Countries with net-zero emission targets are augmenting the usage of green hydrogen due to the absence of technological dominance by a single nation and broader availability of primary resources like renewable energy and water.

With the rollout of the Green Hydrogen Policy on Feb. 17, India has set the wheels in motion towards its energy transition with the development of green hydrogen as well as green ammonia to meet its climate targets.

Under the policy, announced by India's power minister R K Singh, India plans to produce 5 million tonnes of green hydrogen per annum by 2030. The Green Hydrogen Policy forms part of the National Hydrogen Mission announced on India's Independence Day on Aug. 15 last year.

The policy woos investors to develop and deploy green ammonia and green hydrogen by using renewable power from wind or solar to split water into hydrogen and oxygen.

The policy set aside incentives like placing manufacturers in a position to transmit unused green hydrogen energy to the grid.

With its huge landmass, the country will have dedicated manufacturing zones, and to achieve a pan-India growth, the inter-state transmission charges are waived off for 25 years for producers of electric grids, green hydrogen and ammonia. Again, manufacturers will be encouraged to set up bunkers near ports.

However, despite being the third-largest energy consumer in the world, India's target of producing five million tonnes of green hydrogen energy is half of that of the EU, which plans to churn out 10 million tonnes of hydrogen from renewable energy by 2030.

Currently, India's hydrogen demand is primarily located in the chemical and petrochemicals sector. However, most Indian steelmakers are yet to commit to switching over to hydrogen-based technologies.

High cost, risk of undesirable sunk cost, and lack of public awareness have been major barriers in India's hydrogen economy. The current price of hydrogen in the country ranges from $ 4.5 to $ 5.3 per kg. The government wants the cost parity when green hydrogen is produced at $2 per kg.

Though the policy plans to make India an export hub of green hydrogen, the government has set aside only Rs 800 crore in its budget for FY 2021-22.

Shortage of funds can cripple the scheme unless the state-owned firms -- Indian Oil Corp., Bharat Petroleum Corp., Hindustan Petroleum Corp, NTPC, and Gail (India) -- and leading domestic players like Reliance Industries, the Adani Group, Larsen & Toubro, and Greenko chip in with more resources to start pilot projects, infrastructure, and supply chain networks and public outreach programs.

Global competition is already heating up as the EU, China and Australia are cashing in on their cheap and abundant solar availability.

India is a late entrant in the field as the UK, Japan, South Korea, Russia, Colombia, Canada, Germany, France, Australia, Chile, Norway, Spain, the Netherlands, and Portugal have announced national hydrogen plans.

The policy does not impose consumption mandates, especially for those industries that are using grey hydrogen. The government plans to address it later. Maybe in Phase 2, which will be announced later.

The government is planning green hydrogen purchase obligations for refineries and fertilizer plants, starting with 10 percent and increasing it up to 25 percent later.

However, it is unclear what impact such an obligation would have on refineries and fertilizer plants as it can affect utilization at their grey hydrogen-producing units.

To churn out green hydrogen, water, and green electricity as input to the electrolyzer are necessary. Each kiligram of hydrogen uses around 8.92 liters of demineralized water. The availability of sufficient water streams is critical for the success of the policy.

Producing electrolytic hydrogen with renewables costs nearly double the price of using coal, the main source of electricity production in India. At present, India produces around 6.7 million tonnes of grey hydrogen per annum. A report by The Energy and Resources Institute anticipates the demand to reach 23 million tonnes by 2050.

Currently, electrolysers, including their maintenance, constitute a large chunk of the cost of producing green hydrogen. Electrolysers are still expensive. In 2018, an electrolyser producing one cubic meter of hydrogen cost $7,600 per hour. By 2020, it was brought down to -$6,000. The prices will come down drastically given low sales volume and little automation in the industry.

Reliance Industries is building large-scale, low-cost and high-efficiency electrolyzers as part of its $10 billion renewables push. India is targeting 15 gigawatts (GW) of electrolyzer-making capacity and mulls production-linked incentives to boost local production.

Despite the challenges, for a country that imports 85 percent of its oil and 53 percent of its gas, the green hydrogen policy is seen as a game-changer.