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Like a cherubic newborn, green hydrogen has held a global fascination. But scratch the surface, it is evident that its time is a long way away. The Government of India has approved financial support to 8 companies for setting up 1.
5 GW of electrolyser capacity and to 10 companies for producing 4,12,000 tonnes of green hydrogen. This is against a vision of reaching 5 million tonnes (mt) of green hydrogen production by 2030. The economic rationale of providing financial handouts to companies getting into nascent fields is that the initial support would make them stand on their own legs over a reasonable period of time.
But by all accounts, green hydrogen producers would not be competitive on their own for a very long time and would need to be perpetually supported. “Producing renewable hydrogen today is generally one-and-a-half to six times more costly than unabated fossil-based production,” notes the International Energy Agency in its recent Global Hydrogen Review, 2024. Last week, the International Institute for Sustainable Development (IISD) and the Indian think-tank, Centre for Study of Science, Technology and Policy (CSTEP), released a study titled ‘Budgeting for Net Zero’, which delved into the various segments of green energy, such as renewable energy and storage.
On green hydrogen, it said, “Our results suggest that GH2 will not become cost-competitive with hydrogen from natural gas (“grey” hydrogen, the benchmark) until after 2050.” Perfecting your rooftop solar’s efficiency More thermal power planned Carbon credits: Payback in greenback Compressed biogas: Far short of the 5,000-plant mark, but getting there? Splicing solar, micro-hydropower It observed that the government’s subsidies covered only about 5 per cent of the ‘cost gap’, which “will be exhausted before 2030.” To get to the 2030 target of 5 mt, the government would need to spend close to a percentage of the national GDP to keep subsidising green hydrogen to make it competitive with ‘grey hydrogen’ and still “further support would be required until cost parity is reached after 2050”.
All this reminds one of what Dr Fatih Biron, the Executive Director of IEA, said at an energy conference in Goa in July 2023 (and reported in this paper): “Green hydrogen is not something for today, not something for tomorrow and maybe not something even for the day after tomorrow.” IEA’s Global Hydrogen Review 2024 has a fund of data points that substantiates Birol’s view. First, it looks at the green hydrogen production scenario and then at electrolyser manufacturing.
Indeed, installed electrolyser capacity, which was 1.4 GW at the end of 2023, could reach 5 GW in 2024 but 70 per cent of this will come from China. If you count all the announced projects for green hydrogen production (like India’s 4,12,000 tonnes), it adds up an equivalent of 520 GW of electrolyser use by 2030; only 4 per cent is either under construction or reached ‘final investment decision’, says IEA, adding tellingly that “progress is being made, albeit far more slowly than was expected a few years ago”.
As for electrolyser manufacturing, annual production capacity doubled to 25 GW in 2023 — 60 per cent in China. Global product pipeline to 2030 adds up to 165 GW/year — less than a third have reached ‘final investment decision’. (Renewable energy minister Pralhad Joshi said in July that India would have 100 GW of electrolyser capacity by 2030; NITI Aayog expects 20 GW.
) “Producing renewable hydrogen today is generally one-and-a-half to six times more costly than unabated fossil-based production,” notes IEA. Further, 40 per cent of the planned green hydrogen projects are in water-stressed regions — feed-water for electrolyser will only add to the stress. Looking at all these, clearly the time for green hydrogen is yet to come.
Someday, technology will hammer costs down — the best bet for it is electrolysers using sunlight and sea water. Until such time, pursuit of green hydrogen will be chasing a chimera. The Budgeting for Net Zero study, in the making of which many institutions and experts participated, calls upon the government to “re-evaluate the current target, which was set in 2020 when the prevailing assumptions for cost reduction GH2 were more optimistic”.
It suggests a “revised timeline” to develop a green hydrogen industry in India “but at a realistic level of ambition”. Comments.
