Explained: What is green hydrogen and how will the Centre’s new policy boost its production

The Centre on Thursday released the first part of its much-awaited National Green Hydrogen Policy.

Introduced as part of the government’s energy transition plan, the objective is to reduce fossil fuel usage and increase penetration of green fuels.

Power and New and Renewable Energy Minister Raj Kumar Singh said the policy will help in the production of 5 million tonnes of green hydrogen by 2030.

The policy launch has been lauded by industry giants, but what does it exactly mean and how do we benefit from it?

What is green hydrogen?

First things first, here’s what green hydrogen is.

Green hydrogen is produced using renewable energy and electrolysis to split water and is distinct from grey hydrogen, which is produced from methane and releases greenhouse gases into the atmosphere, and blue hydrogen, which captures those emissions and stores them underground to prevent them from causing climate change.

The International Energy Agency has noted that green hydrogen would save the world from 830 million tonnes of CO2 that are emitted annually when this gas is produced using fossil fuels.

However, there are some questions about the viability of green hydrogen because of its high production cost.

What does the National Green Hydrogen Policy state?

The new policy provides several incentives for manufacturers, consumers of green hydrogen and green ammonia.

Under the policy, companies will have the liberty to set up the capacity to generate electricity from renewable sources such as solar or wind anywhere in the country by themselves or through a developer. This electricity will be allowed to be wheeled, free of cost through open access of the transmission grid, to the plant where hydrogen is to be produced.

The government will also allow banking or storage of excess green hydrogen produced by any company for up to 30 days, in case of capacities that are set up before 2025.

The power ministry has also waived the power transmission charges for 25 years for these units, allowed them to buy renewable power from exchanges or their own unit and allowed these companies to bank unconsumed renewable power for up to 30 days with power distribution companies (discom). These companies will be provided open access within 15 days of application.

As the Indian Express explains, this means that a green hydrogen producer will be able to set up a solar power plant in Rajasthan to supply renewable energy to a green hydrogen plant in Assam and would not be required to pay any inter-state transmission charges.

What aim will the policy serve?

The launch of the National Green Hydrogen Policy comes after Prime Minister Narendra Modi had announced it from the ramparts of Red Fort during last year’s Independence Day address to the nation.

The policy is part of the mission to cut down on India’s greenhouse gas emissions. It is aimed towards meeting the climate targets and making India a green hydrogen hub.

The ministry on Thursday said that the implementation of the policy would provide clean fuel to the common people of the country. “This will reduce dependence on fossil fuel and also reduce crude oil imports. The objective also is for our country to emerge as an export hub for green hydrogen and green ammonia.”

Reactions to the policy

ACME Group, which recently announced setting up a green hydrogen facility in Bikaner, was the first to react, according to a report in the Business Standard.

“We specifically welcome the provisions to set up bunkers near ports for export of green ammonia,” Manoj K Upadhyay, founder and chairman, ACME Group.

ReNew Power, which recently joined hands with L&T to set up green hydrogen facilities, said more clarity was needed, but the overall move was a step in the right direction.

With inputs from agencies

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