Green Hydrogen Mission has given rise to two key questions: 1) What is green hydrogen? 2) Do we have a path to its adoption?

For the uninitiated, all shades of hydrogen—green, blue or grey—are only about how hydrogen is produced, not the colour of the gas. Regardless of how hydrogen is generated, it remains the same colourless, odourless gas.

If it is generated using a fossil fuel route, e.g., natural gas to produce hydrogen and inevitably some carbon dioxide, it is referred to as ‘grey’ hydrogen. If the carbon dioxide emitted during the production of grey hydrogen can be captured by various methods instead of being emitted, then the same grey hydrogen is referred to as ‘blue’. If hydrogen can be produced without using fossil fuels, ie, by electrolysing water using electricity, the gas is termed as ‘green hydrogen’.

It helps us very little in our fight against greenhouse gas emissions if we produce hydrogen and release carbon-dioxide into the atmosphere. The promise of blue hydrogen is a strategy of oil and natural gas companies to continue using natural gas as long as possible with the hazy promise of carbon capture at some future date. Currently, only one per cent of the hydrogen produced is blue, the rest is from grey hydrogen with carbon emissions that is equal if not more than when natural gas is burnt directly.

If carbon capture at scale using natural gas was commercially viable, we could then continue to use natural gas to produce electricity. Unfortunately, it is not. ‘Blue hydrogen’ is simply a rebranding or a marketing exercise by oil-gas companies to earn profits as long as they can, similar to rebranding of natural gas as a ‘transitional fuel’.

In a hydrogen economy, there are two questions that we need to address: how will it be used, and what will it cost?

Let us take the use of hydrogen first. If we want to use electric vehicles (EVs), the problem is the low energy density of the battery. For one kilogram of battery, the amount of energy stored is lower compared to one kg of diesel, petrol, or compressed natural gas (CNG).

The energy stored in a litre of petrol is about 32 times that of one kg of battery. That is why electric cars can run for merely about 100–150 km before they need to be recharged. Worse, they are completely unsuited for heavy-duty trucks and, therefore, for commercial transport.

The use of hydrogen as a fuel is much more important for trucks; or even buses. In fact, such trucks can then travel even longer distances—up to 1,000 kilometres, as hydrogen is typically stored under high pressure. Hydrogen can be burnt in engines very similar to what we use today for burning CNG or converted to electricity in fuel cells and directly used in EVs. Fuel cells convert natural gas to electricity and are therefore directly used in the electric motor of the EV. In both cases, the only by-product is water, and environmentally benign.

There are two other uses of hydrogen. One is to produce ammonia for fertilisers, and the other is its use in refineries. In the Haber process, ammonia is produced from nitrogen in the atmosphere, and naphtha or natural gas as feedstock leads to carbon emissions as a by-product. It is possible to replace LNG with hydrogen and combine it with nitrogen and produce ammonia.

As the use of LNG means carbon emissions, that is why the term ‘green ammonia’ for this alternate route of using hydrogen directly. Since India imports natural gas or LNG, therefore there is the added benefit of using hydrogen to replace costly imported LNG. The difference in the price of green ammonia and ammonia using naphtha or LNG is still significant; hence the need for research and development to bring down the price of green ammonia.

India imported about $12 billion worth of LNG in 2021-22, a significant part of it going to fertiliser plants as a feedstock. Of course, this was only a fraction of our oil bill of a staggering $119 billion.

So, the key question for a hydrogen economy replacing fossil fuel is how much will it cost? And here is the bad news. It currently costs $3-5 to produce one kilogram of hydrogen, which needs to drop to about $1/kg before it can become competitive. The good news is that with the costs of renewables dropping sharply, we are likely to see a surplus of renewables on the grid.

So, can we marry green hydrogen to renewables? And will it then help us meet our ambitious greenhouse emission targets of 2030 and net zero (meaning no net carbon emissions) by 2060? This is the genesis of the National Green Hydrogen Mission that the Prime Minister has recently launched with a lot of fanfare.

Typical of all such grandiose plans of the current BJP government, the Green Hydrogen Mission has some financial commitments, in this case, Rs 20,000 crore, and grandiose statements regarding green hydrogen and green ammonia and its transformative role for the future. There is very little discussion on how India is going to develop the entire technology cycle for green hydrogen or green ammonia and what is the national plan for doing so.

A reading of the PIB release makes clear that even a relatively small green end-to-end hydrogen plan will involve much larger outlays than the Rs 20,000 crore. So, let us examine briefly what such a plan means. First is the assumption that based on the cost of renewables, surplus renewable energy is available. The problem is how to use it.

As Indian big capital has already invested heavily in renewables, what should they do with the surplus which the state utilities are in no position to buy? One obvious answer is to use the surplus renewable energy available and convert it to ‘green’ hydrogen or ‘green’ ammonia, helping those who have already invested heavily in renewables while also reducing India’s costly oil and LNG imports.

How do we develop such a green hydrogen economy that can not only produce but also use such hydrogen? The simple answer is that the entire world is looking for an answer here. We have climbed onto the green hydrogen bus relatively late. And even here, the amount earmarked for developing the core technologies of such a path is a paltry Rs 400 crore, that too in a public-private partnership mode.

So where is the rest of the money going? A bulk of this money, Rs 17,490 crore under the Strategic Interventions for Green Hydrogen Transition (SIGHT) programme, goes to private capital. This is as an ‘incentive’, (read subsidy) for green hydrogen production.

“Under the SIGHT, two distinct financial incentive mechanisms—targeting domestic manufacturing of electrolysers and production of green hydrogen—will be provided under the Mission,” according to a PIB release. Also, Rs 1,466 crore is for setting up pilot plants for manufacturing ammonia and fertilisers.

In other words, only Rs 400 crores, a paltry amount, is available for key issues like developing the technology of fuel cells, re-engineering the century old Haber process for using hydrogen as feedstock, creating efficient electrolysers and new battery technologies for storing energy etc.

This is what differentiates post-independence India and neo-liberal India. No need for planning, which is of course a socialist curse; just release the animal spirits of capital. This is why India is one of the largest markets for mobile phones but has a very small market share in handsets or telecom switches and other basic infrastructure equipment.

We again have one of the largest electricity grids but have handed over the production of boilers, turbines and solar cells to others, including the Chinese and South Koreans

Our Ambanis, Adanis, Tatas and Birlas are more comfortable restricting themselves to building a telecom network, and not manufacturing the equipment for the same. For setting up power plants and refineries, but not in creating the industrial base for producing the equipment, boilers, turbines, pumps, compressors, heat exchangers etc. Setting up of solar generation but again with imported solar cells, if not solar panels.

The belief the Modi government shared with the Manmohan Singh government is that all the Indian government has to do is to ask Indian and foreign capital what concessions they need—money, land, labour laws—and the capital will magically develop the technology and make us self-reliant.

This is the same principle that underpins the Rs 20,000 crore National Green Energy Mission. This will help capital become even bigger in India but at the cost of continuous dependence. In an increasingly fragile world order with sanctions and trade restrictions, this is a dangerous path for a continental size economy like India’s.