India: A-Z On Green Hydrogen Initiatives Around The World

INTRODUCTION – UNDERSTANDING THE BUZZ AROUND GREEN HYDROGEN

Green hydrogen refers to hydrogen that is generated via the process of electrolysis or conversion of biomass, including electricity generated from renewable sources which is banked with the grid as per the Indian regulations.

The use of hydrogen as an energy carrier is increasingly recognised as a critical component in the pursuit of decarbonizing industries that are difficult to transition away from high-carbon sources. Several industries, including iron ore and steel, fertilisers, refining, methanol, and marine transportation, are responsible for significant emissions of carbon dioxide (CO2). To achieve a substantial reduction in carbon emissions, the use of carbon-free hydrogen will be of utmost importance. Hydrogen is now being extensively researched as a potential primary solution for several uses in high-emitting industries, including heavy-duty trucks and aircraft.

The aforementioned phenomenon has led to an increasing worldwide inclination towards hydrogen as a whole, with a specific focus on green hydrogen. The potential for a substantial increase in worldwide demand for hydrogen by 2050 is driven by the convergence of two factors: the decreasing costs associated with hydrogen production and the escalating need for decarbonization. This surge in demand, which is projected to reach over 400 percent, will primarily be propelled by the industry and transportation sectors.

Currently, a considerable number of nations have established or are in the process of establishing comprehensive policies or roadmaps to facilitate the development of a hydrogen-based economy. These initiatives often encompass the implementation of various financial incentives aimed at expediting the shift towards this alternative energy source.

In the paragraphs ahead, we will explore how different nations are steering their course toward a sustainable hydrogen future and conclude by highlighting the growth of Hydrogen-based start-ups in India.

INDIA – STRATEGIES AND INCENTIVES

India's dedication to a more environmentally sustainable future is substantiated by its National Green Hydrogen Mission, which is per the country's objectives of achieving energy self-sufficiency by 2047 and attaining carbon neutrality by 2070. The primary objective of the mission is to prioritise the use of green hydrogen as a crucial component in India's ongoing shift towards sustainable energy sources. India declared its ambition to become an exporter of hydrogen to Japan, South Korea, and Europe. Various hydrogen-powered vehicles have been developed and demonstrated under projects supported by the Government of India.

- In 2023, the National Green Hydrogen Mission marked a significant step in the promotion of green hydrogen for India, through the Strategic Interventions for Green Hydrogen Transition (SIGHT) program, the mission allocated a financial incentive budget of INR 17,490 crore. Within this allocation, INR 13,050 crore was designated for green hydrogen production, while INR 4,440 crore was set aside for electrolyser manufacturing.

Like the Production Linked Incentive scheme, the SIGHT program extends fiscal benefits for three and five years for green hydrogen production and electrolyser manufacturing, respectively.

While the program is comprehensive, certain aspects lack clarification such as the definition of 'Green Hydrogen,' guidelines for monitoring the 60,000 hours performance guarantee of manufactured electrolysers, and protocols for verifying the localized content of the manufactured product.

- The Central Motor Vehicles (Eighth Amendment) Rules, 2023 came into force one of the additions to the Central Motor Vehicle Rules, 1989, is Rule 125M, which pertains to the Type Approval of Hydrogen Internal Combustion Engine (ICE) Vehicles. This rule follows Rule 125L and outlines the safety and procedural requirements for type approval of internal combustion engine vehicles in the M and N categories powered by liquid or compressed gaseous hydrogen.

Introducing Rule 125M signifies a significant step towards adopting hydrogen as an alternative fuel for vehicles. It provides a regulatory framework for the production and use of hydrogen-powered vehicles, ensuring that they meet the necessary safety and performance standards.

The Indian government think tank NITI Aayog and the Rocky Mountain Institute (RMI) outlined a blueprint for positioning India as a leading green hydrogen producer. The report, titled "Harnessing Green Hydrogen: Opportunities for Deep Decarbonization in India," envisions India potentially boasting the world's largest green hydrogen generation capacity, exceeding 60 GW by 2030. It was published in February 2022, and is an integral component of the National Hydrogen Policy.

The report stated that India's hydrogen demand will increase more than four times by 2050, making up 10% of the world's hydrogen demand. As a result, it advises facilitating investment through demand gathering and dollar-based green hydrogen bidding. In the long run, by 2050, the majority of the demand growth will be for steel and heavy-duty transportation. Both will fulfil 52% of the entire demand.

In line with the goals of the Hydrogen Mission, a significant portion of the Green Hydrogen Policy deals with initiatives that encourage the production of green hydrogen. These initiatives are:

-25-year waiver of inter-state transmission charges for green hydrogen/ green ammonia projects that are commissioned before June 30, 2025;

-Land allotment in dedicated renewable energy parks, and identification of manufacturing zones for production;

-Guaranteed procurement of renewable energy for production, via open access mechanism and connectivity to be granted on priority. Distribution companies can charge such projects only procurement cost, wheeling charges, and a small margin as determined by the relevant state electricity regulatory commission;

-The Ministry of New and Renewable Energy will develop a portal to grant permission and clearances for the manufacturers of Green Hydrogen. The portal shall enable the government to grant all sorts of permits within 30 days from the date of application;

-The manufacturer will be granted open access to source renewable energy in 15 days from the date of receipt of the application. The applicant can procure this renewable energy from anywhere, energy plant, power exchange or any third party.

US – LEGISLATION AND INCENTIVES

-Bipartisan Infrastructure Law (BIL), also known as the Infrastructure Investment and Jobs Act (IIJA), allocated a historic $1.2 trillion for transportation and infrastructure spending. This funding includes funding for new investments and programs, making it a significant initiative for organizations aiming to advance their clean energy strategies.

The BIL covers a wide array of sectors, including broadband internet, rail, transit, clean energy, and water infrastructure. Importantly, all programs under BIL must align with the Justice40 Initiative, ensuring that 40% of the funds benefit disadvantaged communities historically marginalized and overburdened with pollution.

For organizations focusing on decarbonization, the BIL provides substantial funding opportunities, particularly in the energy and transportation sectors. Key points for Hydrogen Production include:

Funding for Clean Hydrogen Production:

-The BIL includes various grant programs targeting clean hydrogen production, such as the $7 billion Regional Clean Hydrogen Hubs ("H2Hubs") program.

-The H2Hubs aim to drive clean hydrogen utilization in energy-intensive sectors like fertilizer, steel, and shipping, offering significant incentives for industrial companies, utilities, and higher education institutions.

-Organizations should engage with energy experts to assess and optimize clean hydrogen utilization within their energy and sustainability strategies.

-By understanding these funding opportunities and taking strategic actions, organizations can leverage the BIL to advance their clean energy initiatives and contribute to a more sustainable future.

-The Inflation Reduction Act offers a Clean Hydrogen Production Tax Credit (PTC) to facilities beginning construction by the end of 2032.

This includes various credits throughout the value chain, such as renewable credits, leading to over $3/kg in credits for green hydrogen production. Developers of blue hydrogen production facilities may opt for the Investment Tax Credit (ITC), receiving up to 30% ITC based on production process carbon intensity. IRA strengthens green hydrogen adoption by providing tax credits for low-carbon hydrogen production and hydrogen fuel cell-electric vehicles.

While the Act supports production methods, it needs more backing for new infrastructure necessary for hydrogen distribution. More regulatory support is essential to scale up this aspect of the market. Currently, a majority of hydrogen in the USA is produced and consumed on-site, with limited distribution via trucks and pipelines, primarily in the Gulf Region, covering a total distance of 1,600 miles.

Key Incentives:

The Clean Hydrogen Production Tax Credit

This is a 10-year incentive program for clean hydrogen production, offering credits of up to $3.00 per kilogram. Additionally, projects have the option to receive a 30% investment tax credit under Section 48 of the Internal Revenue Code. The incentive structure comprises four tiers, each varying based on the carbon intensity of the hydrogen production pathway.

Alternative Fuel Infrastructure Tax Credit

This benefit is accessible for alternative fuels utilized to power motor vehicles. A credit of $0.50 per gallon applies to the following alternative fuels: natural gas, liquefied hydrogen, propane, P-Series fuel, liquid fuel produced from coal via the Fischer-Tropsch processed and compressed or liquefied gas derived from biomass.

From January 1, 2023, onwards, fueling equipment designed for natural gas, propane, hydrogen, electricity, E85, or diesel fuel blends containing a minimum of 20% biodiesel is eligible for a tax credit of 30% of the equipment cost, or 6% if the property is subject to depreciation, not exceeding $100,000.

The Internal Revenue Service (IRS) defines alternative fuels as propane, natural gas, liquefied hydrogen, liquid fuel derived from coal through the Fischer-Tropsch process, liquid hydrocarbons derived from biomass, and P-Series fuels. Biodiesel, ethanol, and renewable diesel are not considered alternative fuels by the IRS. While the term "hydrocarbons" includes liquids that contain oxygen, hydrogen, and carbon and as such "liquid hydrocarbons derived from biomass" includes ethanol, biodiesel, and renewable diesel, the IRS specifically excluded these fuels from the definition.

Hydrogen Demonstration Project Grants

This initiative allocates funds to hydrogen demonstration projects that have the potential to decrease hydrogen costs, minimize carbon emissions and local air pollution, generate well-paying employment opportunities, and offer advantages to underserved communities. Hydrogen Shot concentrates on a range of projects addressing technological challenges in hydrogen production, storage, distribution, and utilization, encompassing fuel cell technologies.

The Regional Clean Hydrogen Hubs (H2Hubs)

This program is overseen by the U.S. Department of Energy (DOE). It aims to support the establishment of a minimum of four regional networks comprising hydrogen producers, potential consumers of hydrogen, and essential connecting infrastructure located in close proximity.

Clean hydrogen, as per this program, refers to hydrogen generated with a carbon intensity equal to or less than 2 kilograms of carbon dioxide equivalent produced at the production site per kilogram of hydrogen.

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