Green hydrogen purchase to be made compulsory for refineries and fertilizer manufacturers

Under the Production-Linked Incentive (PLI) scheme for electrolyzer manufacturing, a ‘green hydrogen purchase obligation’ for the industry has been introduced.

September 9, 2021

Union Minister for Power and Renewable Energy, Shri R K Singh conveyed the news at a webinar on green hydrogen, on September 8, 2021.

The PLI scheme would be extended to cover electrolyzers as well, to sanction their production in India.

The mandate of 10 percent of hydrogen consumption to be gradually increased to 25 percent, going forward.

GOI aims to promote green hydrogen use in long-distance heavy-duty transportation, fertilizers and steel.

Through the Production-Linked Incentive (PLI) scheme for the manufacture of electrolyzers, the Government of India has planned to introduce a mandatory ‘green hydrogen purchase obligation’ for the industry. Union Minister for Power and Renewable Energy, Shri R K Singh conveyed the news on September 8, 2021  during a webinar on green hydrogen, organized by the Council for Energy, Environment and Water (CEEW). According to the ‘Cabinet note’ drawn up by the Power Ministry to mandate the use of green-hydrogen, a mandatory purchase at 10 percent of hydrogen consumption would require 8,800 MW of electrolyzer capacity. The Minister maintained  that making the use of green hydrogen compulsory for refineries and manufacturers of fertilizers would only result in a very slight  increase in the prices of petroleum products and fertilizers.. 

Currently, electrolyzers-  the machines that split water into hydrogen and oxygen, do not have any domestic manufacturers, although Reliance has expressed its willingness to set up a plant and a US-based company Ohmium has announced its plan to set up a manufacturing unit in Bengaluru.  The PLI scheme will be extended to cover electrolyzers to enable their production in India. . The mandate to purchase green hydrogen will initially begin with the refining and fertilizer sectors. The purchase obligations will be gradually increased from 10 percent to 25 percent and users from other sectors are also expected to be  brought under the scheme.

Sh. RK  Singh also underlined  the GOI’s objective  to promote the use of green hydrogen for long-distance heavy-duty transportation (including shipping), fertilizers and steel industries, and to this end,  viability gap funding and purchase tenders will be provided for heavy mobility and fertilizers that are produced with green hydrogen. Dr. Deepak Yadav of CEEW had earlier highlighted that India’s green hydrogen potential was placed at 7.5 million tons which required 200 GW of solar power.