Prime Minister Narendra Modi’s recent visit to Germany has injected fresh momentum in the burgeoning Indo-German cooperation in sustainable energy technologies. Within the ambit of the sixth India-Germany Inter-Governmental Consultations, a slew of agreements was signed between the two sides to strengthen and reinforce collaboration across a diverse milieu of stakeholders. One that elicits some attention as well as analysis is the Indo-German Hydrogen Task Force. Supported by the Indo-German Energy Forum, with the objective of evolving a robust bilateral green hydrogen roadmap, the task force was established as a spinoff of the Joint Declaration of Intent between both parties on the Partnership for Green and Sustainable Development. It seeks to act as a catalyst to facilitate India’s aspiration and capability to become a hub for green hydrogen production and export.
GREEN HYDROGEN AND DECARBONISATION: FINDING COMMON GROUND
The brouhaha around hydrogen is no secret in the energy transition debate. Hence, if one were to transpose the Indo-German hydrogen partnership into this debate, it is essential to sieve out the rationale and deliverables from the cacophony of hype and hyperbole. In terms of rationale, first and foremost, both countries are major importers of hydrocarbon fuels, virtually rendering them susceptible to the vagaries of geopolitics, supply shocks and increasing price volatility. The second and more socio-environmentally cognizant case for hydrogen is its potential role in helping to achieve the 2030 emission reduction targets as well as the net-zero commitments pledged at the Glasgow Climate Summit. Given the emphasis on electrification as the holy grail of the energy transition, the long-term sustainability of the process depends on the degree of decarbonisation of the energy-conversion systems. In the “hard-to-abate” sectors with more obdurate emissions, such as the steel and chemical industry, or aviation and long-haul freight transportation, green hydrogen produced from renewable electricity could act as an alternative carbon-neutral energy carrier. A molecule of hydrogen has a higher energy density (energy content per unit weight) over conventional petroleum derivatives such as petrol and diesel. Hydrogen fuel cells could therefore be a superior competitor, both for energy storage and as an energy carrier, to not only internal combustion engines but also Lithium-ion batteries used in electric vehicles.
Hydrogen has wide-ranging applications across various energy-intensive sectors. Far from being a flexible energy carrier in fuel cells, helping to generate power for mobility with zero emissions, it serves as a medium for the potential storage of intermittent renewable energy—which otherwise cannot be efficiently absorbed into the power grid in real time. This is the upstream segment of hydrogen production where the excess installed generation capacity of renewables is optimised to split water into hydrogen and oxygen inside an electrolyser. Since the entire process is free of emissions, the hydrogen produced is termed green. However, most hydrogen produced today is grey, derived from either coal or natural gas feedstocks and contributing to CO2 emissions. The biggest consumer of grey hydrogen is the fertiliser industry, which utilises hydrogen to produce compounds such as ammonia and methanol. Green hydrogen produced from renewables is therefore imperative to the decarbonisation goals. This practically applies to the entire hydrogen value chain—ranging from the technology and process of production to storage and application.
Germany approved its National Hydrogen Strategy in 2020. Accordingly, sustainably produced hydrogen has been identified as an integral component in sector coupling—an industrial jargon that beckons creating linkages between energy producing systems and traditionally disparate recipient sectors such as power/electricity generation, industry, transportation, and buildings. While also promoting blue and turquoise hydrogen (hydrogen extracted from natural gas through CO2 capture technology) as expedient pathways to achieving the EU’s ambitious emission reduction targets, the strategy nonetheless champions green hydrogen as the more sustainable long-term option. A key deliverable is the creation of a stimulus package that provides for an additional 9 billion euros for boosting hydrogen technologies domestically and via partnerships involving international stakeholders. One of the primary objectives of the action plan is to enable German companies and research institutes to disrupt the fledgling hydrogen value chains with cutting edge innovations. It seeks to fast-track the commercialisation of existing pilot hydrogen technologies and reduce the cost of production of the green fuel. This is hoped to be achieved through a combination of policy support and leveraging market instruments to drive competition. Acknowledging the limitations of domestically producing green hydrogen on a largescale, the strategy envisages that Germany will have to rely on future imports of the fuel from overseas production hubs. This explains the German perspective of wanting to assume global responsibility in fostering a hydrogen alliance with prospective production/export hubs spanning continents—say, for example, in Australia, Africa (Morocco and Namibia) and Latin America (Chile).
With PM Modi’s announcement last year of a National Hydrogen Mission, India has clearly signalled its intention to become a global green hydrogen production and export hub. The Green Hydrogen Policy was formulated to boost the production of green hydrogen and its associated compounds such as green ammonia and green methanol. Whereas it further seeks to incentivise their downstream applications as industrial and chemical feedstocks respectively. India is already a leading destination for renewable energy investments and has witnessed a rapid expansion of photovoltaic solar and wind energy generation capacity over the past decade. However, the intermittency of renewable energy sources renders them inflexible to fulfil the cyclical pattern of power demand within a huge country such as India. For this reason, coal plants are increasingly operated as cyclical units to balance the baseload and offset fluctuations that may lead to the collapse of the grid. While this process consumes more coal in the form of parasitic load—resulting in less efficiency and more emissions—the cleaner alternative is to use gas-fired peaking plants. However, India does not have sufficient reserves of natural gas or enough of spare gas-fired power generating capacity that could be immediately mobilised to respond to peaking power cycles. This has often led to operational delays in effectively integrating renewables into the nation’s arterial power grid networks.
As opposed to the conventional wisdom of keeping energy decentralised, green hydrogen that is generated from the same intermittent renewables could be stored as chemical energy in electrolysers. Or it could later be converted back to electricity through reverse electrolysis using fuel cells, or conventionally using gas turbines or combined cycle power plants. Otherwise, it could be used as a feedstock in refineries for removing sulphur from oil distillates, or for that matter, in iron and steel and its associated industries such as cement. Nonetheless, a significant consumer of hydrogen (heretofore, grey hydrogen) in India is its gargantuan, albeit heavily subsidized, fertiliser and petrochemical complex. These subsidies play a vital role, serving as a support system, for the country’s large unorganised sector. Some reformative measures have been announced by the Ministry of Power to reward those green hydrogen developers and stakeholders across multiple energy-consuming sectors that are willing to comply with the government’s green hydrogen and green ammonia purchase obligations. The concessions provided range from financing assistance to transmission and distribution privileges.
WHY IT MAKES SENSE TO JUMP ON THE HYDROGEN BANDWAGON
As a timely initiative, there is substantial optimism that the Indo-German Green Hydrogen Task Force will be able to draw synergies between the respective hydrocarbon strategies of both parties. Provided that there is a well-coordinated action plan involving key stakeholders from both sides, India is conveniently positioned to seize the early-mover advantage in the dash for hydrogen. Challenges exist in terms of bringing down the cost of not just renewable energy generation, but also the material and manufacturing costs of critical green hydrogen technologies such as electrolysers and fuel cells. Hence, it may likely take at least another decade before hydrogen production could achieve sufficient economies of scale—a crucial determinant for a commodity to become mainstream and gain broader acceptance. This gives India ample time to develop a sustainable hydrogen ecosystem. One possible way of doing so is by leveraging cooperation with countries that are intent on consolidating their global leadership in renewable hydrocarbon technologies. The existing higher investment costs for electrolyser production in a highly regulated EU could mean that German companies are more inclined towards entering joint-manufacturing arrangements with their counterparts in low-cost destinations such as India.
Green hydrogen may well be the oil of the future. In the case of India, it holds immense promise as a fuel that could decisively satiate the energy needs of a rapidly industrialising economy without compromising on the urgency towards climate action.
Dr Ramu C.M is an independent analyst on energy and international politics. He has a PhD in Geopolitics and International Relations, with specialisation in the geopolitics and geoeconomics of networked energy infrastructures.