Infravisioning: Why Green Is The Best Among Many Colours Of Hydrogen

Vinayak Chatterjee's Infravisioning video series analyses and explains developments in India’s infrastructure sector to the BQ Prime audience.

Edited excerpts of the video:

Hydrogen, a colourless and invisible gas, has acquired many colours in its rising popularity. It's called green hydrogen when there are no harmful greenhouse emissions during its production; black, grey and brown hydrogen is considered dirty because of emissions during its production; a cleaner blue hydrogen is produced from natural gas; yellow hydrogen from solar power during electrolysis; turquoise using the process of methane pyrolysis, pink is produced using nuclear energy and white hydrogen is naturally occurring in underground deposits.

Till January 2021, hydrogen featured as an afterthought in all energy-related discussions in India. It, however, caught the attention of policymakers when the Finance Minister, in her Budget speech in February 2021, set aside Rs 800 crore for the Hydrogen Mission.

At the Reliance Industries annual general meeting in June 2021, Mukesh Ambani said that as part of the group's New Energy Action Plan and vision, it would bet big on hydrogen and set up fuel cell and electrolyser factories to produce green hydrogen.

The market certainly got excited. And then on Aug. 15, the Prime Minister from the ramparts of the Red Fort added to the buzz when he announced: “Green hydrogen is the future of the world. Today, I announce the setting up of the National Hydrogen Mission; we have to make India a global hub for green hydrogen production and export.”

The nation took note and hydrogen firmly established itself as a key component of India's energy journey henceforth. It did not take long for corporate India to announce its plans.

In mid-September, the Adani Group announced its intentions to set up one of the largest green hydrogen projects in the world. Indian Oil Corp. announced setting up of the country's first hydrogen plant at its Mathura refinery; NTPC Ltd. announced plans for a green hydrogen fueling station in Ladakh, and other companies like Larsen and Toubro Ltd. also announced plans.

To decipher green hydrogen, it is instructive to understand the process of producing hydrogen. While hydrogen is one of the most abundant elements, it cannot be sourced as a gas from the atmosphere since it is lighter than air. Instead, it has to be separated from other compounds like water.

Two of the most common ways to produce hydrogen from water is steam methane reforming or SMR; and electrolysis or water splitting. While SMR is less expensive, the process produces greenhouse gas emissions that defeat the main purpose of opting for hydrogen in the first place. Currently, 90% of global hydrogen is produced by the SMR process.

Electrolysis involves passing electricity through water to separate into basic elements—hydrogen and oxygen. But electrolysis is an energy-intensive process. About 50 units of electricity is required to produce a kilogram of hydrogen, not counting the energy costs of the total plant system as well as for storage and transportation. So, if fossil fuels are going to be used to generate electricity to produce hydrogen, then the question is, what is so renewable about it?

But if the required electricity is produced from renewable sources, then the resultant hydrogen is termed green, and the byproduct is water, making it the most environmentally friendly fuel.

There are two challenges to contend with: the cost of production and the cost of transportation. Grey hydrogen from fossil fuels costs between $1 and $2 per kg, whereas green hydrogen costs $4 and $5 per kg. It is expected that green hydrogen will become competitive to fossil fuel-based hydrogen by about 2030. Ambani, in his AGM speech, said that he expected green hydrogen costs to come down to $1 per kg in a decade.

Transportation options would require serious attention as this link again takes another large dose of energy utilisation. After converting electricity to hydrogen, shipping it, storing it, transporting it, and then converting back into electricity, the delivered energy can be 30% below the initial electricity used. Thus, the point is that the rapid growth of green hydrogen requires vast amounts of energy to be generated from renewable sources. So, renewable sources and their transmission all have to gear up.

Hydrogen will increasingly be used in transport, industry and power applications. About 85% of the green hydrogen produced now is done in situ so that transportation is avoided. In the industrial sector, the main in-situ users are metals, ammonia and refineries; others will gradually follow.

Hydrogen produced now for transportation has to compete with batteries. Hydrogen is best used in heavy duty, long-distance terrestrial transportation and shipping because batteries have low-energy-to-weight ratios, and they take a long time to charge compared to fuel cells. Hydrogen solves both the problems. For smaller distances, however, battery charged vehicles are the most viable and the most economical option.

The best use of hydrogen is in the power sector for storage. Hydrogen-based storage is ideal for intra-seasonal storage of power to take care of the lean months of renewable generation. So, rapidly bringing down green hydrogen costs is clearly a laudable national goal, and worthy of government support.

The Union government plans to implement the green hydrogen consumption obligation in production of fertilisers, metals and petroleum refining, similar to what was done with renewable purchase obligations or RPOs.

This is expected to start at 10% and increase in later years to 20-25%. The viability-gap funding for green hydrogen in heavy mobility is also being considered with the possibility of production-linked incentives for manufacturing electrolysers to produce green hydrogen.

The draft electricity rules 2021 have allowed green hydrogen purchase to meet renewable power obligations. It is reliably understood that the Union government is expected to initiate a serious play in this area by calling bids for four gigawatts electrolyser capacity to be ramped up to 20 gigawatts in the medium term.

India has latched onto hydrogen fairly early in the game. Globally, 120 million tonnes of hydrogen is produced annually. Only 1% is green. The current energy demand for hydrogen in India is about 6 million tonnes. It needs to go up 10 times if Net Zero targets are to be met. It promises to be a game-changer across industry, power and transportation, and, of course, to meet the country's ambitious decarbonisation goals. 

Vinayak Chatterjee is founder and managing trustee, The Infravision Foundation; and chairman, CII Mission On Infra, Trade & Investment.

The views expressed here are those of the author, and do not necessarily represent the views of BQ Prime or its editorial team.