Govt announces new green hydrogen policy to cut down fossil fuel use

The central government has unveiled India’s new green hydrogen policy, which will provide low-cost renewable energy, waiver of fee for inter-state power transmission for 25 years for projects commissioned before June 2025 in renewable energy parks and mega manufacturing zones to help the domestic industries to cut down the use of fossil fuels.

The new policy focuses on promoting green hydrogen and green ammonia and will also facilitate the banking of green power while saving surplus power for the green power producer with an electricity distribution company for about 30 days. It aims at building bunkers near ports to store green ammonia for exports.

Mukesh Ambani and Gautam Adani have already announced their mega green hydrogen projects to decarbonise their businesses.

India aims to produce 5 million tonnes (mt) of green hydrogen by 2030.

The race towards green energy comes during the ongoing Russia-Ukraine crisis, which raised energy costs worldwide, particularly India, which imports 85% of its oil and 53% of its natural gas requirements.

The Ministry of Power (MoP) and Ministry of New and Renewable Energy (MNRE) said the government would also order using green hydrogen and green ammonia under the new policy in a phased manner. The government plans to introduce Green Hydrogen Consumption Obligation in fertiliser production and petroleum refining, similar to Renewable Purchase Obligations (RPO).

At the Glasgow UN Climate Change Conference (COP-26) summit last year, PM Narendra Modi pledged to make India carbon neutral by 2070.

RPO will be the green energy consumed for producing emission-free fuel, and electricity consumed beyond the RPO obligation will count towards compliance of those distribution companies (discoms) in whose area such projects are located. RPOs require electricity discoms to buy a fixed amount of renewable energy to cut down the use of fossil fuels.

India’s overall hydrogen demand is expected to be 11.7 mt by 2030 from the current 6.7 mt. Around 54% or 3.6 mt of India’s annual hydrogen consumption of 6.7 mt is utilised in the petroleum refining industry and the rest in producing fertiliser. This grey hydrogen is produced from fossil fuels like natural gas or naphtha.

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