With an aim to make India the global hub for production , usage and export of green hydrogen and its derivatives, the Ministry of New and Renewable Energy (“MNRE”) has issued the National Green Hydrogen Mission on January 04, 2023 (“Mission”). The Mission aims to achieve the objective of having a production capacity of at least 5 million metric tonnes (“MMT”) of green hydrogen per annum by 2030 with a potential to reach 10 MMT per annum. Certain key points of consideration in the Mission have been highlighted below:

1. Costs associated with sourcing of green hydrogen
   The Mission identifies the following costs of sourcing green hydrogen, which need to be reduced to make the sector more cost efficient:
   • Costs of electrolysers and input renewable energy: Such costs are proposed to be reduced by up-scaling the production and deployment of high-performance electrolysers in sufficient volumes and extending various facilitative provisions for transmission, connectivity, banking, open access, and energy storage green hydrogen production projects.
   • Costs associated with capital subsidy, supply and treatment of water, storage and distribution, conversion of hydrogen into suitable derivates and enabling infrastructure: Such costs are proposed to be reduced by exploring dollar denominated bids, decentralised renewable energy generation, maximizing the utilization of the renewable energy potential on various islands of India, and building of required infrastructure for storage and delivery of green hydrogen derivatives.

2. Phased Approach
   The Mission is proposed to be implemented in 2 phases:
   1. Phase I (2022-23 to 2025-26):
      • Creation of demand while enabling adequate supply by increasing domestic electrolyser manufacturing capacity and incentivisation of indigenization of the value chain;
      • Promote green hydrogen utilization in refineries, fertilisers, city gas sectors, and undertaking pilot projects for initiating green transition in steel production, long-haul heavy-duty mobility and shipping;
      • Establishing framework of regulations and standards to facilitate the growth of the sector.
   2. Phase II (2026-27 to 2029-30):
      • Depending on the evolution of costs and market demand, Phase II will explore the potential of developing commercial scale green hydrogen-based project in steel, mobility and shipping sectors.
      • Develop pilot projects in other potential sectors, such as railways and aviation.
      • R&D activities to be scaled up for continuous development of the projects.

3. Coordinated Work
   The Mission requires all ministries, departments and agencies to take focused and coordinates steps to ensure successful achievement of Mission objectives. It outlines the responsibilities for the following ministries:
   1. MNRE:
      • MNRE will be the nodal coordinating ministry responsible for the coordination and implementation of the Mission.
      • It will formulate schemes and program for financial incentives to boost production, utilization, and export of green hydrogen and its derivatives.
      • It will ensure planned deployment of renewable energy and green hydrogen capacities, support pilot and R&D projects, undertake capacity building and promote international cooperation efforts.
      • Work in coordination with various other governmental agencies for establishing a robust ecosystem of regulations and standards, and frame guidelines and methodologies for monitoring progress in respective sectors, and implementation of the financial outlay for the Mission.
      • Frame model guidelines for transparent competitive bidding for procurement of green hydrogen and establish a framework for the certification of green hydrogen. The Mission envisages setting up of two plants for production of green hydrogen-based urea and DAP.
      • Constitute a working group for the recommendation a national framework for standards and regulations required for green hydrogen.
      • It shall be responsible for creating a enabling policy framework, which will include, inter alia, waiver of transmission charges for renewable energy supporting green hydrogen, facilitating banking, and time bound grant of open access and connectivity, extending benefits available to land acquisition for solar parks, SEZ to green hydrogen related activities etc.
   2. The Ministry of Power will implement policies and regulations for effective and cost-efficient delivery of renewable energy for green hydrogen production and will work with various stakeholders to align the electricity system for large scale production.
   3. The Ministry of Petroleum and Natural Gas will facilitate uptake in refineries and city gas distribution through both public and private sector entities. It will also enable development and facilitation of regulations through the Petroleum and Natural Gas Regulatory Board.
   4. The Ministry of Chemicals and Fertilizers will assist in the adoption of indigenous green ammonia-based fertilizers to reduce the fertilisers’ imports burden. It will also enable procurement of green ammonia for its entities in order to push for bulk demand.
   5. The Ministry of Road Transport and Highways will push for efficient and effective adoption of green hydrogen in the transport sector. It will also assist in technology development for the adoption of green hydrogen in the transport sector.
   6. Ministry of Steel will enhance adoption of green hydrogen in the steel sector. It will assist pilot projects for use of green hydrogen in steel production.
   7. Ministry of Ports, Shipping and Waterways will help in establishing India’s export capabilities for green hydrogen and its derivates. It will also facilitate development of the required infrastructure and drive the adoption of hydrogen/derivatives as a propulsion fuel.
   8. Ministry of Finance will frame suitable fiscal and financial frameworks for promotion of production, utilization and export of green hydrogen and its derivatives.
   9. Ministry of Commerce & Industry will help in boosting investments, assist in ease of doing business, and implement industrial and trade policy measures to lower the cost of production and trade of hydrogen and its derivatives. It will also devise policies and programmes for amplifying the supply chain involved in green hydrogen ecosystem.
   10. Ministry of Railways will play a crucial role in promoting the transition towards the adoption of green hydrogen in their operations. This will also involve the usage of railways for transportation of green hydrogen and its derivates.
   11. Ministry of External Affairs will be build bilateral and multilateral partnerships for supporting the green hydrogen ecosystem development for which it will enter into various collaborations with institutions and government agencies.
   12. The Ministry of Skill Development and Entrepreneurship will work in coordination with MNRE and other ministries for creating requisite skillsets, thereby boosting employability in the sector. Relevant coursework and programmes will be put in place for upskilling manpower to be deployed in the sector.
   13. Ministry of Education will introduce pedagogy and curricula at multiple levels that will cover hydrogen technologies and the latest developments.
   14. State entities will help in project development, manufacturing, setting up renewable energy capacity, and promoting export of green hydrogen derivatives.

4. Mission Components
   The Mission seeks to create demand in the market through the following steps:
   1. Creation of an enabling framework and lending support to hydrogen hubs and port infrastructure to develop a thriving export market.
   2. Government of India will specify a minimum share of consumption of green hydrogen or its derivates by designated customers.
   3. Framing of adequate compliance monitoring guidelines by MNRE.
   4. Enactment of legal provisions for enforcing consumption targets for green hydrogen, under the Energy Conservation Act, 2001.
   5. Competitive bidding for establishing fertiliser plants based on green hydrogen/green ammonia.
   6. Introduce pilot projects for replacing fossil fuel and fossil fuel-based feedstocks with green hydrogen and its derivatives,
   7. Promote Green Steel, i.e., Green Hydrogen based steel to enhance low carbon steel production capacity.
   8. Usage of green hydrogen in the transportation sector is to be considered. The Mission proposes to support deployment of FCEV Buses and trucks, with appropriate viability gap funding available for such deployment.
   9. Green Hydrogen refuelling hubs can be introduced in ports to decarbonise the maritime transport and ports sector. Shipping Corporation of India, on its successful divestment is required to retrofit 2 ships to run on green hydrogen-based fuels by 2027.
   10. The Mission aims to identify and develop regions capable of supporting large scale production and/or utilization of green hydrogen as green hydrogen hubs. Projects in such hubs will be planned in an integrated manner to allow pooling of resources and achievement of scale. 2 green hydrogen hubs are planned to be set up in the Phase 1.
   11. Streamline the process of obtaining approvals and enacting a standard regulatory framework for hydrogen ecosystem. All regulatory action to enable permit hydrogen fuelled vehicles and other applications will be notified within 12 months of the notification of this mission.
   12. Building of robust R&D capabilities and ensuring R&D Projects are goal oriented, time bound and suitably scaled to achieve qualifiable returns.
   13. Fostering skill and public awareness in the sector.
   14. A web-based portal exclusively dealing with the subject with all the relevant regulations and standards will be set up and specific testing facilities will be established with a focus on safety across the value chain.
   15. Suitable testing facilities and certification centres will be formed, and relevant testing protocols will be formulated.

5. The Mission goal is to establish India as a leading producer, consumer, and exporter of green hydrogen and its derivatives. In order to achieve this, the Mission will establish a group; an Empowered Group (“EG”) which will be chaired by the Cabinet Secretary, comprising representatives from government agencies, industry experts, and other stakeholders. The EG will oversee and guiding the Mission activities, monitoring progress, and recommending policy interventions and approving mid-course corrections if required.

6. Key Incentives under the Mission
   In terms of financial impetus under the Mission, 2 financial incentives to support domestic manufacturing of electrolysers, and production of green hydrogen will be provided. The financial incentives will be provided with an intention to reduce the production cost, enabling uptake of green hydrogen in emerging sectors, and ensuring establishment of a domestic manufacturing ecosystem by de-risking the first movers and providing viability support for early innovators.
   
    
7. Risk Mitigation
   The Mission identifies the following risks and mitigation measures:
   1. In order to address strategic risks under the supply chain disruptions in critical inputs, the Mission envisages diversification in supply chains as a mitigating measures;
   2. When risks are in nature of technological risks involving technology disruptions and unforeseen developments, the Mission will address such risk through diversification of technology options, technology agnostic approach in funding support, funding of multiple R&D and pilot threads, and creation of collaborative platforms for industry, academia and startups;
   3. For operational/project level risk under risk categorization of water and land availability plus safety concerns, the Mission will undertake optimization of location of renewable energy and green hydrogen production plants, states will requested to create land banks for renewable energy and green hydrogen deployment and formulation of rigorous safety standards and regulatory mechanisms;
   4. To cater financial and market risks involving sustainable demand, availability of affordable renewable energy, availability of electrolysers, additional infrastructure cost, availability of accessible credits, the Mission will mitigate these risk by creating demands in identified sectors, integrate planning of RE capacity addition, offering incentives to create  domestic manufacturing ecosystem, upping capacity to achieve economies of scale, formulating risk sharing framework in procurement, facilitating projects to access FDI, bond markets, etc.

8. Financial Outlay
   1. The Mission supports both public and private investments. The initial outlay for the Mission will be INR 19,744 crore, including an outlay of INR 17,490 crore for the strategic intervention for green hydrogen transition programme.
   2. INR 1,466 crore is reserved for pilot projects, INR 400 crore R&D, and INR 388 crore towards other Mission components.

9. Expected Outcome
   By 2030, the Mission expects to increase India’s Green Hydrogen production capacity to 5 MMT per annum. Add a renewable capacity of 125 GW, create over 6 lakh jobs, and reduce the CO2 emissions by 50 MMT per annum.

This update has been contributed by Arka Majumdar (Partner), Siddhant Satapathy and Aarvi Singh (Associates)

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