Page 126 - CW E-Magazine (30-1-2024)

Point of View

consumption are synchronised for good system efficiency. But there are regions, particularly in the US, where hydrogen is centrally
produced (from fossil fuels) and ferried short distances to consumers, including through pipeline. These offer the easy possibility of
expanding usage in different applications.

In most other parts of the world, however, the creation of the peripheral infrastructure for hydrogen storage, transport, and distribution
is underdeveloped, and needs to be tackled if the intermittency of producing green hydrogen using renewable energy is to be overcome.
Storage is the most effective way to tackle intermittency, and though it comes with its own technical challenges (given the explosive
properties of hydrogen), there is ample expertise to tackle this, particularly in the chemical industry.

The expansion of power grids so as to accommodate a greater proportion of renewable energy is also a crucial determinant of green
hydrogen expansion. This too will also require scaled-up storage solutions (e.g., batteries).

Hydrogen trade
According to a new report from the Hydrogen Council, an industry lobby group, in collaboration with McKinsey, a consultancy, after
factoring in incentives, about 50% of global hydrogen production is priced under $2.5 per tonne, with the US, Canada, and the Middle
East amongst the lowest cost producers. Most large economies of Europe (France, Italy, and Germany) and some developed countries
in Asia (Japan and South Korea) fall at the high end of the cost curve, while India is somewhere in-between with unit production costs
of slightly under $3 per kg. Significantly, the study finds a 15x ratio between the highest and lowest cost regions (after factoring in
incentives). By 2050, several countries could be producing clean hydrogen at a cost of $1.5 per kg, with the more competitive ones
even reaching a figure of $1.2. Disadvantaged producers, on the other hand, could be saddled with production costs above $3.5 per kg.

With the economics of green hydrogen manufacturing varying from one region to another, an arbitrage opportunity will emerge, in
the form of international trade. According to most experts, the most practical way to transport hydrogen across high seas is in the form
of ammonia, despite the costs associated with its production at the source of hydrogen, and its ‘cracking’ near consumption centres to
release the hydrogen (and the nitrogen). As much as 20-mtpa of green hydrogen demand by 2030 could be met by hydrogen transported
long distances, by pipeline, or as ammonia, methanol, synthetic kerosene, and shipped even across oceans. By 2050, this figure could
rise to 200-mtpa.

Collaborative models under which this can be done are being put in place. These involve multiple stakeholders – hydrogen/ammonia
producers, ship owners, port operators, and end-users (e.g., power producers). Port hubs will be particularly important for regions where
trade (export or import) is expected to contribute substantially to the market.

India’s hydrogen roadmap
India is aiming to be a sizeable producer and net exporter of hydrogen – an ambitious aim that could, for the first time in recent
history, offers the prospect of transforming the country from hugely energy-deficient to one with a reasonable level of self-sufficiency.
The ramifications of this change for the economy as a whole and the pace of development is massive.

To enable all of this, there is a need for a long-term road map and India has done well to have formulated one, along with 47 other
countries. Thanks substantially to these policies, there are today more than 1,000 clean hydrogen projects (including ones based on
natural gas with CCS) in development across the world. About a quarter have reached a Final Investment Decision (FID), indicating they
have all the necessary ingredients to go to fruition. About ten are in the works in India, including from two large business houses (Adani
and Reliance), and the national target is to produce 5-mt of green hydrogen by 2030, from virtually nil today.

To the government’s credit it has emphasised that this development needs to happen in a holistic manner (unlike in lithium ion
batteries wherein there are legitimate fears of trading fossil fuel dependence to a mineral & metal vulnerability). Substantial public money
has been allotted for R&D and technology development to be on the global frontier in each part of the value chain.

Given the size, scope, and economic competitiveness of its renewable energy sector, India is well placed in green hydrogen. In
addition, thanks to proper policy support, industry action, and increased investor interest, one can be optimistic about India’s ability to
emerge as a sizeable hub for green hydrogen.
Ravi Raghavan

126 Chemical Weekly January 30, 2024

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