Green Hydrogen Policy- A Step Towards India’s Energy Transition

The Ministry of Power (MoP) on 17 February 2022 announced the much awaited Green Hydrogen Policy (Green Hydrogen Policy). The Union Budget of 2021 had first mentioned about the proposed National Hydrogen Mission. Thereafter, on the occasion of the 75^th Independence Day, the Prime Minister announced the launch of the National Hydrogen Mission with an underlying objective of making India energy independent before 2047 i.e. before its 100^th year of independence. The National Hydrogen Mission aims to facilitate production of 5 (five) million tonnes of green hydrogen by 2030 and the related development of renewable energy capacity.

The policy, though named as Green Hydrogen Policy, provides a framework for production and development of green ammonia as well. Green hydrogen and green ammonia have been defined as hydrogen or ammonia produced by way of electrolysis of water using renewable energy including renewable energy which has been banked or produced from biomass. It is relevant to mention that earlier, MoP had published the draft Electricity (Promoting Renewable Energy through Green Energy Open Access) Rules, 2021, where green hydrogen was first recognised and defined as “hydrogen produced using electricity from the renewable sources”. With the Green Hydrogen Policy finally being launched, the government has paved the way for development of green hydrogen as well as green ammonia as an alternative source of energy and future fuel in India.

Some of the key highlights of the Green Hydrogen Policy:

Comments

India imports more than 4/5^th (four-fifth) of its oil and half of its natural gas requirements. As such, green hydrogen is seen as the future fuel to reduce India’s dependency on fossil fuels and make it self-sufficient. Green hydrogen and green ammonia assume more importance at a time the ongoing crisis in Europe has raised global fuel costs.

The recent COP 26 Climate Conference in Glasgow demonstrated that the world is ready for green hydrogen and it will be one of the key elements to achieve net zero target. With the roll out of Green Hydrogen Policy the government has set the wheels in motion towards India’s big energy transition. Hydrogen being one the most abundant element on the planet will play a key role in climate action globally. In the recent years with manifold increase in the demand of hydrogen, the Green Hydrogen Policy promises to be a gamechanger for India’s energy market. The Green Hydrogen Policy is a forward looking policy, providing incentives and opportunities for attracting developers to venture into production of green hydrogen / ammonia. Waiver of ISTS charges for green hydrogen / ammonia projects commissioned before 30 June 2025, would incentivise developers to expediate development of green hydrogen / ammonia projects.  Further, allowing, project proponents to set up bunker in port lands will also provide avenues for developers to explore export activities. The aim of bringing in economies of scale and competitive pricing will provide good traction in long run.

The Green Hydrogen Policy is a step in the right direction and will help India achieve its twin objectives, of creating demand for green hydrogen along with increasing the installed capacity of renewable energy. The policy will enable India to hone-in hydrogen and ammonia as an alternate fuel and reduce dependency on fossil fuels. As per The Energy and Resources Institute, the demand for hydrogen is to increase by five-fold in 2050. While the policy does not create a demand push by mandating green hydrogen / ammonia consumption obligations, akin to RPO, on certain industries like fertilizer production and petroleum refining which primarily use grey hydrogen or provides incentives to consumers to adopt the same, however, the policy would provide much impetus to India’s clean energy transition and climate action, which was also one of the most echoed themes in the recent Union Budget. Some of the issues relating to demand may be addressed by the government in the subsequent phases.

Dibyanshu (Partner), Prateek Bhandari (Principal Associate) and Sathyajith Nair (Associate)

For any queries please contact: editors@khaitanco.com ​​​​​​​