post cover

The weekend read: Beyond the hydrogen hype

In conversation with TERI's Will Hall

logo

Lou Del Bello

Oct 18 2020

7 mins read

0

Welcome to the weekend edition of Lights On, a newsletter that brings you the key stories and exclusive intel on energy and climate change in South Asia. 

In case you missed this week’s analysis of the IEA’s flagship report World Energy Outlook, you can catch up here.

This explainer and today’s interview are examples of premium content that will go behind the paywall starting November. This newsletter takes about 20 hours of work every week and readers’ support is the only way to keep it going without sponsors or advertisement.

The good news is that if you want to become a member, you can get a 20 percent discount for the next two weeks. If you are a student, grab your membership with a 60 percent discount and pass it on to your classmates. You can also become a founding member by pledging $110, or whatever amount you like (above the annual membership price).

Get 20% off for 1 year

Caption

Steel workers - Image credit: Needpix.com

India has been gripped by hydrogen fever.

With the global climate crisis raging, the idea that we could power industries and vehicles through the most abundant gas in the universe, while emitting vapour instead of toxic fumes, is more appealing than ever. 

Scientists have toyed with hydrogen technologies for a long time, with little success in deploying them at scale, but as countries now scramble to wean themselves off coal as fast as possible, hydrogen is back in the mix. 

Hydrogen is all around us but doesn’t occur naturally; it comes as part of compounds such as water or methane, and it has to be separated before it can be used. Methods such as electrolysis, where an electric current is used to split water into hydrogen and oxygen, have never been particularly cheap or clean, because the electricity was produced through fossil fuels. 

India’s competitive edge

But as countries race to decarbonise, the falling prices of technology and clean energy have reignited hopes that hydrogen may well be the next big thing for the global energy transition, and India has a competitive edge.

“NTPC is looking at hydrogen in a big way and our focus is entirely on green hydrogen,” Mohit Bhargava, director for renewable energy at India’s biggest power producer and coal giant, said in a statement. “We believe $2/kg hydrogen is possible in the next three to four years, if you are able to clearly create the market, for example in the steel and ammonia sectors.” To put this into context, recent estimates put the price of hydrogen produced in the US and EU somewhere between US$4.5 and $8 per kg. 

“India is particularly well placed to take advantage of hydrogen,” says Will Hall, an associate fellow at The Energy and Resources Institute (TERI) in Delhi. “First of all, it’s got some of the cheapest renewable tariffs in the world. Which means that the cost of green hydrogen can be really competitive.” India has some of the most abundant and available renewable resources in the world as well, he says. 

And while other economies may plan to use natural gas as a transition fuel as they phase out coal and decarbonise their industrial sectors, India still imports around half of its natural gas. “The current prices of imported natural gas are pretty high, so I think there is potential for hydrogen to start displacing fossil fuels at a faster rate in more parts of the economy versus elsewhere in the world,” Hall says.

Beyond the hype

Does that mean that in a few years smog-belching chimneys and polluting cars will be a thing of the past, and soot emissions will be replaced by harmless warm vapour? Not so fast. 

“I use the term hydrogen economy myself, but I think that it can give the wrong impression.” Hall says. “Hydrogen is sometimes viewed by people as a panacea that will solve all of India's energy problems right away.” In reality, he says, TERI’s early assessments suggest it might meet up to 15 percent of final energy demand by 2050, or 2060. 

Another common misconception is that hydrogen can be deployed at scale to power cars and other lighter vehicles. In this sector, “the pace of progress that you've seen with electric vehicles has been so fast, that it will undercut hydrogen in all four wheeler segments,” Hall says. It’s clear that the scale of investment in technology progress will only increase the gap between hydrogen and battery vehicles, he says, “and that’s where we are trying to shift the focus away from a segment which we view as a bit of a dead end into areas where we'd have much higher value for hydrogen.”

The way forward

Scientists agree that any strategy on hydrogen should be nested within the broader strategy for energy transition. On that basis, Hall says, “you want to do energy efficiency first, then you want to start to decarbonize your power sector, which the government of India is already working on.” 

The next step is to directly electrify end-use demand - things like batteries, electric vehicles, heating, cooling and cooking. This is most efficient if the electricity is produced right where it's needed, avoiding transmission costs and losses, for example through rooftop solar panels. “And only when you look across the economy, and identify those areas which you can't directly electrify, only then should you be looking at hydrogen or other low carbon fuels,” Hall says.

Hydrogen’s greatest potential lies in heavy industry, for example in fertiliser production requiring ammonia, or in the steel sector, where it can be used to process iron ore. These obscure industrial processes may not be as sexy as the next generation of hydrogen powered cars, but they weigh heavily on India’s carbon budget. Steel manufacturing is expected to grow five-fold in the next 30 years, and is still heavily dependent on coal. If it’s not made more efficient, steelmaking is poised to add 35 percent to India’s CO2 total emissions, but by replacing coal with hydrogen produced with clean electricity, the sector’s emissions could drop by 94 percent.

This is not going to happen overnight, but by the end of the decade “things will really take off,” says Hall. “The assumption is that the cost of renewables and electrolysers will continue to fall, and there will be some level of policy support to get things started in the late 2020s.” 

Globally, hydrogen is essential to address key carbon intensive sectors that would be difficult to decarbonise through other existing technologies. But for India, it’s also the opportunity to take the lead in an emerging industry in a way it didn’t manage for solar photovoltaic. “The energy transition at the moment is not a ‘Make In India’ story,” says Hall. “It has been driven by a few technologies, such as solar panels and batteries, that have been mostly imported from China.” If India wants to pursue a path to green hydrogen, which will be essential to fully decarbonise its economy, “it should really work hard to try and indigenise electrolyser manufacturing capability.”

This could happen in a phased way, by initially teaming up with foreign businesses where the technology is more advanced. “After that, you can develop manufacturing hubs in different parts of India, where scientific institutions are already at work on hydrogen but still lack the capacity to translate their research into manufacturing technologies.” 

If India fails to act now, in less than 10 years it may be outpriced by China, which is currently already producing the cheapest electrolysers in the world. “Obviously, India would not want that from a geopolitical standpoint, but also from a job creation perspective,” Hall says. 

Hydrogen will never contribute to a clean energy revolution the way solar does, but it’s a strategic technology that will become essential to target some of India’s highest polluting sectors. And while we may hear a lot about fuel cells for cars and other shiny innovations, the hydrogen story hinges on smart policies at least as much as on technological advances.

That’s it for today! If you’ve been forwarded this newsletter and you’d like to read it every week, you can subscribe below, for free. If you want to become a member, don’t miss your early bird discount that is up for grabs until November 1!

Get 20% off for 1 year

Read more posts like this in your inbox

Subscribe to the newsletter