Given the increased thrust to absorb green Hydrogen as a renewable resource, the government is set to make it mandatory for user industries to produce or procure green hydrogen to meet part of their needs.
This is a move that has the potential to make India one of the largest producers of what is being seen as a ‘fuel of the future’ that will play a key role in energy transition and carbon reduction.
Oil refineries and fertilizer manufacturers will be asked to implement the policy immediately after the Cabinet approves the proposal, power, and renewable energy minister R K Singh told Economic times.
According to the Minister, the renewable energy ministry has sent the proposal for Cabinet approval after discussing with pertinent ministries.
The proposal is on the lines of renewable energy purchase obligation for electricity distribution companies and is the focus of the government’s transition and carbon reduction blueprint.
According to the policy, starting 2023-24, refineries will have to use green hydrogen for meeting 10 per cent of their requirement. This will rise to 25 per cent in five years. Fertilizer makers will start with 5 per cent green hydrogen, which will go up to 20 per cent. The proposal for the Cabinet also seeks approval to extend the policy to other industries at a later stage.
The policy will be applied to industries such as steel and the transport sector gradually as the market evolves. “Currently refineries and other user industries produce grey hydrogen from natural gas. This method produces CO2. The policy will create a market for green hydrogen, which in turn will attract investments in its production,” Singh said.
And since wheeling of renewable energy is free, companies can bring renewable energy from anywhere to produce green hydrogen. The cost impact will be negligible. Going by the government’s estimates, India can be one of the largest producers of green hydrogen in the world. The steel industry is also likely to be brought under the policy’s ambit in two years. Indian Oil, RIL, JSW and NTPC have made plans to set up green hydrogen facilities.