National Green Hydrogen Mission

GS Paper III Indian Economy

Context:

India aspires to become a global hub for green hydrogen production, but it faces resource challenges.

The Union Cabinet has approved the National Green Hydrogen Mission in Jan 2023.
Budget Outlay: Rs. 19,744 crore, for various components.
Aims: To make India a global hub for the production, utilization, and export of green hydrogen and its derivatives.
Implementation: Ministry of New & Renewable Energy
Sub Schemes under the National Green Hydrogen Mission:
- Strategic Interventions for Green Hydrogen Transition Programme (SIGHT)
  - It will fund the domestic manufacturing of electrolysers and produce green hydrogen.
- Green Hydrogen Hubs:
  - States and regions capable of supporting large scale production and/or utilization of hydrogen will be identified and developed as Green Hydrogen Hubs.

National Green Hydrogen Mission Outcomes by 2030:
- Development of a green hydrogen production capacity of at least 5 million metric tonnes (MMT) per year.
- Addition of about 125 GW of renewable energy capacity.Over Rs. 8 lakh crore in total investments.Creation of over six lakh jobs.
- Reduction in fossil fuel imports over Rs. 1 lakh crore.
- Averting nearly 50 MMT of annual greenhouse gas emissions.

Hydrogen Consumption in India

India currently consumes approximately 6 million tonnes of hydrogen annually.
The primary consumers are the fertilizer industry, utilizing 3.25 million tonnes, and refineries.
By 2050, industry estimates suggest a surge in hydrogen demand, reaching 28 million tonnes.
The goal is for 80% of this demand to be met with green hydrogen.

- Creation of export opportunities for green hydrogen and its derivatives.
- Decarbonization of industrial, mobility, and energy sectors.
- Reduced dependence on imported fossil fuels.
- Development of indigenous manufacturing capabilities.
- Employment opportunities and technological advancements.

National Green Hydrogen Mission

Incentive Disparity: The starting incentive of Rs 50 per kilogram, dropping to Rs 40 in the second year and Rs 30 in the third year, is perceived as insufficient to stimulate significant investment.
- Global Comparisons: The US provides up to $3 per kilogram in base tax credit. Additionally, the U.S. has committed $8 billion for the development of regional hydrogen hubs.
- Europe offers around 4 Euros/Kg for green hydrogen projects, making it a more attractive destination.
Funding Insufficiency: The government’s allocation of around Rs 5,400 crores for funding 1.35 million tonnes of green hydrogen production for three years is considered meager.
- It represents only around 40% of the total budget for fuel production.