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New Policy to Cut Green Hydrogen Cost by 40-50%: IOC

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Country’s largest petroleum company Indian Oil Corporation (IOC) will set up ‘green hydrogen’ plants at its Mathura and Panipat refineries by 2024 to replace carbon-emission units. The company believes that the recently announced Green Hydrogen Policy is an important initiative in energy transition and will help reduce costs.

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IOC Director Research and Development SSV Ramkumar says the new policy will cut the cost of manufacturing green hydrogen by 40-50 percent.

“This policy will prove to be the biggest ‘pro’ for the production of green hydrogen,” he told PTI here.

Petroleum refineries, fertilizer plants and steel units use hydrogen as a fuel in the process to produce finished products.

Hydrogen is used in refineries to remove excess sulfur from petrol and diesel. Currently, hydrogen is produced from fossil fuels such as natural gas or naphtha, and this generates carbon emissions.

The IOC plans to replace this ‘gray hydrogen’ with ‘green hydrogen’ – also known as ‘clean’ hydrogen. In this, energy is harnessed from renewable energy sources such as solar or wind, and water is split into two hydrogen particles and one oxygen particle through the process of electrolysis.

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Ramkumar said, “The main cost of renewable energy at Rs 2 per kilowatt (or per unit) is actually the cost of the production site (in solar farms in Rajasthan or Ladakh, etc.). There are different charges for sending it through transmission lines to different states. After that the cost goes up to Rs 4-7 per unit.

He said that at the cost of factory gate at Rs 4 to 7 per unit, the cost of production of green hydrogen comes to Rs 500 per kg. Whereas in the current gray hydrogen, it sits at just Rs 150 per kg.

Under the hydrogen policy announced on February 17, open use of renewable energy for production of green hydrogen will be exempted and there will be no central surcharge and inter-state transmission duty. This facility will be available on projects to be started before June 30, 2025.

Ramkumar said that this will essentially reduce the production cost of green hydrogen by 40 to 50 percent.

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