The government is set to make it mandatory for user industries 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.
Oil refineries and fertiliser manufacturers will be asked to implement the policy immediately after the Cabinet approves the proposal, power and renewable energy minister R K Singh told in an interview.
As per 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. Fertiliser makers will start with 5% green hydrogen, which will go up to 20%.
The policy will be applied to other 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. The policy will create a market for green hydrogen, which in turn will attract investments in its production,” Singh said.
The proposal is sent to Cabinet for the approval. The proposal, on the lines of renewable energy purchase obligation for electricity distribution companies, is at the centre of Singh’s energy transition and carbon reduction blueprint, he added.
“Today, wheeling of renewable energy is free. Companies can bring renewable energy from anywhere to produce green hydrogen. The cost impact will be negligible. Going by our estimates, India can be one of the largest producers of green hydrogen in the world,” he said.
IndianOil, RIL, JSW and NTPC have made plans to set up green hydrogen facilities.