CRESPAI

On 1^st February 2022, FM Smt. Nirmala Sitaraman Ji, tabled ambitious budget 2022 in the parliament. One of key highlight of budget this year is government’s determined reiteration of its commitment towards energy transition as well as towards tackling climate change.

FM reiterated what Hon’ble Prime Minister said at the COP26 summit in Glasgow last November, “what is needed today is mindful and deliberate utilisation, instead of mindless and destructive consumption.” The low carbon development strategy as enunciated in the ‘panchamrit’ that he announced is an important reflection of our government’s strong commitment towards sustainable development.

Keeping that in mind some major announcements has been made for sectors like renewable energy, energy efficiency, electric mobility, data centres, building efficiency, grid-connected energy storage and supporting incentives for green bonds. Let us looks some of them here.

 

Solar Energy

In order to support domestic manufacturing of solar panels to meet target of 280 GW of solar energy by 2030, Rs. 19,500 Crs. has been allocated for Productivity Linked Incentives (PLI) for highly efficient modules, with priority to fully integrated manufacturing units from polysilicon to solar PV modules, will be made.

Battery Swapping Policy

Considering the constraint of space in urban areas for setting up charging stations at scale, a battery swapping policy will be brought out and inter-operability standards will be formulated. The private sector will be encouraged to develop sustainable and innovative business models for ‘Battery or Energy as a Service’. This will improve efficiency in the EV ecosystem.

Transition to Carbon Neutral Economy

 

Around 5% to 7% biomass pellets will be co-fired in thermal power plants resulting in CO2 savings of 38 MMT annually. This will help avoiding stubble burning in agriculture fields.

 

In large commercial buildings, through the Energy Service Company (ESCO) business model, energy efficiency and savings measures will be promoted.

 

Four pilot projects for coal gasification and conversion of coal into chemicals required for the industry will be set-up to evolve technical and financial viability

 

Green Bonds

 

As a part of the government’s overall market borrowings in 2022-23, sovereign Green Bonds will be issued for mobilizing resources for green infrastructure. The proceeds will be deployed in public sector projects which help in reducing the carbon intensity of the economy.

 

Infrastructure Status

 

Data Centres and Energy Storage Systems including dense charging infrastructure and grid-scale battery systems will be included in the harmonized list of infrastructure.

 

India’s commitment for energy transition is not new, India has already successful installed over 100 GW renewable energy plants and still have a long way to go. This budget has come in right spirit acknowledging the priorities, let us hope it gets translated in reality in same spirit.

In the last century, if there was one thing that has shaped the face of geopolitics in the world, then that would be energy. However, with alarming rise in global temperature and countries slowly but thankfully committing to net-zero by 2050, the energy transition from fossil fuel to clean energy is bound to happen. In this transition, hydrogen holds the most optimistic role, driving not only the energy transition but also redefining the global fault lines. Let us see, Why hydrogen and what it holds for world as well as India.

 

Why Hydrogen? Several Good reasons

Firstly, Hydrogen is the oldest, lightest and most abundant element in the universe. It is naturally present in many compounds, including water and fossil fuels. Around 120 million tonnes of hydrogen is produced globally, two-thirds of which is pure hydrogen.

 

Second, Hydrogen can be used as a fuel. When burned, it can generate heat of more than 1 000°C without emitting CO2. 5 Further, hydrogen can also be used in fuel cells, where it chemically reacts with oxygen to produce electricity without emitting any pollutants or greenhouse gases. The only by-product of this chemical reaction is water vapour.

 

Third, Clean hydrogen is a potential game changer for reducing emissions and achieving climate neutrality that too without compromising on industrial growth and social development. According to IRENA estimates, hydrogen will cover up to 12 per cent of global energy use by 2050. Also, over 30 per cent of hydrogen could be traded across borders by 2050, a higher share than natural gas today.

Fourth, The transition to green hydrogen will not be the fuel replacement but an overall shift to a new system with political, technical, environmental, and economic disruptions. “Hydrogen could prove to be a missing link to a climate-safe energy future”, Francesco La Camera, Director-General of IRENA, said.

 

Hydrogen playing out geopolitics!

Present geographical distribution of petroleum and natural gas is highly lopsided, creating global powers as well as geopolitical pressure points ruling the global order. This has very much defined the present outline of global friends and foes. However, hydrogen is one of the most abundant elements across the planet and is potent to break hegemony of present energy supplying economies. It will not only challenge but will also threaten the very foundation of these economies.

 

This arising phenomenon has already been sensed by various countries. Present fossil fuel exporting nations like Saudi Arabia, UAE, Oman has already started planning out to diversify their economies. And for other countries like Japan and Germany who will be potential importer of clean energy have also deployed dedicated clean energy diplomacy.

 

India well set for Once in a millennium opportunity.

In the geopolitical game of energy, unfortunately, India has mostly been on the receiving end. Being naturally deficient in fossil fuel made India heavy import dependent. However, since last few years, India is committed to reduce its import dependencies by diversifying its energy basket to renewable and clean energy. Here hydrogen appears to be the natural choice. With world committing to invest in clean energy projects and India having untapped potential with energy needs expected to be doubled in coming decades, Hydrogen driven energy holds great opportunity for India to take a great leave forward shifting from fossil fuel to hydrogen driven energy.

 

This will have multiple benefit for India. One, this will fulfill India’s global commitment for energy transition. Two, this will increase inflow of foreign investment in energy sector. Three, India will be less vulnerable to geopolitical pressure points. Four, hopefully, India can make space for itself in energy geopolitics as a defining actor rather than just being a passive recipient of heat.

 

Seeing potential in the sector India has already launched its National Hydrogen Mission in August 2021, with the ambition of becoming “a global hub for green hydrogen production and export”. Prime Minister Narendra Modi considers green hydrogen vital to making a “quantum leap” towards achieving energy independence by 2047.

 

How far is it in the future?

Next 2 decades are the defining period for the future of hydrogen. According to IRENA estimates, 2020s as a big race for technology leadership. But demand is expected to only take off in the mid-2030s. By that time, green hydrogen will cost-compete with fossil-fuel hydrogen globally, poised to happen even earlier in countries like China, Brazil, and India. Green hydrogen was already affordable in Europe during the 2021 spike in natural gas prices. Refurbishing natural gas pipelines is likely to further boost demand and facilitate hydrogen trade.

 

Currently, the world is finally hoping to have grip after multiple shock waves of pandemic. The desperation to revive the global economy is evident, nonetheless the signs of climate change can also not be ignored any longer. Therefore, economies must grow, and they must grow green this time. This can be the new starting point for global order, with hydrogen being the new gold in this.