Scaling India’s Hydrogen Ecosystem by Transitioning from Blue to Green Hydrogen

Atanu Mukherjee, President & CEO, MN Dastur & Dastur Energy in a recent interaction with Industry Outlook magazine shared his views on the key challenges in scaling green hydrogen, particularly in terms of renewable energy infrastructure, how existing solid fuel resources like coal and biomass are being explored for hydrogen production via gasification and how can these resources support the green hydrogen transition without undermining sustainability goals and more. With over 30 years of experience, Mukherjee, a clean energy pioneer, leads Dastur Energy's decarbonization efforts, shaping India's CCUS policy and advancing global carbon management for hard-to-abate industries.

India’s National Hydrogen Mission focuses on leveraging renewable energy for green hydrogen production. What are the key challenges in scaling green hydrogen, particularly in terms of renewable energy infrastructure?

The adoption of green hydrogen through renewable-powered electrolysis faces two major challenges: scalability and economics. Achieving the necessary scale requires an enormous renewable energy capacity. For instance, producing one million tons of green hydrogen annually would demand approximately six gigawatts of renewable electricity, which translates to 25 gigawatts of installed renewable capacity. To meet a target of 5 million tons per year, India would need 100 - 125 gigawatts of renewable capacity - a daunting task given current infrastructure and targets.

This raises a critical question: should the focus be on deploying renewable capacity exclusively for green hydrogen production or for decarbonizing the electricity grid? A balanced approach, prioritizing the greatest decarbonization impact, might first focus on greening the grid and later leveraging its low-carbon electricity for green hydrogen production. This strategy allows for gradual scaling of renewable energy while maximizing near-term emissions reductions at better economic feasibility.

In the interim, India can utilize its abundant coal reserves to produce low-carbon hydrogen through coal gasification coupled with carbon capture and storage (CCS). Government-supported coal gasification initiatives could serve as a cost-effective bridge, creating a clean hydrogen ecosystem to facilitate the transition to green hydrogen.

Economic Challenges of Green Hydrogen

The economics of green hydrogen remain a key obstacle. Electrolysis-based hydrogen costs range between $4 and $7 per kilogram, depending on location and resources. In contrast, coal-based hydrogen with CCS can cost as little as $1 to $1.25 per kilogram, providing an affordable entry point for launching a hydrogen economy. Over time, scaling renewable energy to green the grid can reduce baseload electricity costs, improve electrolyzer utilization, and make green hydrogen more competitive.

Transporting hydrogen adds another layer of complexity. Pipelines can increase costs by $1–$2 per kilogram, while liquefaction for truck or ship transport adds $3–$6 per kilogram. To minimize these costs, shared transport and storage infrastructure should be developed to build hydrogen corridors, ensuring economic delivery to end-use points. Expanding Demand for Hydrogen

Achieving a target of 5 million tons of hydrogen annually will require expanding its applications beyond current uses. While hydrogen can replace fossil-fuel-based hydrogen in refineries and fertilizer production, these sectors alone cannot generate sufficient demand for large-scale hydrogen production. Emerging use cases such as replacing coal in steel manufacturing or producing chemicals like methanol using captured CO₂ and hydrogen - offer significant potential to drive future demand.

Hydrogen for Energy Storage

Hydrogen also has a role in renewable energy storage, offering a solution to intermittency issues. It could emerge as a cost-effective alternative to battery storage. Long-duration hydrogen storage, combined with hydrogen turbines, pumped hydro, and emerging low-cost battery technologies, could provide stable, affordable, and clean electricity, supporting the transition to renewable and low-carbon grids. A Phased Strategy for a Hydrogen Economy

India must address challenges related to scale, infrastructure, and cost to position hydrogen as a major energy source while fostering new demand areas. A phased approach, beginning with low-carbon hydrogen, transitioning to green hydrogen, and expanding demand in industries like manufacturing, energy storage, and chemical production can establish a sustainable hydrogen economy.

Existing solid fuel resources like coal and biomass are being explored for hydrogen production via gasification. How can these resources support the green hydrogen transition without undermining sustainability goals?

The coal gasification mission offers a significant opportunity to capitalize on the country’s vast coal saves. Through gasification, coal can be efficiently converted into hydrogen and different chemicals, making a scalable and economically viable solution. With the integration of carbon capture and storage (CCS), the CO₂ emissions from this process can be drastically decreased, producing what is known as blue hydrogen. While a little higher in carbon emissions than green hydrogen, blue hydrogen is a cost-effective option, with production costs ranging from $1 to $1.25 per kilogram. This is more economical when compared to green hydrogen, which right now costs $4 to $7 per kilogram, making blue hydrogen an excellent starting point for building a hydrogen economy.

In addition to coal, biomass can likewise be used for hydrogen production. With carbon capture, biomass-determined hydrogen could achieve negative carbon emissions. However, the economic practicality of biomass is less convincing because of lower energy content, higher handling expenses, and lower throughput productivity. Contingent upon the type of biomass, production costs range from $3 to $4 or more per kilogram, making it a less alluring choice compared to coal.

For establishing a robust hydrogen economy, it is practical to begin with blue hydrogen that is derived from solid fuels, like coal and petroleum coke. Combined with CCS, this approach provides low cost, scalable pathway to hydrogen creation. It can support numerous demand side applications, like industrial processes and energy storage, while at the same time paving the way for the eventual transition to green hydrogen as renewable energy capacities expand and costs decline.

By utilizing existing resources and focusing on cost-effective solutions, India can speed up the adoption of hydrogen as clean energy source and make an establishment for long-term sustainability.

India's National Hydrogen Mission emphasizes the development of green hydrogen, with a focus on regulatory support. How can the recent amendments in the Renewable Energy Purchase Obligation (REPO) be leveraged to accelerate green hydrogen commercialization in India?

To accelerate the adoption of clean and green hydrogen, a promising approach could involve offsetting hydrogen consumption by converting it into corresponding megawatt-hours of clean, renewable electricity. This can be credited in a similar manner to renewable energy credits, encouraging both production and usage. Additionally, regulatory mandates requiring industries to use a specific percentage of clean hydrogen in their operations could further drive market development.

For instance, organizations like Indian Oil Corporation Limited could be required to use 5-10% green hydrogen produced via renewable electrolysis. However, the focus should not solely be on whether the hydrogen is green or blue, but rather on the CO₂ emissions associated with its production. A credit system based on emission levels would be more effective. For example, hydrogen with emissions under 1 kg of CO₂ per kg could earn higher credits, while hydrogen with 1-3 kg of CO₂ per kg could earn moderate credits.

This approach would make the system agnostic to production methods, focusing on cleaner hydrogen at economically viable costs. Over time, the transition could shift from blue hydrogen (with carbon capture) to green hydrogen as renewable energy scales and costs decrease.

A regulatory framework centered on emissions rather than specific production processes would better address the core issue: minimizing CO₂ emissions. Credits could be tied to the amount of CO₂ abated, rather than exclusively rewarding green hydrogen. Such a balanced system would encourage innovation across all clean hydrogen production methods, fostering demand while enabling cost-effective scaling of the hydrogen economy.

These measures could play a significant role in supporting India's hydrogen economy, aligning regulatory mechanisms with sustainability goals and making clean hydrogen both accessible and affordable.