Top takeaways from India’s first policy on green hydrogen and green ammonia

resr 5paisa Research Team

Last Updated: 12th December 2022 - 08:52 pm

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On August 15 last year, Prime Minister Narendra Modi launched the National Hydrogen Mission as part of the government’s efforts to meet its climate targets and making India a green hydrogen hub. This mission, the government says, will help in meeting the target of producing 5 million tonnes of green hydrogen by 2030.

Now, the government has unveiled the Green Hydrogen and Green Ammonia Policy to facilitate the transition from fossil fuel or fossil fuel-based feedstocks to hydrogen and ammonia, which are said to be the future fuels to replace fossil fuels. Production of these fuels by using power from renewable energy, termed as green hydrogen and green ammonia, is one of the major requirements towards environmentally sustainable energy security of the nation.

The government says the implementation of the new policy will provide clean fuel, reduce dependence on fossil fuel, decrease India’s crude oil imports and make India an export hub for green hydrogen and green ammonia. The policy offers many incentives to manufacturers and consumers of green hydrogen and green ammonia.

The policy announcement comes at a time when many large corporate groups such as Reliance Industries and Adani Enterprises—led by India’s two richest men, Mukesh Ambani and Gautam Adani—have announced their intention to enter into the sector. While Reliance plans to set up a facility to produce green hydrogen, Adani has set up a new company called Adani Petrochemicals to venture into green fuels.

Others venturing into this emerging area include renewable energy companies ACME Group, which recently announced setting up green hydrogen facilities, and ReNew Power, which has teamed up with Larsen & Toubro to set up green hydrogen facilities.

Here are the key takeaways from the new policy:

1) The policy says that green hydrogen or ammonia manufacturers may purchase renewable power from the power exchange or set up renewable energy capacity themselves or through any other, developer, anywhere.

2) The policy says open access to manufacturers will be granted within 15 days of receipt of application.

3) The policy says manufacturers can bank their unconsumed renewable power, up to 30 days, with distribution companies and take it back when required.

4) Distribution licensees can also procure and supply renewable energy to the manufacturers of green hydrogen and ammonia in their states at concessional prices.

5) The policy says manufacturers will get a waiver of inter-state transmission charges for 25 years for projects commissioned before June 30, 2025. This will help reduce the cost of green fuels.

6) The manufacturers and the renewable energy plant will be given connectivity to the grid on a priority basis to avoid any procedural delays.

7) The policy says benefit of Renewable Purchase Obligation will be granted incentive to the hydrogen or ammonia manufacturers and the distribution licensee for consumption of renewable power.

8) To ensure ease of doing business, the renewable energy ministry will set up a single portal for carrying out all the activities including statutory clearances in a time bound manner.

9) The policy says connectivity, at the generation end and the manufacturing end, to the inter-stage transmission system for renewable energy capacity set up for making green hydrogen or ammonia shall be granted on priority.

10) Manufacturers will also be allowed to set up bunkers near ports for storage of green ammonia for export. Port authorities will provide the land for the storage at applicable charges, the policy says.

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