By

- Sanjay Kaul
- Dr Debesh Patra
- Pradeep Dixit
ROLE OF HYDROGEN IN NET ZERO TARGETS OF
ORGANIZATIONS AND ECONOMIES

Abstract
This article attempts to capture the dimension of the issues involved and the developments
that have already taken place in the pursuit of mission net zero.

The paper is structured in three sections. Section I deals with role of hydrogen for
achieving net zero. Section II deals with actions taken by Governments world over at
policy level as examples and action plan of Indian Inc. Section III deals with challenges
and road ahead for hydrogen adoption for reaching at net zero.

Net zero carbon emission is a shared task before the business world. The scope and
expanse of business covers the worldwide range of industries, services and those including
energy industries. The task is mammoth; it is an absolute imperative and is time bound. By
its very nature, the jobs involved, this covers a wide portfolio like science, nature,
business, economics and politics. In the world of net zero, innovation is the key,
collaboration is the norm and knowledge is paramount. The complexity begins with the
concept and entails an inestimable investment. Issues have been relied from secondary
sources and have been arranged briefly in thematic sequence. Lessons have been drawn
from the experience of few specific countries, who are in the frontline of net zero initiative,
as global players. India specific issues and initiative have been compiled and presented as
contextual. The article attempts to focus the collaborative approach taken by leaders to
hydrogen, as an ultimate fuel that has turned out to be humanity’s hope to net zero.

Annexure gives “ A 2022 spot light on India for sustainability practice”

Net Zero is a target for our Planet & respective Govts.

Net zero emission means that all man-made greenhouse gas emissions must be removed from
the atmosphere through reduction measures, thus reducing the Earth’s net climate balance,
after removal via natural and artificial sink, to zero. This way humankind would be carbon
neutral and global temperature would stabilise.

Section – I: Role of Hydrogen in Net Zero

Hydrogen has a central role in helping the world reach net-zero addition of GHG emissions
to the atmosphere by 2050 and limit global warming to 1.5 degrees Celsius above pre-
industrial levels to reduce the odds of dangerous and unimaginable effects of climate
change. The global warming is already 1 degree above pre-industrial levels and is
estimated to rise at 0.2 degree per decade. Complementing other decarbonization
technologies like renewable power, biofuels, and energy efficiency improvements, clean
hydrogen (both renewable and low carbon) offers the only long term, scalable, and cost-
effective option for deep decarbonization in sectors such as steel, refining, ammonia,
maritime, aviation, road transport and buildings. From now through 2050, use of hydrogen
can avoid 80 gigatons (GT) of cumulative CO2 emissions. With annual abatement potential
of 7 GT in 2050, hydrogen can contribute 20% of the total abatement needed in 2050. This
requires the use of 660 million metric tons (MMT) of renewable and low-carbon hydrogen
in 2050, equivalent to 22% of global final energy demand. (McKinsey 2021)
The role of hydrogen is critical in enabling a decarbonized energy system. It facilitates the
integration of renewably produced energy as hydrogen can store energy, provide resilience,
and transport high volumes of energy over long distances via pipelines and ships.
Hydrogen allows energy companies to tap extremely competitive, but otherwise “stranded”
renewable energy in remote locations. This accelerates the energy transition as it allows
more renewables to be produced. Finally, because hydrogen can be produced from
electricity and used as or converted into fuels, chemicals, and power, the production of
hydrogen from electricity will connect and fundamentally reshape current power, gas,
chemicals, and fuel markets.

Hydrogen has an important potential role in a net zero economy as it has no carbon
emissions at the point of use. It is versatile, capable of being produced and used in many
ways, including production from renewable sources and applications to decarbonise
challenging areas, such as heavy transport, industry, and heat, as well as the storage and
transport of energy. It is already widely used in industry and agriculture, but its current
production carries a high greenhouse gas footprint. Significant greenhouse gas emission
reductions could be achieved through decarbonisation of production for both existing and
new applications. However, hydrogen currently faces challenges that require technological
advances, including in its generation, storage and use, particularly the costs involved in
achieving net zero life cycle emissions. Further research, development, demonstration, and
deployment are required to pinpoint the areas where hydrogen can make a critical
difference in reducing emissions.

Hydrogen has a long way to go to fulfill its potential. An entire network of pipes and
storage facilities would have to be built at great expense. Europe is responding with a plan,
the EU Hydrogen Backbone, to link low-cost supply centers with European demand
centers. Other technologies integral to the hydrogen economy include the following:

a) Low-cost production. If hydrogen could be made for less than $2 per kilogram in
the European Union or $1 per kilogram in parts of the United States by 2030, major
end uses would become economically viable. Estimates suggest that electrolyzer
costs could fall 60 to 80 percent over the next decade.
b) Road-transport fuel. Hydrogen’s higher energy density makes hydrogen fuel-cell
electric vehicles (FCEVs) suitable for long-haul or heavy road transport. For FCEVs
to be adopted widely, they would need to become less expensive, and fueling
stations are required to be built. This transition needs to happen in collaboration
with automobile manufacturing companies.

c) Ammonia production. This is one of the most promising near-term uses for low-
carbon hydrogen. Green ammonia, made from green hydrogen, would be the first
variety to match the cost of conventional ammonia production. Hydrogen is also
relatively straightforward to integrate in ammonia production, so less supporting
infrastructure is required. And ammonia can be used as a fuel or as a “vector” for
 transporting hydrogen.

d) Steel production. The steel sector is one of the largest industrial emitters, producing
about 7 to 9 percent of global emissions. The conventional blast furnace–basic
oxygen furnace route for steel production emits approximately 1.8 tons of carbon per
ton of steel. But using green hydrogen to power the direct reduction of iron as a
feedstock for electric arc furnaces
Net Zero Plans of Corporates
At the COP26 Summit in Glasgow, apart from governments, several businesses also
pledged to go carbon-free, setting ambitious deadlines for themselves. Essentially, it means
that these establishments will reduce emissions or balance new emissions by using natural
carbon sinks like forests and oceans to absorb them.

Some of India’s largest firms have announced net-zero goals as companies globally switch
to sustainable investments and seek suppliers with similar commitments to curb greenhouse
emissions. Reliance Industries Ltd. said it will turn "net carbon zero" by 2035. Private
lender HDFC Bank Ltd. has set 2031-32 target for being carbon neutral, while Tata
Consultancy seeks to be there by 2030. Wipro Ltd., Infosys Ltd., Mahindra & Mahindra
Ltd., JSW Energy Ltd. and even Indian Railways have also announced similar plans. And
these are not the only ones. As many as 56 Indian companies have committed to reducing
greenhouse gas emissions, according to the Science-Based Target Initiative, a global
coalition that enables firms to set climate goals.

Reliance Industries visualizes India becoming a global green energy superpower with
exports of clean energy rising to $500 billion over the next 20 years. Reliance has
announced plans worth billions of dollars to boost India's renewable energy capacity
including building battery storage, fuel cells and producing green hydrogen at less than $1
per kilogram. Chairman of Reliance recently announced that the green Energy Giga
Complex will have an electrolyser factory for green hydrogen production, and a fuel cell
factory. Reliance hopes that India can bring down hydrogen costs massively in the future.
RIL hopes to become a net-zero emissions company by 2035, and Rs 75,000-crore
investment in green energy is a large part of the plan. Some of the other companies that have
disclosed plans for green hydrogen are JSW Energy, Adani, ACME group, NTPC, GAIL,
IOC. IOC has announced that the total hydrogen consumption of their Mathura refinery
will be converted to green. The phase one target is to convert 10 per cent of Mathura
refinery’s consumption of hydrogen into green hydrogen from grey by 2023 or 2024. It has
just concluded the first pilot of running 50 DTC buses in the Delhi-NCR region by
spiking the ordinary CNG buses with 18 per cent hydrogen. Order has also been placed
for 15 hydrogen fuel cell buses which will be delivered in a staggered manner by 2023.
These buses will run on green hydrogen produced from different production pathways. It
also has plans to setup a hydrogen manufacturing unit in Kochi, which is targeted to draw
energy from the solar facility at the Kochi
international airport. There is also a plan of running hydrogen-based fuel cell buses from
Baroda to the Statue of Unity. There are advanced ongoing discussions with the UPSRTC to
run hydrogen- based fuel cell buses from Delhi to Agra.

BPCL has drawn plan to put up a 20MW electrolyzer at its Bina refinery to produce green
hydrogen as it aims for net zero emissions for its operations by 2040.This will be double
the size of GAIL’s 10MW proposed electrolyzer. Green hydrogen should make up 10% of
the overall hydrogen requirements of refiners in 3 years, increasing to 25% by end of the
decade, as per a government proposal.

GAIL has started mixing hydrogen in natural gas on a trial basis in Indore through
Aavantika Gas Ltd., its joint venture with HPCL. NTPC has also shown interest to produce
green hydrogen on a commercial scale. They have expressed their plans to do the same
from its 4.75 GW park at the Rann of Kutch and have announced a 5 MW plant. Presently,
the company is running a pilot in their Vindhyanchal unit. Further the company also has
plans to set up green hydrogen fuelling station in Leh, Ladakh and will start plying 5
hydrogen buses. They have invited Expressions of Interest (EOIs) for 10 hydrogen fuel cell
buses and cars.

L&T is also looking to venture into the green hydrogen sector. According to their latest
report, they have set plan to achieve net zero emissions by 2040 and plan to spend INR 10-
15 Billion on its green initiatives. In addition to exploring the possibility of manufacturing
electrolysers, they are setting up a green hydrogen plant at their Hazira complex, which is
scheduled to be completed within this financial year. It is partnering with Norway-based
HydrogenPro to access its electrolyser technology to enter the green hydrogen market. As
part of the agreement, L&T and HydrogenPro will set up a joint venture company in India
to manufacture gigawatt-scale alkaline water electrolysers based on the latter's technology.

Establishing India as a global hub for green hydrogen generation, Ohmium International
through its subsidiary in India has shipped its first ever unit of electrolyser to the United
States. The electrolyser was manufactured in Ohmium’s Bengaluru facility which is India’s
first green hydrogen electrolyser Gigafactory.

Any climate action will have to start by reducing and offsetting emissions that come from
the industrial and commercial activity. There is also the need to negate potential business
losses, in case nothing is done to arrest or mitigate greenhouse gas emission. According to
the Carbon Disclosure Project, Indian companies stand to collectively lose over Rs 7.14
lakh crores if they do nothing to mitigate climate risks in the next five years. These risks
come from physical phenomena like floods, emerging regulations, emission caps, changing
customer behaviour and preferences, and even potential legal issues. But if done right,
opportunities worth Rs 2.9 lakh crore could emerge. Indian suppliers of multinational firms
reportedly run the risk of losing $274 billion worth of exports every year if they fail to curb
carbon emissions.

Firms in the developed nations are already preparing to immune their business from
potential loss due to carbon emission. A recent report by the ECIU showed that a fifth of
the world’s largest companies have committed to the net zero target. Besides, socially
responsible investing is on the rise and investor money is increasingly coming with
explicit climate-related goals. Investments
with ESG commitments have now crossed $40 trillion globally, according to ESG Risk. In
India, 7% of the assets under management are ESG investments. That number is likely to
rise to 30% by 2030. A large chunk of the global investors want to put their wallet behind
projects that help curb environmental damage. Increasing amount of money is now going
into stock mutual and exchange- traded funds with environmental goals as part of their
mandates. And that money from investors is getting hard to come by for companies in
polluting industries. Banks and financial institutions with large funding portfolio to fossil
fuel assets, like BlackRock, JPMorgan Chase, Korea Development Bank and the Japan
Bank of International Cooperation have announced exit policies from their coal
investments.

Companies mainly have three types of emissions. There are direct emissions from sources
that are owned or controlled by companies—like furnaces, boilers or transportation. There
are also indirect emissions from the coal-fired electricity consumed by a company. The
third includes all other emissions that occur in the company's value chain.This makes the
transition to net-zero for companies in the services sector relatively easier, since majority
of their emissions are from indirect sources. The only thing they need to do to is to change
their energy source to renewables and they will be able to cut most of their emissions. TCS
plans to make more efficient use of energy across its operations, expand use of renewable
energy sources and work with its supply chain partners to reduce emissions. It also plans to
rationalise business travel. HDFC Bank, too, aims to be carbon neutral by sourcing 50% of
its electricity from renewable sources and decrease absolute emissions. It aims to reduce
water consumption, single-use plastic and plant 25 lakh trees to offset its carbon footprint.
The lender also plans to issue green bonds—debt instruments used to fund projects that have
a positive impact on climate.

The challenge is a lot bigger for companies that will have to fundamentally alter their
business. The energy sector, for instance, is still largely coal-powered and contributes more
than half of India's emissions. Reliance, even after diversifying into digital and retail, still
gets half of its revenue from oil and gas. To meet its net carbon zero target, Reliance
Industries said it will use newer technologies to reduce emissions, and plans carbon capture
and storage—to convert carbon dioxide into useful products. RIL also claims it has begun
sourcing carbon-neutral oil or crude produced with net-zero emissions and is increasing use
of renewable sources of energy to power operations. Sectors like metals and cements will
also find it harder to transition as emissions are inherent part of the production process.
These are known as hard-to-abate sectors. Unless there’s a technological breakthrough, it’ll
be very hard for Tata Steel to come out and say we are going net-zero. Such companies
usually introduce a concept of internal carbon pricing to show climate action. That is when
a firm puts a price to every unit of carbon that is emitted by them and then uses the
proportionate money to fund green investments. Mahindra & Mahindra Ltd. was the first
Indian company to set carbon price of $10 per tonne of carbon emissions.

In terms of end uses, hydrogen is critical for decarbonizing industry (e.g., as feedstock for
steel and fertilizers), long-range ground mobility (e.g., as fuel in heavy-duty trucks, coaches,
long-range passenger vehicles, and trains), international travel (e.g., to produce synthetic
fuels for maritime vessels and aviation), heating applications (e.g., as high-grade industrial
heat), and power generation (e.g., as dispatchable power generation and backup
power).Without hydrogen, it would be difficult to reach net-zero emissions: some forms of
transport, for example, aviation, shipping,
and heavy-duty transport, cannot be electrified, and several industrial processes cannot use
electricity directly and need hydrogen as feedstock or for high temperature applications.

Section II – Net Zero Journey So far

Strategies Adopted by Governments

As of 2021, more than 30 countries have released hydrogen roadmaps and governments
have committed more than $70 billion in public funding.

For example:
- The EU strategy envisages hydrogen meeting around one-quarter of energy demand
by 2050. The UK and German governments’ plans both include scaling up low-
carbon hydrogen production capacity to 5GW by 2030.

- For transport, China is aiming to produce one million hydrogen fuelled vehicles and
1,000 refueling stations by 2030, the same goals as California.

- South Korea’s roadmap is aiming to produce six million FCEVs and roll out 1,200
refilling stations by 2040.

China

China, followed by Europe and North America, will be the largest hydrogen markets in
2050, together accounting for about 60% of global demand. Fulfilling this decarbonization
role will require a large scale-up of clean hydrogen production in the coming decades.
Supplying 660 MMT to end-uses will require 3 to 4 terawatts (TW) of electrolysis capacity
and about 4.5 to 6.5 TW of renewable generation capacity, as well as 140 to 280 MT of
reforming capacity for low-carbon hydrogen production and associated infrastructure to
store about 1 to 2.5 GT of CO2 a year. In such a supply scenario, renewable energy for
hydrogen will account for roughly 15% to 25% of the 27 TW of total new renewable
energy required by 2050 to reach net zero – a 10x increase over the 2.8 TW installed
today.

China has set itself ambitious climate targets and will, in addition to an expansion of
renewable electricity generation and electrification, need large quantities of renewable or
low carbon hydrogen to decarbonise its industrial processes and the hard to electrify
sectors. Just as in the European and German case, the development of a carbon neutral
hydrogen economy will be essential.

Germany

Taking a look at the German net zero efforts, energy efficiency and renewable electricity
are the major focus areas for the transformation of the industry. Since renewable energy
already provides the majority of German electricity, and good progress has been made in
the electrification of transport and industry, renewable hydrogen is the next logical step for
achieving carbon neutrality. Renewable hydrogen which is produced using renewable
electricity, offers a further way to
transport, store, and trade renewable electricity; it makes local potential accessible
globally. After Germany’s decision to phase out coal-fired power, hydrogen is now
considered to play a key role in reaching emissions-reduction targets, particularly regarding
process-related GHG emissions from the country’s large industrial sector, emissions of
parts of the transportation sector and, in the long term, potentially also emissions from the
heating sector.

The commendable part in the German strategy is an action plan of 38 concrete measures for
starting the market ramp-up until 2023. The measures aim at attracting private investment
in hydrogen generation, transport, and use. In September 2021, the German government
released a report on the progress of the implementation of the 38 measures. Germany is
working hard on the implementation of the strategy and is spending billions. It plans to
create the regulatory conditions for market ramp-up of hydrogen technologies, i.e. enable
domestic markets for the production, use and transport of hydrogen. The focus is on those
sectors that are already close to economic viability or that cannot be decarbonized in any
other way such as the industrial and transport sectors mentioned above.

To secure and shape the future national supply of hydrogen from renewable energies and
its downstream products, the German Hydrogen Strategy envisages 5 GW of electrolyser
capacity by 2030 and 10 GW by 2040. In addition to domestic production potential, it is
necessary to find reliable international partners, with focus on the EU, for the production
and transport of hydrogen and establishing appropriate cooperation and import structures.
Transitionally, European market for carbon-neutral hydrogen will be established, which
will accelerate the market ramp-up of hydrogen technologies on the application side.

Low-carbon hydrogen, defined as hydrogen with an energy content that is derived from
non-fossil based sources, and that meets a GHG emission reduction threshold of 70%
compared to fossil- based hydrogen, will be used wherever conversion to electrified
processes is not feasible. This applies to certain hard-to-abate industrial sectors as well as
to some transportation and heating applications. Demand for hydrogen for industrial
processes is already substantial in Germany and amounts to about 55 TWh, which is
currently served by hydrogen produced using methane steam reforming. Additionally, if
steel production uses hydrogen for direct reduction, demand in Germany would grow by a
further 80 TWh by 2050. Demand will continue to increase due to new applications, such as
in heavy-duty transport, aviation, and shipping. Germany already has the second highest
number of H2 refueling stations in the world, the introduction of a PtL (power-to- liquid)
quota is currently being negotiated and the first hydrogen trains are already running on
several routes. PtL is also known as electro-fuels (e-fuels) and include synthetic kerosene,
kerosene and synfuels. These fuels are sourced from green hydrogen produced from
electrolysis by renewable electricity, which is then combined with carbon obtained though
carbon capture to yield a liquid hydrocarbon. PtL can achieve up to an 80% reduction in
CO2 emissions. It can be blended into conventional kerosene for use as aviation fuel and is
hence called a drop-in fuel. PtL fuels are currently 3 to 6 times more expensive than
conventional jet fuel.

The focus is on use in the area of sector coupling and transformation of industry, but the
German government also supports future areas of application in transport as an alternative
to battery- powered vehicles in heavy goods transport on the road and by rail. Finally, it
may become useful in the German heating market, for example to convert existing heating
systems in private
residential buildings from natural gas to fuel cell technology, as a developed natural gas
network, which can be repurposed, already exists.

Main drivers for the prices of renewable hydrogen are the investment costs for
electrolysers as well as renewable power plants. Prices for both are expected to continue to
decrease significantly with economies of scale, resulting in long-term price projections for
hydrogen of 2 €/kg and below at locations with excellent wind and solar conditions. While
cost parity with fossil fuels can remain challenging even then, price parity for the buyer is
within reach when combined with ambitious carbon prices.

Both China and Germany will benefit from working together on establishing a renewable
hydrogen economy and by learning from each other, because challenges are quite similar in
both countries. China has a much bigger potential for renewable energy production, but
making carbon-neutral, ideally renewable hydrogen available in sufficient quantities is still
a big challenge. An exchange of experience in research and development would support the
development of the industry. Research collaborations in a wide variety of fields allow
topics to be developed from different perspectives. Finally, both Germany and China can
profit from the development of electrolyser technology and economies of scale. Just as the
development of renewables in Europe and China has driven down costs for these
generation technologies below any other energy source, large demand for hydrogen
technologies will significantly reduce prices for electrolysers. Making renewable hydrogen
competitive, is arguably the best possible outcome of future cooperation.

Indian Private Sector Investment in Hydrogen

Hydrogen has witnessed a new wave of interest in business. The Hydrogen Council, which
was formed in 2017 to bring together relevant companies, now has more than100 members.
Recent years have seen a surge of private sector deals. As examples, Canada-based
Hydrogenics, a fuel cell leader, was bought by Cummins in 2019. UK-based ITM Power, a
leading maker of electrolysers, has raised £172million to develop hydrogen from renewable
energy. Ceres Power, a UK-based company that develops and manufactures fuel cell stacks,
has attracted investment from Bosch and Weichai Power.

Planned blue hydrogen projects include collaborations between groups of companies with
public sector support, often around ports with clusters of industries and access to undersea
storage. These include the UK’s proposed Net Zero Teesside, Zero Carbon Humber and
HyNet projects that together ultimately plan to decarbonise nearly 50% of the UK’s
industrial emissions with storage under the North Sea and Irish Sea. Several gigawatt-scale
green hydrogen projects have been announced, including the €88 million Heavenn project
in the Netherlands, the UK’s Gigastack project, and SeaH2L and project for the Dutch-
Flemish North Sea Port Cluster.

Other projects plan to convert green hydrogen to ammonia for export. On the West coast of
Australia, the $36 billion Asian Renewable Energy Hub project will produce green
hydrogen and ammonia for Australia and Asian export markets. The $5 billion project at
the Saudi Arabian new city of Neom on the Red Sea will produce hydrogen with a 2GW
alkaline electrolyser plant, which will be converted into 1.2Mt/yr of green ammonia to be
exported and converted back to hydrogen.
Section III – Challenges in Hydrogen Adoption

Challenges in Use of Hydrogen

Hydrogen is not a ‘silver bullet’ for all end-uses. Instead, decision-making could be
guided by means of a hierarchy according to the value of hydrogen for each end-use.
Questions to be raised are: a) is it necessary, helpful or not useful at all? b) What are the
system implications? The presence or lack of alternative energy vectors for a particular
end-use is a further factor in decision-making. Hydrogen has clear benefits in
applications such as industrial heating and processes, and heavy goods transport, and
especially where a viable alternative option does not exist. Its use in domestic heating is
less clear-cut since electrification exists as a competing option. It will, however, be
necessary to keep options open until the appropriate evidence is available and the relative
benefits and limitations of the various options, and implications for the system as a whole,
can be more effectively appraised.

Hydrogen will be most effective where alternatives do not exist, there are fewer but larger
consumers, and there is least disruption to consumers. In particular, these include uses in
energy intensive industries, inter-seasonal energy storage, and return-to-base fleet vehicles
– especially heavy goods vehicles, construction vehicles, and agricultural vehicles. Once
hydrogen has been sufficiently scaled up to meet those demands, then further expansion
can enable it to be bled into other use cases. The use of hydrogen for temporal grid
balancing, (in which excess grid electricity is used to electrolyse water into hydrogen, the
hydrogen is stored, and then used to generate electricity when demand outstrips
generation), requires very large-scale hydrogen storage. Developing methods of storage,
such as geological storage, which must have high safety, trust and efficiency, is a key
engineering challenge.

Current Status & Milestones for 2030

As per a Mckinsey study scaling through 2030 is critical for meeting long-term targets and
unlocking cost-efficient decarbonization opportunities. It estimates that the deployment of
75 MMT clean hydrogen is needed by 2030 – an ambitious, yet achievable target. This
supply of clean hydrogen can replace 25 MMT of grey hydrogen in ammonia, methanol,
and refining; 50 billion liters of diesel in ground mobility; and 60 MMT of coal used for steel
production. The study further goes on to estimate that early growth in clean hydrogen
deployment will likely center on Europe, Japan, and Korea, which will account for about
30% of new clean demand. China and North America – significantly larger hydrogen
markets today – will follow closely with about 20% of demand for clean hydrogen each. To
supply this demand in a cost-optimal way, a mix of both renewable and low-carbon
hydrogen supply would require 200 to 250 gigawatts (GW) of electrolyzer capacity and
300 to 400 GW of new renewables, as well as 45 to 55 MMT of low- carbon hydrogen
production capacity and associated carbon infrastructure to store 350 to 450 MMT of CO2
a year. This will create need to step up the deployment of renewables: in 2020, 260 GW of
capacity was commissioned. A further acceleration is required to meet rising electrification
demand. This deployment of clean hydrogen will not happen without the right regulatory
framework pertaining to electricity, carbon pricing & other infrastructure. Both
governments and businesses need to act together in this huge unexplored task.
Strong Momentum, but a USD 540 billion Capital Gap Remains

As per the Mckinsey study, the hydrogen industry shows strong momentum around the
globe, with more than 520 projects announced in 2021, up 100% compared to 2020. These
announced projects will translate into 18 MMT of clean hydrogen supply (accounting for
USD 95 billion) as well as infrastructure (USD 20 billion) and end-uses (USD 45 billion).
Considering investments to achieve government targets and support equipment value
chains, the total sum of estimated spending will grow to more than USD 600 billion by
2030. Although the pipeline of projects is strong, a significant gap to the net zero scenario
remains, and the right regulatory framework is required to turn projects from concepts into
actual investments. Out of the currently announced direct investments, only USD 20 billion
(13%) have passed the final investment decision (FID) so far, with another USD 64 billion
(40%) in the feasibility or front-end engineering and design (FEED) stage. This means
many proposals are on the table awaiting the right regulatory framework to unlock demand
and investments. In terms of additional investments, the currently announced projects
(USD 160 billion) cover nearly 25% of the required USD 700 billion to achieve the
deployment, out of which USD 300 billion is required for hydrogen production, 200 billion
for infrastructure, and 200 billion for hydrogen end-uses. This leaves a gap of USD 540
billion. While significant, these investment levels appear possible. The USD 700 billion
required equates to about a third of the investments made in renewable energy from 2010
through 2019, or less than 15% of cumulative investments in upstream oil and gas.

Challenges Ahead
A tremendous acceleration has taken place over the past year with strong growth in the
number of projects being launched, demonstrating hydrogen any potential uses are
recognized in the industry. However, a five-fold increase in announcements is required to
enable the full abatement potential of hydrogen. The conversion of this momentum into
real deployment and scale-up now critically depends on the right regulatory framework,
which will create demand, enable supply, and reduce investment risks.

Hydrogen falls into a number of different policy areas, responsibilities for which are
distributed across several areas of government but will need to be brought together
into a unified programme of work under a net-zero delivery body. This must be a
high- level systems architect body evidence-driven by data and analytics, with
responsibilities, funding and accountability which can align government around the
net zero goal; in other words, a systems approach to policymaking will be required.
A systems approach helps policymakers to gather evidence from the widest, most
diverse and critical perspectives leading to ‘bigger picture’ view of this policy
opportunity and how different parts of the system interact to affect the desired outcome.

The full potential of hydrogen can only be realized if action is taken across three fronts to:
stimulate demand, enable access through infrastructure, and create scale to bring down
costs and close the economic gap of hydrogen decarbonization solutions versus
conventional alternatives. While the overall investment required is large, it is well within
the order of magnitude of current financial flows into the energy sector.
Requirements include a set of suitable policies such as mandates and robust carbon pricing,
the development of large-scale infrastructure, and targeted support and de-risking of large
initial investments. Scaling of hydrogen is the key to reducing costs through economies of
scale, making hydrogen available to end-users through the necessary infrastructure, and
ultimately making hydrogen a competitive, available, cost-efficient decarbonization vector.
A large share of the decarbonization will come from current industrial uses of hydrogen
with 270 MMT of CO2 avoided a year, particularly from the decarbonization of refining
and ammonia synthesis.

Carbon capture, use, and storage (CCUS) is necessary to decarbonize hard-to-abate sectors
and to remove CO2 from the atmosphere. Presently, use of CCUS is minimal. Costs remain
prohibitively high, typically $50 to $100 per ton of CO2 (tCO2), and CCUS equipment
consumes a lot of energy. Moreover, innovation has been slow. Many existing CCUS plants
employ 30-year-old solvent- based technologies for post combustion carbon capture. But
new technologies are emerging. These could contribute to solving the net-zero equation
while creating growth potential for sectors and geographies. At present, the technologies
exhibit varying levels of maturity, performance, market demand, and regulatory support.
To bring them to commercial, climate-stabilizing scale would require companies, financial
institutions, and governments to cooperate on investment and research programs as well as
efforts to integrate technologies with existing industrial systems. This challenge is
formidable, but the moment to devote creativity, capital, and conviction to addressing it is
now.

Conclusion
Humanity has to reach a point where it harnesses nature without emitting deleterious
byproducts that inherently carries the potential to threaten nature and human life, both. And
that point is attempted to be visualized by the net zero concept. Hydrogen as a tool to net
zero has promises that need to be realized. Hydrogen as it appears, nature’s gift for
humanity that can sustain life on this green planet and yet have quality of living for people.
As of today, there is tremendous push in giving life to hydrogen. Research and innovation
in the area of science, policy and finances all have to converge to make this happen. The
accounts in this article is an attempt to cultivate knowledge and disseminate awareness in
that direction.
 Annexure
Sustainability Practice- A 2022 Spot light on India

Before achieving the Net zero target in 2050 or 2070, the lowering of emission challenge of
2030 must be met by the Economy, Industry and business in India.

Change management in Business outlooks can come by proposing, changing, prescribing in

advance and suggesting corporate governance norms. For India, it is no different.

Since 2013 several norms, disclosures and reporting has been prescribed to push the
‘transitioning’ of Corporate governance towards diversity, protection of shareholder’s
interest, transparency and social responsibility.

It’s been a year since SEBI has prescribed disclosures under BRSR (Business Responsibility
and Sustainability reporting) which covers ESG (Environmental, Social and Governance)
parameters. While this applies to about a 1000 listed Companies, may be a 100 Companies
have worked on the system of reporting and disclosure under this.

The norms are only mandatory from the FY 23-24 where then the impact assessment and
mitigations measures would be necessary.

India is a signatory to COP26 in 2021 and is answerable in 2030 with the statistics it achieves
in lowering the emissions which is certifiable.

The ‘transition’ is obviously focused on the outcome and success rate of those several
hundred Companies who must study first the impact the ESG measures would have on their
business and how commitment of various stakeholders can be achieved. Only then effective
measures can be drawn up involving major capital expenditure, change of practices and
business norms and goals.

The optimism can be drawn from the fact that previously introduced norms, prescribed for a
change of approach towards Diversity, disclosure and CSR, have gone through similar cycles
of upheaval and now seem to be settling.

The business models of bulk of the listed Companies are under pressure and are competing
with other priorities of digitalization, low cost integrated solution providers, newer risks such
as the pandemic. Under these circumstances adding ESG as a definitive parameter of
performance in the Compensation and Remuneration committee agenda and keeping
stakeholders committed to ‘greening the businesses’ would be a formidable yet unavoidable
challenge.

This shall be a space to watch till 2030.

References
Hydrogen Council & McKinsey (2021) ‘Hydrogen for Net Zero: A Critical Cost
Competitive Energy Vector’, November 2021

Royal Society (2021) ‘The Role of Hydrogen & Ammonia in Meeting the Net Zero
Challenge’, June 2021 https://royalsociety.org/-/media/policy/projects/climate-change-
science-
solutions/climate-science-solutions-hydrogen-ammonia.pdf (June 2021)

Royal Academy of Engineering (2021) ‘The Role of Hydrogen in Achieving Net Zero’,
January 2021 https://www.icheme.org/media/15371/nepc-response-the-role-of-hydrogen-
in-achieving- net-zero-jan-2021.pdf

https://www.cnbctv18.com/business/companies/major-indian-companies-committed-to-
go- carbon-free-check-out-here-on-when-they-plan-to-achieve-the-goal-11808892.htm
(Dec 2021)

https://www.bloombergquint.com/business/what-net-zero-means-and-how-indian-firms-
plan-to- meet-targets (June 2021)

https://www.energypartnership.cn/home/the-role-of-hydrogen-in-germanys-energy-
transition/ https://www.mckinsey.com/business-functions/sustainability/our-
insights/innovating-to-net-zero- an-executives-guide-to-climate-technology (October 2021)

https://www.cummins.com/news/2021/04/15/cummins-hydrogen-power-takes-
flight(15-04- 2021)

Elephant in the Board Room, Economic Times, DEEP DIVE. 08.05.2022