The need to be future ready for net zero

ROLE OF HYDROGEN IN NET ZERO TARGETS OF ORGANIZATIONS AND ECONOMIES

Abstract

This article attempts to capture the dimension of the issues involved and the developments that have already taken place in the pursuit of mission net zero.?

The paper is structured in three sections. Section I deals with role of hydrogen for achieving net zero. Section II deals with actions taken by Governments world over at policy level as examples and action plan of Indian Inc. Section III deals with challenges and road ahead for hydrogen adoption for reaching at net zero.

Net zero carbon emission is a shared task before the business world. The scope and expanse of business covers the worldwide range of industries, services and those including energy industries. The task is mammoth; it is an absolute imperative and is time bound. By its very nature, the jobs involved,? this? covers? a wide portfolio like science, nature, business, economics and politics. In the world of net zero, innovation is the key, collaboration is the norm and knowledge is paramount. The complexity begins with the concept and entails an inestimable investment. Issues have been relied from secondary sources and have been arranged briefly in thematic sequence. Lessons have been drawn from the experience of few specific countries, who are in the frontline of net zero initiative, as global players. India specific issues and initiative have been compiled and presented as contextual. The article attempts to focus the collaborative approach taken by leaders to hydrogen, as an ultimate fuel that has turned out to be humanity’s hope to net zero.

Annexure gives “ A 2022 spot light on India for sustainability practice”

Net Zero is a target for our Planet & respective Govts.?

Net zero emission means that all man-made greenhouse gas emissions must be removed from the atmosphere through reduction measures, thus reducing the Earth’s net climate balance, after removal via natural and artificial sink, to zero. This way humankind would be carbon neutral and global temperature would stabilise.

Section – I: Role of Hydrogen in Net Zero

Hydrogen has a central role in helping the world reach net-zero addition of GHG emissions to the atmosphere by 2050 and limit global warming to 1.5 degrees Celsius above pre-industrial levels to reduce the odds of dangerous and unimaginable effects of climate change. The global warming is already 1 degree above pre-industrial levels and is estimated to rise at 0.2 degree per decade. Complementing other decarbonization technologies like renewable power, biofuels, and energy efficiency improvements, clean hydrogen (both renewable and low carbon) offers the only long term, scalable, and cost-effective option for deep decarbonization in sectors such as steel, refining, ammonia, maritime, aviation, road transport and buildings. From now through 2050, use of hydrogen can avoid 80 Gigatons (GT) of cumulative CO2 emissions. With annual abatement potential of 7 GT in 2050, hydrogen can contribute 20% of the total abatement needed in 2050. This requires the use of 660 million metric tons (MMT) of renewable and low-carbon hydrogen in 2050, equivalent to 22% of global final energy demand. (McKinsey 2021)

The role of hydrogen is critical in enabling a decarbonized energy system. It facilitates the integration of renewably produced energy as hydrogen can store energy, provide resilience, and transport high volumes of energy over long distances via pipelines and ships. Hydrogen allows energy companies to tap extremely competitive, but otherwise “stranded” renewable energy in remote locations. This accelerates the energy transition as it allows more renewables to be produced. Finally, because hydrogen can be produced from electricity and used as or converted into fuels, chemicals, and power, the production of hydrogen from electricity will connect and fundamentally reshape current power, gas, chemicals, and fuel markets.

Hydrogen has an important potential role in a net zero economy as it has no carbon emissions at the point of use. It is versatile, capable of being produced and used in many ways, including production from renewable sources and applications to decarbonise challenging areas, such as heavy transport, industry, and heat, as well as the storage and transport of energy. It is already widely used in industry and agriculture, but its current production carries a high greenhouse gas footprint. Significant greenhouse gas emission reductions could be achieved through decarbonisation of production for both existing and new applications. However, hydrogen currently faces challenges that require technological advances, including in its generation, storage and use, particularly the costs involved in achieving net zero life cycle emissions. Further research, development, demonstration, and deployment are required to pinpoint the areas where hydrogen can make a critical difference in reducing emissions.

Hydrogen has a long way to go to ful-fill its potential. An entire network of pipes and storage facilities would have to be built at great expense. Europe is responding with a plan, the EU Hydrogen Backbone, to link low-cost supply centres with European demand centres. Other technologies integral to the hydrogen economy include the following:

1. Low-cost production. If hydrogen could be made for less than $2 per kilogram in the European Union or $1 per kilogram in parts of the United States by 2030, major end uses would become economically viable. Estimates suggest that electrolyzer costs could fall 60 to 80 percent over the next decade.
2. Road-transport fuel. Hydrogen’s higher energy density makes hydrogen fuel-cell electric vehicles (FCEVs) suitable for long-haul or heavy road transport. For FCEVs to be adopted widely, they would need to become less expensive, and fuelling stations are required to be built. This transition needs to happen in collaboration with automobile manufacturing companies.
3. Ammonia production. This is one of the most promising near-term uses for low-carbon hydrogen. Green ammonia, made from green hydrogen, would be the first variety to match the cost of conventional ammonia production. Hydrogen is also relatively straightforward to integrate in ammonia production, so less supporting infrastructure is required. And ammonia can be used as a fuel or as a “vector” for transporting hydrogen.
4. Steel production. The steel sector is one of the largest industrial emitters, producing about 7 to 9 percent of global emissions. The conventional blast furnace–basic oxygen furnace route for steel production emits approximately 1.8 tons of carbon per ton of steel. But using green hydrogen to power the direct reduction of iron as a feedstock for electric arc furnaces

Net Zero Plans of Corporates

At the COP26 Summit in Glasgow, apart from governments, several businesses also pledged to go carbon-free, setting ambitious deadlines for themselves. Essentially, it means that these establishments will reduce emissions or balance new emissions by using natural carbon sinks like forests and oceans to absorb them.

Some of India’s largest firms have announced net-zero goals as companies globally switch to sustainable investments and seek suppliers with similar commitments to curb greenhouse emissions. Reliance Industries Ltd. said it will turn "net carbon zero" by 2035. Private lender HDFC Bank Ltd. has set 2031-32 target for being carbon neutral, while Tata Consultancy seeks to be there by 2030. Wipro Ltd., Infosys Ltd., Mahindra & Mahindra Ltd., JSW Energy Ltd. and even Indian Railways have also announced similar plans. And these are not the only ones. As many as 56 Indian companies have committed to reducing greenhouse gas emissions, according to the Science-Based Target Initiative, a global coalition that enables firms to set climate goals.

Reliance Industries visualises India becoming a global green energy superpower with exports of clean energy rising to $500 billion over the next 20 years. Reliance has announced plans worth billions of dollars to boost India's renewable energy capacity including building battery storage, fuel cells and producing green hydrogen at less than $1 per kilogram. Chairman of Reliance recently announced that the green Energy Giga Complex will have an electrolyzer factory for green hydrogen production, and a fuel cell factory. Reliance hopes that India can bring down hydrogen costs massively in the future. RIL hopes to become a net-zero emissions company by 2035, and Rs 75,000-crore investment in green energy is a large part of the plan. Some of the other companies that have disclosed plans for green hydrogen are JSW Energy, Adani, ACME group, NTPC, GAIL, IOC. IOC has announced that the total hydrogen consumption of their Mathura refinery will be converted to green. The phase one target is to convert 10 per cent of Mathura refinery’s consumption of hydrogen into green hydrogen from grey by 2023 or 2024. It has just concluded the? first? pilot? of? running? 50? DTC? buses? in? the? Delhi-NCR? region? by? spiking? the? ordinary CNG buses with 18 per cent hydrogen. Order has also been placed for 15 hydrogen fuel cell buses which will be delivered in a staggered manner by 2023. These buses will run on green hydrogen produced from different production pathways. It also has plans to setup a hydrogen manufacturing unit in Kochi, which is targeted to draw energy from the solar facility at the Kochi

international airport. There is also a plan of running hydrogen-based fuel cell buses from Baroda to the Statue of Unity. There are advanced ongoing discussions with the UPSRTC to run hydrogen- based fuel cell buses from Delhi to Agra.

BPCL has drawn plan to put up a 20MW electrolyzer at its Bina refinery to produce green hydrogen as it aims for net zero emissions for its operations by 2040.This will be double the size of GAIL’s 10MW proposed electrolyzer. Green hydrogen should make up 10% of the overall hydrogen requirements of refiners in 3 years, increasing to 25% by end of the decade, as per a government proposal.

GAIL has started mixing hydrogen in natural gas on a trial basis in Indore through Aavantika Gas Ltd., its joint venture with HPCL. NTPC has also shown interest to produce green hydrogen on a commercial scale. They have expressed their plans to do the same from its 4.75 GW park at the Rann of Kutch and have announced a 5 MW plant. Presently, the company is running a pilot in their Vindhyanchal unit. Further the company also has plans to set up green hydrogen fuelling station in Leh, Ladakh and will start plying 5 hydrogen buses. They have invited Expressions of Interest (EOIs) for 10 hydrogen fuel cell buses and cars.

L&T is also looking to venture into the green hydrogen sector. According to their latest report, they have set plan to achieve net zero emissions by 2040 and plan to spend INR 10-15 Billion on its green initiatives. In addition to exploring the possibility of manufacturing electrolysers, they are setting up a green hydrogen plant at their Hazira complex, which is scheduled to be completed within this financial year. It is partnering with Norway-based HydrogenPro to access its electrolyser technology to enter the green hydrogen market. As part of the agreement, L&T and HydrogenPro will set up a joint venture company in India to manufacture gigawatt-scale alkaline water electrolysers based on the latter's technology.

Establishing India as a global hub for green hydrogen generation, Ohmium International through its subsidiary in India has shipped its first ever unit of electrolyser to the United States. The electrolyser was manufactured in Ohmium’s Bengaluru facility which is India’s first green hydrogen electrolyser Gigafactory.

Any climate action will have to start by reducing and offsetting emissions that come from the industrial and commercial activity. There is also the need to negate potential business losses, in case nothing is done to arrest or mitigate greenhouse gas emission. According to the Carbon Disclosure Project, Indian companies stand to collectively lose over Rs 7.14 lakh crores if they do nothing to mitigate climate risks in the next five years. These risks come from physical phenomena like floods, emerging regulations, emission caps, changing customer behaviour and preferences, and even potential legal issues. But if done right, opportunities worth Rs 2.9 lakh crore could emerge. Indian suppliers of multinational firms reportedly run the risk of losing $274 billion worth of exports every year if they fail to curb carbon emissions.

Firms in the developed nations are already preparing to immune their business from potential loss due to carbon emission. A recent report by the ECIU showed that a fifth of the world’s largest companies have committed to the net zero target. Besides, socially responsible investing is on the rise and investor money is increasingly coming with explicit climate-related goals. Investments

with ESG commitments have now crossed $40 trillion globally, according to ESG Risk. In India, 7% of the assets under management are ESG investments. That number is likely to rise to 30% by 2030. A large chunk of the global investors want to put their wallet behind projects that help curb environmental damage. Increasing amount of money is now going into stock mutual and exchange- traded funds with environmental goals as part of their mandates. And that money from investors is getting hard to come by for companies in polluting industries. Banks and financial institutions with large funding portfolio to fossil fuel assets, like BlackRock, JPMorgan Chase, Korea Development Bank and the Japan Bank of International Cooperation have announced exit policies from their coal investments.

Companies mainly have three types of emissions. There are direct emissions from sources that are owned or controlled by companies—like furnaces, boilers or transportation. There are also indirect emissions from the coal-fired electricity consumed by a company. The third includes all other emissions that occur in the company's value chain.This makes the transition to net-zero for companies in the services sector relatively easier, since majority of their emissions are from indirect sources. The only thing they need to do to is to change their energy source to renewables and they will be able to cut most of their emissions. TCS plans to make more efficient use of energy across its operations, expand use of renewable energy sources and work with its supply chain partners to reduce emissions. It also plans to rationalise business travel. HDFC Bank, too, aims to be carbon neutral by sourcing 50% of its electricity from renewable sources and decrease absolute emissions. It aims to reduce water consumption, single-use plastic and plant 25 lakh trees to offset its carbon footprint. The lender also plans to issue green bonds—debt instruments used to fund projects that have a positive impact on climate.

The challenge is a lot bigger for companies that will have to fundamentally alter their business. The energy sector, for instance, is still largely coal-powered and contributes more than half of India's emissions. Reliance, even after diversifying into digital and retail, still gets half of its revenue from oil and gas. To meet its net carbon zero target, Reliance Industries said it will use newer technologies to reduce emissions, and plans carbon capture and storage—to convert carbon dioxide into useful products. RIL also claims it has begun sourcing carbon-neutral oil or crude produced with net-zero emissions and is increasing use of renewable sources of energy to power operations. Sectors like metals and cements will also find it harder to transition as emissions are inherent part of the production process. These are known as hard-to-abate sectors. Unless there’s a technological breakthrough, it’ll be very hard for Tata Steel to come out and say we are going net-zero. Such companies usually introduce a concept of internal carbon pricing to show climate action. That is when a firm puts a price to every unit of carbon that is emitted by them and then uses the proportionate money to fund green investments. Mahindra & Mahindra Ltd. was the first Indian company to set carbon price of $10 per tonne of carbon emissions.

In terms of end uses, hydrogen is critical for decarbonizing industry (e.g., as feedstock for steel and fertilizers), long-range ground mobility (e.g., as fuel in heavy-duty trucks, coaches, long-range passenger vehicles, and trains), international travel (e.g., to produce synthetic fuels for maritime vessels and aviation), heating applications (e.g., as high-grade industrial heat), and power generation (e.g., as dispatchable power generation and backup power).Without hydrogen, it would be difficult to reach net-zero emissions: some forms of transport, for example, aviation, shipping,

and heavy-duty transport, cannot be electrified, and several industrial processes cannot use electricity directly and need hydrogen as feedstock or for high temperature applications.

Section II – Net Zero Journey So far

Strategies Adopted by Governments

As of 2021, more than 30 countries have released hydrogen roadmaps and governments have committed more than $70 billion in public funding.

For example:

• The EU strategy envisages hydrogen meeting around one-quarter of energy demand by 2050. The UK and German governments’ plans both include scaling up low-carbon hydrogen production capacity to 5GW by 2030.
• For transport, China is aiming to produce one million hydrogen fuelled vehicles and 1,000 refueling stations by 2030, the same goals as California.
• South Korea’s roadmap is aiming to produce six million FCEVs and roll out 1,200 refilling stations by 2040.

China

China, followed by Europe and North America, will be the largest hydrogen markets in 2050, together accounting for about 60% of global demand. Fulfilling this decarbonization role will require a large scale-up of clean hydrogen production in the coming decades. Supplying 660 MMT to end-uses will require 3 to 4 terawatts (TW) of electrolysis capacity and about 4.5 to 6.5 TW of renewable generation capacity, as well as 140 to 280 MT of reforming capacity for low-carbon hydrogen production and associated infrastructure to store about 1 to 2.5 GT of CO2 a year. In such a supply scenario, renewable energy for hydrogen will account for roughly 15% to 25% of the 27 TW of total new renewable energy required by 2050 to? reach? net? zero? –? a? 10x? increase over the 2.8 TW installed today.

China has set itself ambitious climate targets and will, in addition to an expansion of renewable electricity generation and electrification, need large quantities of renewable or low carbon hydrogen to decarbonise its industrial processes and the hard to electrify sectors. Just as in the European and German case, the development of a carbon neutral hydrogen economy will be essential.

Germany

Taking a look at the German net zero efforts, energy efficiency and renewable electricity are the major focus areas for the transformation of the industry. Since renewable energy already provides the majority of German electricity, and good progress has been made in the electrification of transport and industry, renewable hydrogen is the next logical step for achieving carbon neutrality. Renewable hydrogen which is produced using renewable electricity, offers a further way to

transport, store, and trade renewable electricity; it makes local potential accessible globally. After Germany’s decision to phase out coal-fired power, hydrogen is now considered to play a key role in reaching emissions-reduction targets, particularly regarding process-related GHG emissions from the country’s large industrial sector, emissions of parts of the transportation sector and, in the long term, potentially also emissions from the heating sector.

The commendable part in the German strategy is an action plan of 38 concrete measures for starting the market ramp-up until 2023. The measures aim at attracting private investment in hydrogen generation, transport, and use. In September 2021, the German government released a report on the progress of the implementation of the 38 measures. Germany is working hard on the implementation of the strategy and is spending billions. It plans to create the regulatory conditions for market ramp-up of hydrogen technologies, i.e. enable domestic markets for the production, use and transport of hydrogen. The focus is on those sectors that are already close to economic viability or that cannot be decarbonized in any other way such as the industrial and transport sectors mentioned above.

To secure and shape the future national supply of hydrogen from renewable energies and its downstream products, the German Hydrogen Strategy envisages 5 GW of electrolyser capacity by 2030 and 10 GW by 2040. In addition to domestic production potential, it is necessary to find reliable international partners, with focus on the EU, for the production and transport of hydrogen and establishing appropriate cooperation and import structures. Transitionally, European market for carbon-neutral hydrogen will be established, which will accelerate the market ramp-up of hydrogen technologies on the application side.

Low-carbon hydrogen, defined as hydrogen with an energy content that is derived from non-fossil based sources, and that meets a GHG emission reduction threshold of 70% compared to fossil- based hydrogen, will be used wherever conversion to electrified processes is not feasible. This applies to certain hard-to-abate industrial sectors as well as to some transportation and heating applications. Demand for hydrogen for industrial processes is already substantial in Germany and amounts to about 55 TWh, which is currently served by hydrogen produced using methane steam reforming. Additionally, if steel production uses hydrogen for direct reduction, demand in Germany would grow by a further 80 TWh by 2050. Demand will continue to increase due to new applications, such as in heavy-duty transport, aviation, and shipping. Germany already has the second highest number of H2 refueling stations in the world, the introduction of a PtL (power-to- liquid) quota is currently being negotiated and the first hydrogen trains are already running on several routes. PtL is also known as electro-fuels (e-fuels) and include synthetic kerosene, kerosene and synfuels. These fuels are sourced from green hydrogen produced from electrolysis by renewable electricity, which is then combined with carbon obtained though carbon capture to yield a liquid hydrocarbon. PtL can achieve up to an 80% reduction in CO2 emissions. It can be blended into conventional kerosene for use as aviation fuel and is hence called a drop-in fuel. PtL fuels are currently 3 to 6 times more expensive than conventional jet fuel.

The focus is on use in the area of sector coupling and transformation of industry, but the German government also supports future areas of application in transport as an alternative to battery- powered vehicles in heavy goods transport on the road and by rail. Finally, it may become useful in the German heating market, for example to convert existing heating systems in private

residential buildings from natural gas to fuel cell technology, as a developed natural gas network, which can be repurposed, already exists.

Main drivers for the prices of renewable hydrogen are the investment costs for electrolysers as well as renewable power plants. Prices for both are expected to continue to decrease significantly with economies of scale, resulting in long-term price projections for hydrogen of 2 €/kg and below at locations with excellent wind and solar conditions. While cost parity with fossil fuels can remain challenging even then, price parity for the buyer is within reach when combined with ambitious carbon prices.

Both China and Germany will benefit from working together on establishing a renewable hydrogen economy and by learning from each other, because challenges are quite similar in both countries. China has a much bigger potential for renewable energy production, but making carbon-neutral, ideally renewable hydrogen available in sufficient quantities is still a big challenge. An exchange of experience in research and development would support the development of the industry. Research collaborations in a wide variety of fields allow topics to be developed from different perspectives. Finally, both Germany and China can profit from the development of electrolyser technology and economies of scale. Just as the development of renewables in Europe and China has driven down costs for these generation technologies below any other energy source, large demand for hydrogen technologies will significantly reduce prices for electrolysers. Making renewable hydrogen competitive, is arguably the best possible outcome of future cooperation.

Indian Private Sector Investment in Hydrogen

Hydrogen has witnessed a new wave of interest in business. The Hydrogen Council, which was formed in 2017 to bring together relevant companies, now has more than100 members. Recent years have seen a surge of private sector deals. As examples, Canada-based Hydrogenics, a fuel cell leader, was bought by Cummins in 2019. UK-based ITM Power, a leading maker of electrolysers, has raised ￡172million to develop hydrogen from renewable energy. Ceres Power, a UK-based company that develops and manufactures fuel cell stacks, has attracted investment from Bosch and Weichai Power.

Planned blue hydrogen projects include collaborations between groups of companies with public sector support, often around ports with clusters of industries and access to undersea storage. These include the UK’s proposed Net Zero Teesside, Zero Carbon Humber and HyNet projects that together ultimately plan to decarbonise nearly 50% of the UK’s industrial emissions with storage under the North Sea and Irish Sea. Several gigawatt-scale green hydrogen projects have been announced, including the €88 million Heavenn project in the Netherlands, the UK’s Gigastack project, and SeaH2L and project for the Dutch-Flemish North Sea Port Cluster.

Other projects plan to convert green hydrogen to ammonia for export. On the West coast of Australia, the $36 billion Asian Renewable Energy Hub project will produce green hydrogen and ammonia for Australia and Asian export markets. The $5 billion project at the Saudi Arabian new city of Neom on the Red Sea will produce hydrogen with a 2GW alkaline electrolyser plant, which will be converted into 1.2Mt/yr of green ammonia to be exported and converted back to hydrogen.

Section III – Challenges in Hydrogen Adoption

Challenges in Use of Hydrogen

Hydrogen is not? a? ‘silver? bullet’? for? all? end-uses.? Instead,? decision-making? could? be? guided by means of a hierarchy according to the value of hydrogen for each end-use. Questions to be raised are: a) is it necessary, helpful or not useful at all? b) What are the system implications? The presence or lack of alternative? energy? vectors? for? a? particular? end-use? is? a? further? factor in decision-making. Hydrogen has clear benefits in applications such as industrial heating and processes, and heavy goods transport, and especially where a viable alternative option does not exist. Its use in domestic heating is less clear-cut since electrification exists as a competing option. It will, however, be necessary to keep options open until the appropriate evidence is available and the relative benefits and limitations of the various options, and implications for the system as a whole, can be more effectively appraised.

Hydrogen will be most effective where alternatives do not exist, there are fewer but larger consumers, and there is least disruption to consumers. In particular, these include uses in energy intensive industries, inter-seasonal energy storage, and return-to-base fleet vehicles – especially heavy goods vehicles, construction vehicles, and agricultural vehicles. Once hydrogen has been sufficiently scaled up to meet those demands, then further expansion can enable it to be bled into other use cases. The use of hydrogen for temporal grid balancing, (in which excess grid electricity is used to electrolyse water into hydrogen, the hydrogen is stored, and then used to generate electricity when demand outstrips generation), requires very large-scale hydrogen storage. Developing methods of storage, such as geological storage, which must have high safety, trust and efficiency, is a key engineering challenge.

Current Status & Milestones for 2030

As per a Mckinsey study scaling through 2030 is critical for meeting long-term targets and unlocking cost-efficient decarbonization opportunities. It estimates that the deployment of 75 MMT clean hydrogen is needed by 2030 – an ambitious, yet achievable target. This supply of clean hydrogen can replace 25 MMT of grey hydrogen in ammonia, methanol, and refining; 50 billion litres of diesel in ground mobility; and 60 MMT of coal used for steel production. The study further goes on to estimate that early growth in clean hydrogen deployment will likely center on Europe, Japan, and Korea, which will account for about 30% of new clean demand. China and North America – significantly larger hydrogen markets today – will follow closely with about 20% of demand for clean hydrogen each. To supply this demand in a cost-optimal way, a mix of both renewable and low-carbon hydrogen supply would require 200 to 250 gigawatts (GW) of electrolyzer capacity and 300 to 400 GW of new renewables, as well as 45 to 55 MMT of low- carbon hydrogen production capacity and associated carbon infrastructure to store 350 to 450 MMT of CO2 a year. This will create need to step up the deployment of renewables: in 2020, 260 GW of capacity was commissioned. A further acceleration is required to meet rising electrification demand. This deployment of clean hydrogen will not happen without the right regulatory framework pertaining to electricity, carbon pricing & other infrastructure. Both governments and businesses need to act together in this huge unexplored task.

Strong Momentum, but a USD 540 billion Capital Gap Remains

As per the Mckinsey study, the hydrogen industry shows strong momentum around the globe, with more than 520 projects announced in 2021, up 100% compared to 2020. These announced projects will translate into 18 MMT of clean hydrogen supply (accounting for USD 95 billion) as well as infrastructure (USD 20 billion) and end-uses (USD 45 billion). Considering investments to achieve government targets and support equipment value chains, the total sum of estimated spending will grow to more than USD 600 billion by 2030. Although the pipeline of projects is strong, a significant gap to the net zero scenario remains, and the right regulatory framework is required to turn projects from concepts into actual investments. Out of the currently announced direct investments, only USD 20 billion (13%) have passed the final investment decision (FID) so far, with another USD 64 billion (40%) in the feasibility or front-end engineering and design (FEED) stage. This means many proposals are on the table awaiting the right regulatory framework to unlock demand and investments. In terms of additional investments, the currently announced projects (USD 160 billion) cover nearly 25% of the required USD 700 billion to achieve the deployment, out of which USD 300 billion is required for hydrogen production, 200 billion for infrastructure, and 200 billion for hydrogen end-uses. This leaves a gap of USD 540 billion. While significant, these investment levels appear possible. The USD 700 billion required equates to about a third of the investments made in renewable energy from 2010 through 2019, or less than 15% of cumulative investments in upstream oil and gas.

Challenges Ahead

A tremendous acceleration has taken place over the past year with strong growth in the number of projects being launched, demonstrating hydrogen any potential uses are recognized in the industry. However, a five-fold increase in announcements is required to enable the full abatement potential of hydrogen. The conversion of this momentum into real deployment and scale-up now critically depends on the right regulatory framework, which will create demand, enable supply, and reduce investment risks.

Hydrogen falls into a number of different policy areas, responsibilities? for? which? are? distributed? across? several? areas? of ? government? but? will? need? to ? be? brought? together? ? into a unified programme of work under a? net-zero? delivery? body.? This? must? be? a? high-? level? systems? architect? body? evidence-driven? by ? data ? and ? analytics, ? with ? responsibilities, funding and? accountability? which? can? align? government? around? the? net? zero goal; in? other? words,? a? systems? approach? to? policymaking? will? be? required.? A? systems approach? helps? policymakers? to? gather? evidence? from? the? widest,? most? diverse? and critical perspectives? leading? to? ‘bigger? picture’? view? of? this? policy? opportunity? and how different parts of the system interact to affect the desired outcome.

The full potential of hydrogen can only be realized if action is taken across three fronts to: stimulate demand, enable access through infrastructure, and create scale to bring down costs and close the economic gap of hydrogen decarbonization solutions versus conventional alternatives. While the overall investment required is large, it is well within the order of magnitude of current financial flows into the energy sector.

Requirements include a set of suitable policies such as mandates and robust carbon pricing, the development of large-scale infrastructure, and targeted support and de-risking of large initial investments. Scaling of hydrogen is the key to reducing costs through economies of scale, making hydrogen available to end-users through the necessary infrastructure, and ultimately making hydrogen a competitive, available, cost-efficient decarbonization vector. A large share of the decarbonization will come from current industrial uses of hydrogen with 270 MMT of CO2 avoided a year, particularly from the decarbonization of refining and ammonia synthesis.

Carbon capture, use, and storage (CCUS) is necessary to decarbonize hard-to-abate sectors and to remove CO2 from the atmosphere. Presently, use of CCUS is minimal. Costs remain prohibitively high, typically $50 to $100 per ton of CO2 (tCO2), and CCUS equipment consumes a lot of energy. Moreover, innovation has been slow. Many existing CCUS plants employ 30-year-old solvent- based technologies for post combustion carbon capture. But new technologies are emerging. These could contribute to solving the net-zero equation while creating growth potential for sectors and geographies. At present, the technologies exhibit varying levels of maturity, performance, market demand, and regulatory support. To bring them to commercial, climate-stabilizing scale would require companies, financial institutions, and governments to cooperate on investment and research programs as well as efforts to integrate technologies with existing industrial systems. This challenge is formidable, but the moment to devote creativity, capital, and conviction to addressing it is now.

Conclusion

Humanity has to reach a point where it harnesses nature without emitting deleterious byproducts that inherently carries the potential to threaten nature and human life, both. This very point is being attempted to be visualized by the net zero concept. Hydrogen as a tool to net zero has promises that need to be realized. Hydrogen as it appears, nature’s gift for humanity that can sustain life on this green planet and yet have quality of living for people. As of today, there is tremendous push in giving life to hydrogen. Research and innovation in the area of science, policy and finances all have to converge to make this happen. The accounts in this article is an attempt to cultivate knowledge and disseminate awareness in that direction.

Annexure

Sustainability Practice- A 2022 Spot light on India

Before achieving the Net zero target in 2050 or 2070, the lowering of emission challenge of 2030 must be met by the Economy, Industry and business in India.?

Change management in Business outlooks can come by proposing, changing, prescribing in advance and suggesting corporate governance norms. For India, it is no different.??

Since 2013 several norms, disclosures and reporting has been prescribed to push the ‘transitioning’ of Corporate governance towards diversity, protection of shareholder’s interest, transparency and social responsibility.?

It’s been a year since SEBI has prescribed disclosures under BRSR (Business Responsibility and Sustainability reporting) which covers ESG (Environmental, Social and Governance) parameters. While this applies to about a 1000 listed Companies, may be a 100 Companies have worked on the system of reporting and disclosure under this.

The norms are only mandatory from the FY 23-24 where then the impact assessment and mitigations measures would be necessary.

India is a signatory to COP26 in 2021 and is answerable in 2030 with the statistics it achieves in lowering the emissions which is certifiable.?

The ‘transition’ is obviously focused on the outcome and success rate of those several hundred Companies who must study first the impact the ESG measures would have on their business and how commitment of various stakeholders can be achieved. Only then effective measures can be drawn up involving major capital expenditure, change of practices and business norms and goals.?

The optimism can be drawn from the fact that previously introduced norms, prescribed for a change of approach towards Diversity, disclosure and CSR, have gone through similar cycles of upheaval and now seem to be settling.???

The business models of bulk of the listed Companies are under pressure and are competing with other priorities of digitalization, low cost integrated solution providers, newer risks such as the pandemic. Under these circumstances adding ESG as a definitive parameter of performance in the Compensation and Remuneration committee agenda and keeping stakeholders committed to ‘greening the businesses’ would be a formidable yet unavoidable challenge.?

This shall be a space to watch especially from now till 2030.?

References

Hydrogen Council & McKinsey (2021) ‘Hydrogen for Net Zero: A Critical Cost Competitive Energy Vector’, November 2021

Royal Society (2021) ‘The Role of Hydrogen & Ammonia in Meeting the Net Zero Challenge’, June 2021 https://royalsociety.org/-/media/policy/projects/climate-change-science-

solutions/climate-science-solutions-hydrogen-ammonia.pdf (June 2021)

Royal Academy of Engineering (2021) ‘The Role of Hydrogen in Achieving Net Zero’, January 2021 https://www.icheme.org/media/15371/nepc-response-the-role-of-hydrogen-in-achieving- net-zero-jan-2021.pdf

https://www.cnbctv18.com/business/companies/major-indian-companies-committed-to-go- carbon-free-check-out-here-on-when-they-plan-to-achieve-the-goal-11808892.htm (Dec 2021)

https://www.bloombergquint.com/business/what-net-zero-means-and-how-indian-firms-plan-to- meet-targets (June 2021)

https://www.ene rgypartnership.cn/home/the-role-of-hydrogen-in-germanys-energy-transition/ https://www.mckinsey.com/business-functions/sustainability/our-insights/innovating-to-net-zero- an-executives-guide-to-climate-technology (October 2021)

https://www.cummins.com/news/2021/04/15/cummins-hydrogen-power-takes-flight (15-04- 2021)

Elephant in the Board Room, Economic Times, DEEP DIVE. 08.05.2022