Oil refineries and fertilizer manufacturers have been asked by Government of India to produce or procure green hydrogen to meet part of their needs, 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.
The renewable energy ministry has sent the proposal for Cabinet approval after discussing with pertinent ministries. This proposal is on the lines of renewable energy purchase obligation (RPO) for electricity distribution companies.
According to the policy, starting 2023-24, refineries will have to use green hydrogen for meeting 10% of their requirement. This will rise to 25% in five years.
Fertilizer makers will start with 5% green hydrogen, which will go up to 20%. 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.
IndianOil, RIL, JSW and NTPC have made plans to set up green hydrogen facilities.
Hydrogen has wide application in manufacturing and is now being looked at as a clean mobility solution. Green hydrogen is the cleanest fuel as it is produced through electrolysis using renewable energy.
Reference- Times Of India, Mercom India, PIB, Money Control