Green Hydrogen Economy

Green Hydrogen Economy

Throughout history, economies have been driven by various factors, from agriculture in ancient times to the dominance of oil in the 20th century. The transition to the present has seen the rise of knowledge and data economies, where information and innovation play pivotal roles. Looking ahead, the potential future drivers include the shift towards a green economy, driven by renewable energy and sustainability efforts, as well as the growing importance of healthcare and the exploration of space resources. These drivers reflect evolving societal needs, technological advancements, and global challenges, shaping the trajectory of economic development in the years to come.?

Hydrogen, especially green hydrogen, is emerging as a prominent contender for future fuel solutions. The green hydrogen industry focuses on producing hydrogen using renewable energy sources like wind, solar, or hydroelectric power, rather than fossil fuels. Green hydrogen is created through electrolysis, splitting water into hydrogen and oxygen using electricity. This electricity is generated from renewable sources, rendering the entire process carbon-free. One of its main advantages is its potential to decarbonize various sectors such as transportation, industry, and heating. Hydrogen can serve as a clean fuel for vehicles, as a feedstock for energy-intensive industrial processes like steel and ammonia production, and as a means of storing renewable energy for later use.

The green hydrogen industry is still nascent but experiences rapid growth and investment as countries and industries strive to reduce their carbon emissions and shift to more sustainable energy sources. Governments worldwide are implementing policies and incentives to support the development of the green hydrogen sector, including funding for research and development, subsidies for hydrogen production and infrastructure, and setting targets for hydrogen use across different applications.

However, challenges remain, such as the high cost of electrolysis technology, the need for infrastructure for hydrogen production, distribution, and storage, and ensuring the scalability of renewable energy sources to meet the demand for hydrogen production. Despite these hurdles, the green hydrogen industry holds great promise as a crucial component of the transition to a low-carbon economy.

The future market

PwC’s analysis projects a consistent increase in hydrogen demand up to 2030, fueled by specialized uses in sectors like industry, transportation, energy, and construction. Collaborative initiatives across these sectors are expected to lead to the formation of new partnerships for hydrogen project development. The cost of producing hydrogen is predicted to drop by about 50% by 2030 and will continue to decrease, albeit more gradually, until 2050. By mid-century, regions with abundant renewable resources, including parts of the Middle East, Africa, Russia, China, the US, Australia and India, could see green hydrogen production costs between €1 and €1.5/kg. Conversely, areas with scarce renewable resources, such as much of Europe, Japan, or Korea, may face costs of around €2/kg, positioning them as probable importers of green hydrogen. Even regions with ample renewable resources but high population density might turn to imports due to limited land availability for direct green electricity production and hydrogen conversion. Large nations like the US, Canada, Russia, China, India, and Australia could see both competitive and less competitive hydrogen production regions, potentially leading to domestic trade. Global export and import centers for green hydrogen are anticipated to emerge, akin to the existing oil and gas trade hubs, but with new participants from regions rich in renewables.

India's efforts in green hydrogen

India has been making considerable progress in the green hydrogen sector. Here are some of the key initiatives and plans:

  • National Green Hydrogen Mission: This mission, approved by the Union Cabinet on January 4, 2022, aims to establish India as a global leader in green hydrogen production and supply. By 2030, the mission aims to develop a green hydrogen production capacity of at least 5 million metric tons per annum, along with an associated renewable energy capacity addition of about 125 GW.
  • Investment and Job Creation: The government has sanctioned $2.3 billion for the development of the green hydrogen sector. This could potentially save over $12 billion in fossil fuel imports and reduce carbon emissions by 50 million metric tons. The mission is also projected to create over 600,000 jobs.
  • Green Hydrogen Hubs: The mission intends to identify and develop regions that can support large-scale hydrogen production or utilization as Green Hydrogen Hubs.
  • Strategic Interventions for Green Hydrogen Transition (SIGHT): Initially, two distinct financial incentive mechanisms are proposed with an outlay of ? 17,490 crore up to 2029-30: incentives for manufacturing electrolysers and for producing green hydrogen.
  • Export Opportunities: India is expected to become a key regional exporter of green hydrogen, offering competitive pricing and aiming for a significant share of the global 200 million-tonne hydrogen demand by 2030.
  • Green Hydrogen Policy: Announced by the Ministry of Power in February 2022, this policy provides incentives such as waiving Inter-State Transmission System (“ISTS”) tariffs for up to 25 years for projects completed before December 31st, 2030. It also expedites the process of granting open access to renewable energy sources and allows for the banking of unused renewable energy for 30 days.
  • RE Open Access Rules: As per the Green Hydrogen Policy, the Ministry of Power notified the Electricity (Promoting Renewable Energy through Green Energy Open Access) Rules, 2022. These rules include green hydrogen and green ammonia for meeting Renewable Purchase Obligations by entities such as licensees, captive users, and open-access consumers.
  • Green Hydrogen Production Standards: The MNRE has introduced standards for green hydrogen production within India. According to the MNRE, Green Hydrogen originates from renewable energy sources, including electrolysis, biomass conversion, and green energy stored in energy storage systems. It has been mandated that carbon emissions should not exceed two kilograms of CO2 equivalent to each kilogram of hydrogen produced. Furthermore, the non-biogenic greenhouse gas emissions from the electrolysis-based production technique should not exceed 2 kg CO2 eq/kg hydrogen on an annual basis.

These efforts are part of India’s broader strategy to position itself as a leader in the hydrogen economy and achieve its goal of becoming energy-independent by 2047 and achieving Net Zero by 2070.

Green hydrogen value chain

The green hydrogen value chain involves several key parties:

  • Equipment Suppliers: These are companies that manufacture and supply the necessary equipment for green hydrogen production, such as electrolyzers and fuel cells.
  • Green Hydrogen Producers: These are companies that produce green hydrogen through electrolysis, using electricity generated from renewable energy sources.
  • Transport and Storage Providers: These companies provide solutions for the transport and storage of green hydrogen. This could involve pipelines, trucks, or other forms of transport, as well as storage facilities.
  • Green Hydrogen Consumers: These are the consumers of green hydrogen. They can be industries such as steel and ammonia production, transportation sector for fuelling vehicles, and power sector for storing renewable energy.
  • Regulators and Policymakers: These are government bodies and organizations that regulate the industry, provide policy direction, and offer incentives to promote the growth of the green hydrogen sector.
  • Research and Development Institutions: These are academic and research institutions that conduct research to improve the efficiency, reduce the cost, and increase the scalability of green hydrogen production and usage.
  • Investors and Financial Institutions: These are entities that provide the necessary capital for the development and expansion of the green hydrogen industry.

Each party plays a crucial role in the value chain, contributing to the growth and development of the green hydrogen industry.

Legal and regulatory regime

Currently, there is no dedicated legislation for green hydrogen in India.?It is regulated by existing laws and regulations. Apart from being common to all industries' regulations, the following list of statutes and their amendments governs the hydrogen industry. Those are

  • The Manufacture, Storage, and Import of Hazardous Chemical Rules (1989)
  • The Gas Cylinders Rules (1981)
  • The Environment Impact Assessment Notification (2006),
  • The Factories Act (1948),
  • The Electricity (Promoting Renewable Energy Through Green Energy Open Access) Rules, 2022 under Electricity Act, 2003
  • The Petroleum and Natural Gas Regulatory Board Act (2006).
  • The Energy Conservation (Amendment) Act, 2022,??
  • Manufacture, Storage, and Import of. Hazardous Chemicals (MSIHC) Rules, 1989 under the Environment (Protection) Act, 1986.

Some of the Ministries involved in regulating the industry

  • Ministry of New and Renewable Energy (MNRE)
  • Ministry of Power (MoP)
  • Ministry of Petroleum and Natural Gas (MoPNG)
  • Ministry of Chemicals and Fertilizers
  • Ministry of Road Transport and Highways (MoRTH)
  • Ministry of Steel
  • Ministry of Ports, Shipping and Waterways (MoPSW)
  • The Ministry of Environment, Forest and Climate Change (MoEFCC)

Some of the Authorities involved in regulating the industry

  • Ministry of Environment and Forests under the Environment Protection Act, 1986.
  • Chief Controller of Imports and Exports under Import and Export (control) Act, 1947.
  • Central Pollution Control Board or State Pollution Control Board or Committee under the Environment Protection Act, 1986 as the case may be.
  • District Collector or District Emergency Authority designated by the State Government.
  • Centre for Environment and Explosive Safety (CEES)
  • Defense Research and Development Organization (DRDO).
  • Bureau of Energy Efficiency (BEE), a statutory body under the Ministry of Power
  • ?Bureau of Indian Standards (BIS)

Last year the Bureau of Indian Standards (BIS) issued a comprehensive list comprising 23 Indian Standards focused on hydrogen, reflecting its versatile applications and significance. These standards cover various facets of hydrogen, providing directives and specifications tailored to its distinct properties and uses. They encompass safety protocols for hydrogen storage in cylinders, specifications for hydrogen fuel in road vehicles, safety guidelines for hydrogen generators, purity standards, and handling protocols for liquid hydrogen. This initiative underscores BIS's dedication to setting stringent benchmarks and guaranteeing the safety, quality, and effectiveness of hydrogen-related operations and applications spanning multiple industries.

The notification of the Green Hydrogen Standard for India notified that Bureau of Energy Efficiency (BEE), Ministry of Power shall be the Nodal Authority for accreditation of agencies for the monitoring, verification and certification for Green Hydrogen production projects.

The legal and regulatory regime for green hydrogen in India is evolving, with specific rules and regulations expected to be developed as the sector grows.?

About Newtrace

Newtrace is an emerging startup in the green hydrogen sector based in Bangalore, India. Here are some key details about Newtrace:

Founding: The company was launched in 2020.

Total Funding: $6.7M

Latest Funding Round: $5.7M, Seed, May 24, 2023

Annual revenue of NewTrace is $12.9K as on Mar 31, 2023

NewTrace's valuation is $24.8M

Investors: Peak XV Partners, IKP Knowledge Park, Aavishkaar Capital,

Sameer Brij Verma, Speciale Invest, Micelio fund and 5 Others

Mission: Newtrace is on a mission to enable cost-effective and reliable access to green hydrogen through their massively scalable electrolyzer technology.?This is aimed at accelerating the decarbonization of mobility, industrial, energy, and chemical sectors.

Innovation: They specialize in the production of green hydrogen and have developed an innovative electrolyser management system that consolidates equipment data into a fully automated platform.?This empowers clients to efficiently generate green hydrogen at a competitive price.

Future Plans: The company aims to deploy its electrolysers in sectors such as refineries, fertilizers, chemicals, steel and cement, and transportation.?It is also looking to expand its solution into providing technology for long-term storage and conversion of green hydrogen and ammonia.

Newtrace is one of the many startups contributing to the growth of the green hydrogen industry in India.

Further Readings:

https://www.india.gov.in/spotlight/national-green-hydrogen-mission

https://mnre.gov.in/national-green-hydrogen-mission/

https://www.pwc.com/gx/en/industries/energy-utilities-resources/future-energy/green-hydrogen-cost.html

https://www.newtrace.io/newtrace-about

https://pib.gov.in/PressReleasePage.aspx?PRID=1969471

https://energy.economictimes.indiatimes.com/news/renewable/indias-regulatory-landscape-needs-to-get-green-hydrogen-ready/89950992

https://www.thehindubusinessline.com/economy/india-initiates-talks-for-green-hydrogen-exports-to-eu-nations/article67441627.ece

https://www.energyforum.in/fileadmin/user_upload/india/media_elements/Presentations/20230306_GH2TF/20230306_gh2_plant_setup.pdf

https://ksandk.com/energy/green-hydrogen-production-in-india/

https://www.bl-india.com/download/pdf/List%20of%20Indian%20Standards%20related%20to%20Hydrogen.pdf

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