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Budget 2021: Green Energy Highlights (2 February 2021)

Budget 2021: Green Energy Highlights (2 February 2021)

Context:

Budget 2021 has proposed the launch of Hydrogen Energy Mission in this fiscal year.

Background:

According to the report, compiled by The Energy and Resources Institute, "green hydrogen will become the most competitive route for hydrogen production by around 2030".

Currently, 30 research projects in India are supported under the hydrogen and fuel cell programme of the Department of Science and Technology.

Summary of the Debate

Hydrogen Energy Mission

  • It aims to reduce petroleum use, greenhouse gas emissions, and air pollution, and contribute to more diverse and efficient energy infrastructure.

  • Hydrogen to be generated from green sources.

  • The scheme will provide assistance to DISCOMS for infrastructure creation, including pre-paid smart metering and feeder separation, upgradation of infrastructure, etc.

Significance of the Mission:

  • Hydrogen is a clean fuel for the future, it can act as an energy storage option, which would be essential to meet intermittencies (of renewable energy) in the future.

  • The western countries, the European countries have already a hydrogen mission in place.

  • There have been many greenish initiatives and with the infusion of money into power sector, renewable energy even the voluntary scrapping policy will help in uptake of electric vehicles in India.

  • This mission would decarbonise heavy industries.

  • Green hydrogen energy is vital for India to meet its Nationally Determined Contributions.

  • Green hydrogen, produced with renewable electricity, is projected to grow rapidly in the coming years.

  • Hydrogen from renewable sources can play a critical role in heavy-duty, long-distance transport.

  • The use of hydrogen can reduce the CO2 related emissions.

                                         

India and clean energy:

  • Installed Capacity: India is the third largest solar installed capacity in the world and fourth largest renewable energy installed capacity country in the world.

  • Hydrogen Production: Today there is about six tons of hydrogen is produced in the country and our estimate is that by 2050 it will it will go up at least by five times.

  • Solar mission: In 2014-15, the government enhanced target of solar mission from 20 megawatt to 20 gigahertz to 100 gigawatts plus a total renewable electricity generation capacity to 175 gigawatts by 2022.

  • Paris commitment: In Paris commitment for international carbon and climate change negotiations 2015-16, India decided to have almost 40 percent of renewables in power generation.

  • In 2020: India is already around 91 gigawatts out of which 38 is wind and 34 gigawatts is solar.

  • Renewable target: For 2030 was announced to for 450 gigawatts.

  • Solar manufacturing hub:  India has approximately two to three gigawatt of solar manufacturing solar PV module manufacturing capacity today, India aims to be the solar manufacturing hub of the world so it has different partnerships ongoing with public and private stakeholders.

  • PLI scheme: To boost solar manufacturing in India.

  • Electric mobility plans:  More than 11 states in India now have rolled out their own electric mobility plans and they're focusing not only on manufacturing and job creation but also in demand creation.

  • In two-wheeler segment: The entry barriers have really come down and partnerships and international alliances are happening.

  • Startups: Partnering with Original Equipment Manufacturer (OEMs) with international partners and wanting to set up manufacturing base or use existing capacity.

  • Other initiatives from the green perspective (in Budget 2021): Scrappage policy for individuals with 20 years and for commercial vehicles with 15 years.

  • Private Financing: For the first time we heard about private financing of Rs 20,000 crores for 20, 000 buses and innovative financing with public private partnerships that would really revolutionize the way public transportation system and bus systems would move in India and of course the metro itself was talked about this support in Chennai and Bangalore and Nasik and couple of other cities.

Hydrogen as a fuel:

  • Currently, hydrogen is around six to eight dollar per kg production cost.

  • Hydrogen as a storage device as a storage media can itself be a big economy and that's why countries across the world Japan, Australia they are banking on hydrogen as a future energy media.

  • According to a report titled “The Potential Role of Hydrogen in India – Harnessing the Hype” by The Energy and Resources Institute (TERI) released in December last year, demand for hydrogen could increase by at least 5-fold by 2050, continuing to grow in the second half of the century in India.

  • Demand for hydrogen is at around 6 metric tonne (MT) per annum, mainly from industry sectors, such as fertilizers and refineries.

  • This can increase to around 28 MT by 2050 mainly due to cost reductions in key technologies and a push to reduce carbon footprint.

  • Right now, hydrogen is a by-product of some refinery processes and also used in fertilizers, but in the context of renewable energy hydrogen has a certain role to play:

    • It can be used as a carrier

    • As a fuel comes storage like petrol or diesel

    • It can also be used directly as a fuel

  • Hydrogen for large scale or long-distance transport is one very big possibility. It can be railways, it can be large shipping or even it can be buses or trucks where road transport is through hydrogen vehicles, because electric vehicles have their own limitations.

  • In terms of driving a car, one kg of hydrogen would really give close to 100 kilometers in cities, but it would take maybe seven to eight litres of petrol for the same distance.

Way Forward:

  • Domestic manufacturing capacity: Some of the measures that would further enhance investment to renewable energy in India is increasing the domestic manufacturing capacity in India whether it is the PLI Scheme for manufacturing solar panels and through this budget the PLI Scheme has been extended to the ACC (Advanced Chemical Cells) as well in the auto sector.

  • Global value chain: India should definitely look into becoming part of the global value chain for hydrogen itself and there's much more that India could do, for example, from manufacturing these stacks and the electrolyzers; for the storage, the pipelines and the tanks.

  • Mobility: Moving for long distance whether it is urban freight movement between cities and states and also for the passenger movement that's a very promising initiative to really look at this.

  • Energy security: Hydrogen is one of the alternatives that India needs to consider from its energy security perspective.

  • Customs duty: Increasing the customs duty on solar panels will actually uh incentivize domestic players in India to set up manufacturing of solar panels and the entire and making the entire supply chain robust.

  • Awareness: Driving the awareness with customers and consumers would be really critical because we really need kind of push the citizens to know really become more sensitive to environment.

  • Capacity building: It is not only awareness but also building capacity of the industries so that you have manufacturing in place, you have skill job created a skill council of green jobs.

  • R & D: There is a good spending on research development and technology adaptation because that is one area where India has lost earlier in solar photovoltaics and now, we should not lose that aspect in hydrogen and new technologies especially electric vehicles, new battery technologies, etc.

  • Green labelling: with respect to particularly consumer awareness for example green labelling of products needs to be in place so that consumers are aware that. For example, in the western world a lot of fair trade happens, even in India we do have but green labelling of products is something that would that is one of the steps to incentivize consumers.

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