Hindu Editorial Analysis : 18-December-2024
Green hydrogen is increasingly seen as a vital solution to help India meet its climate goals, particularly its ambition to achieve net-zero emissions by 2070. As the world grapples with climate change, green hydrogen, produced using renewable energy, has gained attention due to its potential to decarbonize various industries. However, the production of green hydrogen comes with several financial and economic challenges, particularly in terms of high costs and investment barriers.
Challenges in Green Hydrogen Production
One of the biggest hurdles in green hydrogen production is its high cost. Unlike traditional hydrogen, which can be produced using fossil fuels (grey hydrogen) or with carbon capture (blue hydrogen), green hydrogen is still expensive to produce. Key issues include:
- High Production Costs: The cost of electricity (Levelized Cost of Electricity, or LCOE) and the price of electrolyzers contribute significantly to the high production cost of green hydrogen.
- Investment Disparities: Green hydrogen production costs range from $5.30 to $6.70 per kg, compared to $1.90 to $2.40 per kg for grey or blue hydrogen. This disparity makes it difficult for green hydrogen to compete in the market.
- Financing Barriers: In emerging economies like India, high capital costs make it more challenging to attract investment for green hydrogen projects. In 2024, only 27.6% of announced large-scale clean hydrogen projects had received final investment decisions, reflecting the financial hesitancy within the sector.
Key Initiatives to Promote Green Hydrogen in India
India has launched several initiatives to accelerate green hydrogen production:
- National Green Hydrogen Mission: This mission aims to reduce production costs, create demand for green hydrogen, and establish a certification framework for its use.
- Financial Incentives and Pilot Projects: The government is offering incentives for manufacturing electrolysers and supporting pilot projects in sectors like steel production and mobility.
- Green Hydrogen Hubs: India plans to create hubs that will concentrate green hydrogen production and distribution, improving efficiency and reducing costs.
Overcoming the High Cost of Green Hydrogen
To make green hydrogen more economically viable, several strategies are being explored:
- Blended Finance Models: These combine public and private investments to reduce risks and lower costs. Government-backed loans and incentives can make investments in green hydrogen more attractive.
- Green Bonds: Issuing green bonds can help raise capital for renewable energy projects, attracting investors interested in sustainable investments.
- Carbon Credits and Offtake Agreements: Green hydrogen projects can secure revenue through carbon credits or long-term contracts, improving investor confidence.
- Strategic Industrial Clusters: Developing industrial clusters near renewable energy sources can help create self-sustaining hydrogen corridors, fostering investment.
Why Green Hydrogen?
Green hydrogen is a clean alternative to traditional hydrogen, as it is produced using renewable energy through electrolysis, which splits water into hydrogen and oxygen. This process does not emit greenhouse gases, making it environmentally friendly. India has set an ambitious goal of producing 5 million metric tonnes (MMT) of green hydrogen annually by 2030.
Traditional hydrogen production methods, such as grey and blue hydrogen, still contribute to carbon emissions. Therefore, green hydrogen offers a more sustainable and cleaner option, helping to meet global climate targets and reduce dependence on fossil fuels.
Why In News
Green hydrogen has emerged as a crucial pathway to decarbonize India’s industrial sectors, aligning with the nation’s ambitious goal of achieving net-zero emissions by 2070, while also contributing to global efforts to combat climate change and transition towards a sustainable energy future.
MCQs about Green Hydrogen
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What is the primary challenge in green hydrogen production?
A. Lack of technology
B. High production costs
C. Low demand for green hydrogen
D. Limited renewable energy sources
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What is India’s target for green hydrogen production by 2030?
A. 1 million metric tonnes
B. 5 million metric tonnes
C. 10 million metric tonnes
D. 15 million metric tonnes
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Which of the following is a financial mechanism mentioned in the essay to support green hydrogen projects?
A. Carbon capture agreements
B. Green bonds
C. Public-private tariffs
D. Hydrogen tax breaks
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Which of the following initiatives is part of India’s strategy to boost green hydrogen production?
A. National Green Hydrogen Mission
B. Green Hydrogen Tax Incentives Program
C. National Solar Energy Plan
D. Hydrogen Production Subsidy Scheme
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