National Logistics Policy must include components on Green Hydrogen Economy

By Gopal Krishna Agarwal,

Honorable Prime Minister Narendra Modi has taken it upon himself to be a global leader in climate change challenges and is committed to the cause of renewable energy. This shows that there is will power at the top leadership level for achieving these goals. Because of this commitment, after COP21, India has taken some bold steps in meeting emission norms. Consequently, after the Paris Climate Change Summit, India’s emissions have reduced by 28% from their levels in 2005, according to a report. We are almost on the verge of achieving the target of reducing emissions by 30% by 2030.

A major noteworthy measure taken by India is to set up the International Solar Alliance, with its head office in India, along with France. Another initiative taken by India to meet its green energy commitments is to obtain 80-85% of its electricity demand through renewable sources by 2050. India is also committed to the United Nations Sustainable Development Goals, incorporating all the 17 goals into the government policies. Recently, India has achieved the target of 40% power generation capacity based on non-fossil sources.

Green hydrogen economy: The baton of a zero-carbon future

Coal’s share in India’s energy mix constitutes over 44% while oil contributes to around 25%. The share of bio-energy and CNG is 21% & 5.8% respectively, while that of nuclear & solar energy is critically low. Being a fossil fuel, coal is a recipe for a climate hazard. On the other hand, oil prices in the country are skyrocketing, and imported oil is inflating India’s import bill. As India treads farther on the road to industrialization, its per capita energy consumption will grow from 30% currently, which is lower than the world average consumption, to almost double in 2040. This is attributed to the fact that India has now displaced US to become the second most attractive destination for setting up manufacturing industries globally.

Though there are certain concerns about large hydro projects, India has a huge potential in it. Similarly, small hydro projects can be important initiatives, although they are nearly non-existent at present. But at the same time, India now has the world’s fifth-largest solar power and fourth-largest wind energy capacities. This energy can be used to produce green hydrogen, a zero carbon emission fuel, and it will be a big game changer for the whole energy sector.

Hydrogen is a big source of energy, and though there are several challenges at present and India is not a big player in this field, the direction in which private investments and the government are moving can reap big rewards for the country. It will help in energy security, decarburization, and meeting the target for reduced carbon emissions. It is estimated that a transition towards hydrogen energy, which can become the most important component on the renewable energy side, will entail an investment of more than US$ 500 billion in the near future.

Many private companies like Reliance, Adani Power, Tata Power and Mittal Power and even some of the government companies in the energy sector, like NTPC, have set up big targets and there is an expected investment commitment of US$ 316 billion by 2030. If government policies are supportive, and challenges pertaining to the implementation of hydrogen energy are met, India can become a big player in this field.

Creating a conducive ecosystem for a green hydrogen economy

At present, cost is a big challenge for hydrogen technology. There is also a big competition on the solar energy side from China. A major challenge that can be found from the private sector is high interest costs. Though the government is continuously reducing interest costs, more sources of energy and funding are needed for this to happen. If new and improved technology is brought along with innovation and research, production challenges can be met. 

Recognizing the challenges and finding solutions is also something the government is working on. It is now coming up with new industrial and logistics policies to address concerns like transportation and availability of raw materials, among others. There is also a focus on building manufacturing bases in India. Under Aatma Nirbhar Bharat, the government has also committed Rs 90,000 crore on upgradation of the power sector, tackling issues of grid reforms, improvement in transmission and improvement in discoms.

Private players as well as the government agree that hydrogen and silicon are novel fields that can generate a lot of wealth for the country. Around Rs 1,500 crore has been committed by the government for setting up this National Hydrogen Mission. Various policies are being implemented and roadmaps are being set up. Ultimately when the objective is clear and there is commitment of the highest level for clean and green energy, India will surely be able to achieve its targets.

The Government is coming out with new National Logistics Policy; it must address issues pertaining to integrated logistics hubs, hydrogen storage, transportation, warehousing, and ports. Similarly, internalizing the environmental cost on the corporate sector’s balance sheet will help in proper project evaluation for the government and also bring better presentation. So, the recording of these environmental initiatives in the balance sheet and internalizing cost is another important issue, where more research and development can take place. Finance accounting professionals, such as from Institute of Chartered Accountants of India (ICAI) can take this initiative. More sources of low cost funding are must to propel a robust hydrogen economy in the country and the government is taking steps towards that.

Gopal Krishna Agarwal is the National Spokesperson - Economic Affairs , BJP