Scaling India’s Hydrogen Ecosystem by Transitioning from Blue to Green Hydrogen

Atanu Mukherjee, President & CEO, MN Dastur & Dastur Energy in a recent interaction with Industry Outlook magazine shared his views on the key challenges in scaling green hydrogen, particularly in terms of renewable energy infrastructure, how existing solid fuel resources like coal and biomass are being explored for hydrogen production via gasification and how can these resources support the green hydrogen transition without undermining sustainability goals and more. With over 30 years of experience, Mukherjee, a clean energy pioneer, leads Dastur Energy's decarbonization efforts, shaping India's CCUS policy and advancing global carbon management for hard-to-abate industries.

India’s National Hydrogen Mission focuses on leveraging renewable energy for green hydrogen production. What are the key challenges in scaling green hydrogen, particularly in terms of renewable energy infrastructure?

The adoption of green hydrogen through renewable powered electrolysis faces two essential challenges such as: scalability and economics. Achieving production at the necessary scale demands huge renewable energy capacity. For instance, producing one million tons of green hydrogen every year would require around six gigawatts of renewable electricity, buttressed by 25 gigawatts of renewable capacity. To meet a target of 5,000,000 tons for per annum, India would require 100-125 gigawatts of renewable capacity, which is an ambitious objective given current infrastructure and targets.

The question is whether to focus on deploying such capacity exclusively for green hydrogen or for greening the energy grid. A balanced approach would include first greening the grid and later utilizing its low-carbon electricity to produce green hydrogen over time. This strategy aligns with the gradual scaling of renewable energy to meet hydrogen production needs.

In the interim, the country could consider leveraging its abundant coal reserves for producing low-carbon hydrogen through coal gasification combined with carbon capture technology. This approach, supported by the government’s coal gasification initiatives, can act as the bridge to a green hydrogen economy by creating a clean hydrogen ecosystem at a low cost.  

The economics of green hydrogen production present another significant hurdle. Electrolysis-based green hydrogen costs range from $4 to $7 per kilogram, depending upon regional and geographic conditions. In comparision, coal-based hydrogen with carbon capture can cost as low as $1 to $1.25 per kilogram, offering a cost-effective pathway to launch the hydrogen economy. Over the long run, scaling renewables to green the grid can diminish costs and support competitive green hydrogen production.

Transportation infrastructure adds another layer of complexity. Hydrogen transport is expensive: pipelines add $1 to $2 per kilogram, while liquefaction for truck transport or shipping can cost $3 to $6 per kilogram. In this way, the focus should be on decreasing production costs as well as minimizing delivered costs at consumption points for ensuring viability.

On the demand side, accomplishing a target of 5,000,000 tons of hydrogen yearly will require growing its applications beyond current uses. While hydrogen can replace fossil fuels in refinery operations or fertilizer manufacturing, and these sectors alone cannot create adequate demand. New use cases, for instance, replacing coal in steel manufacturing or producing chemicals such as methanol utilizing captured CO₂ and hydrogen, offer significant potential.

Hydrogen also holds promise for renewable energy storage. Its ability to address the intermittency of renewable sources could make it one of the cost-effective options to expensive battery storage. Long-duration hydrogen storage and hydrogen turbines could provide stable, clean electricity for supporting renewable grids.

India should address scale, infrastructure, as well as cost challenges in order to position hydrogen as a predominant energy source, while fostering new demand. A phased approach, starting with low-carbon hydrogen, transitioning to green hydrogen, and scaling demand in manufacturing, energy storage, and chemical production, can pave the way for a sustainable hydrogen economy.

Existing solid fuel resources like coal and biomass are being explored for hydrogen production via gasification. How can these resources support the green hydrogen transition without undermining sustainability goals?

The coal gasification mission offers a significant opportunity to capitalize on the country’s vast coal saves. Through gasification, coal can be efficiently converted into hydrogen and different chemicals, making a scalable and economically viable solution. With the integration of carbon capture and storage (CCS), the CO₂ emissions from this process can be drastically decreased, producing what is known as blue hydrogen. While a little higher in carbon emissions than green hydrogen, blue hydrogen is a cost-effective option, with production costs ranging from $1 to $1.25 per kilogram. This is more economical when compared to green hydrogen, which right now costs $4 to $7 per kilogram, making blue hydrogen an excellent starting point for building a hydrogen economy.

In addition to coal, biomass can likewise be used for hydrogen production. With carbon capture, biomass-determined hydrogen could achieve negative carbon emissions. However, the economic practicality of biomass is less convincing because of lower energy content, higher handling expenses, and lower throughput productivity. Contingent upon the type of biomass, production costs range from $3 to $4 or more per kilogram, making it a less alluring choice compared to coal.

For establishing a robust hydrogen economy, it is practical to begin with blue hydrogen that is derived from solid fuels, like coal and petroleum coke. Combined with CCS, this approach provides low cost, scalable pathway to hydrogen creation. It can support numerous demand side applications, like industrial processes and energy storage, while at the same time paving the way for the eventual transition to green hydrogen as renewable energy capacities expand and costs decline.

By utilizing existing resources and focusing on cost-effective solutions, India can speed up the adoption of hydrogen as clean energy source and make an establishment for long-term sustainability.

India's National Hydrogen Mission emphasizes the development of green hydrogen, with a focus on regulatory support. How can the recent amendments in the Renewable Energy Purchase Obligation (REPO) be leveraged to accelerate green hydrogen commercialization in India?

To cultivate the adoption of green hydrogen, a viable approach involves offsetting its consumption by converting it into corresponding megawatt-hours of clean, renewable electricity. This can be credited similarly to renewable energy credits, encouraging both production and usage. Regulatory mandates requiring industries to utilize a particular percentage of clean hydrogen in their operations can likewise drive market development.

For example, organizations like Indian Oil Corporation Limited could be mandated to utilize 5-10% green hydrogen produced through renewable electrolysis. However, the focus shouldn't exclusively be on whether it should be green or blue hydrogen but, on the CO₂ emission levels associated with its production. An system of credits based on emission levels would be more effective. For instance Hydrogen with under 1 kg of CO₂ emission per kg could earn higher credits, Hydrogen with 1-3 kg of CO₂ emission per kg could earn moderate credits.

This approach would make the system agnostic to production methods, emphasizing cleaner hydrogen at economically viable costs. Over time, the transition could move from blue hydrogen (with carbon catch) to green hydrogen as renewable energy scales and costs decline.

An regulatory framework that is focused on emissions rather than production processes would better address the core concern – minimizing Carbon-di-oxide emissions. Credits could be tied to the amount of CO₂ not transmitted, rather than exclusively rewarding green hydrogen. This balanced system would encourage innovation across all clean hydrogen production methods, priming demand while enabling cost-effective scaling of the hydrogen economy.

Such measures could significantly support India's hydrogen economy, aligning regulatory mechanisms with sustainability goals and making clean hydrogen accessible and affordable.