Green hydrogen holds strong promise for India’s energy self-reliance
Asia has a very significant role to play in the global energy transition. However, Asia is not a homogenous entity — its economies are at different stages of development with vast disparities in energy endowments.
India is an important part of the Asian energy transition. As the country’s largest private sector energy and infrastructure conglomerate, the Adani Group is playing a leading role in the provision of affordable, clean, and reliable power to accelerate economic growth needed for improving the quality of life of India’s citizens.
First, some facts. It is all too easy for the western media to portray India as one of the top five emitters of GHG emissions. However, this gravely misses the point: India’s per capita emissions are one-fifth to one-tenth of that of the developed economies. The nation’s per capita energy consumption is less than half of the world’s average, and the disparity is even starker when one considers India’s 3% share of accumulated emissions, which is less than one-thirtieth of that of the US and the EU on a per capita basis.
The above facts notwithstanding, both developed and developing countries must work together to address global warming. Given that developing economies are more likely to face disproportionately adverse effects of climate change, they do not have the luxury of pointing the finger at the developed world for causing the problem. Rather, they have to chart a path to grow responsibly. Developed economies also bear a responsibility to support developing countries, so that these countries are not forced to sacrifice much needed economic growth while bearing a disproportionate share of the burden of mitigating climate change.
One of history’s great economic miracles has been China’s rapid growth which has transformed the material well-being of its people. While it may be common to hyphenate China and India, any comparison needs to be nuanced notwithstanding the similarity in the size of their billion plus populations. India is 10-15 years behind China where rapid industrialization during 2000-2013 took China’s current share of global GHG emissions to 24%. India has a long way to go in its economic development trajectory — India’s per capita electric power and cement consumption are just one fourth of that of China.
India’s path to a $5 trillion economy by 2025 requires an investment of more than $800 billion. This investment will go towards scaling up the nation’s energy system and building much needed infrastructure, which will lead to an inevitable rise in emissions. For this reason, India has focussed two of its Nationally Determined Contributions (NDCs) on reducing the emission intensity of its economy, as well as an ambitious plan to increase the proportion of renewables in its electricity generation mix. India is well on track to exceeding these two NDCs as part of its Paris obligations.
The Adani Group is a microcosm of India, and the Group Chairman’s vision of nation building has been the guiding framework for responsible growth. The Chairman, addressing the 2021 JP Morgan India Investor Summit, pledged that the Group would exceed India’s emission intensity reduction goal. He also noted that the Group’s renewable pipeline has already reached 25 GW — a full four years ahead of its planned target date of 2025 – and that Adani Green Energy Limited is on track to becoming the world’s largest renewable energy company by 2030. The Chairman also announced that 75% of the Group’s planned capital expenditure will be in green businesses, and that the Group will invest $20 billion over the next decade in renewables, green component manufacturing, and the enabling infrastructure to accommodate a greater share of renewables in India’s energy system.
As India and the Adani Group continue to build a globally leading renewables capacity over the next decade, and the country ramps up much needed infrastructure and industrial capacity, it is more critical than ever that India’s affordable and reliable base-load power is in place. This need does, however, pose a number of challenges. India does not have abundant domestic natural gas, and imported LNG is too expensive for electricity generation (it is also needed for more valuable end-uses such as the chemicals value chain). India is also dependent on uranium imports, and any significant expansion of hydroelectricity will require a careful consideration of ecological impact and community displacement.
Hence, coal will remain an essential component of India’s base-load power over the next two decades until energy storage technologies, such as batteries and green hydrogen, become more affordable. Again, the Group is conducting itself responsibly by investing in advanced technology — its thermal portfolio is at least 7% less emission-intensive than India’s, and is among the most emission-efficient in the world. To further reduce the emission-intensity, Adani Power Limited — the Group’s thermal power business — plans to blend biomass with coal and is investigating pilots for co-firing of hydrogen and green ammonia, as well as pilots for carbon capture and utilization.
Green hydrogen holds a strong promise for India’s future energy self-reliance. It is not too difficult to imagine a scenario where green hydrogen at a price of less than $1/kg — coupled with the projected reduction in the cost of combined cycle hydrogen turbines and fuel cells — will not only allow the country to make a transition from fossil fuels, but will also free India from the debilitating financial burden of energy imports.
This opportunity was signalled by Prime Minister Narendra Modi when he announced the National Hydrogen Mission in August 2021 on India’s Independence Day. This ambitious plan builds upon India’s target of 450 GW of renewables by 2030. It sends a strong signal for demand for green hydrogen via mandates in sectors such as fertilizers and refining, provides for viability gap funding and supply-side incentives, such as waivers on import duty for electrolysers, as well as manufacturing incentives to assemble and localize electrolyser manufacturing. Addressing the UN General Assembly, Prime Minister Modi also stated his ambition for India to become one of the largest green hydrogen hubs in the world.
Given the Adani Group’s capabilities in large-scale renewables and transmission and distribution infrastructure, green hydrogen is a natural adjacency and a logical next step. At the JP Morgan event, the Chairman also noted that the Group is well-positioned to become one of the largest producers of green hydrogen globally.
India could help the world in its transition towards a green hydrogen economy. The pandemic has highlighted how crucial it is for global supply chains to be diversified. India’s low-cost manufacturing base can make the green hydrogen economy a reality around the world by bringing down the price of green components. However, for this to happen, the developed world must look to India as a manufacturing partner not only to serve the Indian demand, but also as a global export base.
India and the Adani Group are playing their part in the energy transition — they are leading the world in renewables and are poised to play an important role in green hydrogen. It is time for the developed economies to meet them at the table by taking concrete steps towards the promised provision of finance and technology thereby creating the foundation of a much needed partnership in the collective response to the challenge of climate change.
