Editorial 1. How to become a green hydrogen superpower
Context:
2023 Union Budget has allocated ₹19,700 crore for the National Green Hydrogen Mission. This will set in motion a programme that can position India as a green hydrogen (super)power. Why is this important and what will it take?
National Green Hydrogen Mission (NGHM):
Objective: It is a program to incentivise the commercial production of green hydrogen and make India a net exporter of the fuel. The Mission will facilitate demand creation, production, utilization and export of Green Hydrogen.
2 Sub Schemes of NGHM::
1. Strategic Interventions for Green Hydrogen Transition Programme (SIGHT): It will fund the domestic manufacturing of electrolysers and produce green hydrogen.
2. Green Hydrogen Hubs: States and regions capable of supporting large scale production and/or utilization of hydrogen will be identified and developed as Green Hydrogen Hubs.
Nodal Ministry for the scheme is the Union Ministry of New and Renewable Energy (MNRE).
Significance of green hydrogen for India:
In its nationally determined contributions (NDC under Paris climate deal), India has committed to 50% electricity capacity from non-fossil sources by 2030. But an energy transition in industry is needed at the same time. Most industrial greenhouse gas emissions in India come from steel, cement, fertilizers and petrochemicals.
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What is green hydrogen? Splitting water into hydrogen and oxygen is energy-intensive. When this energy comes from renewable/non-fossil sources, we get green hydrogen. It can serve as an energy source (heavy industry, long-distance mobility, aviation, and power storage) and an energy carrier (as green ammonia or blended with natural gas). Green hydrogen holds the promise of fuelling industrial growth while simultaneously reducing industrial emissions. With abundant sunshine and significant wind energy resources, India is geographically blessed to become one of the lowest-cost producers of green hydrogen. |
India is targeting at least 5 million tonnes (MTs) of production by 2030, which is larger than that of any single economy. This would create demand for
- 100-125 gigawatts (GW) of renewable energy
- 60-100 GW of electrolysers
- investment opportunity of ₹8 lakh crore
- Cut 50 MMT of annual emissions.
Way forward: 5 priorities
For the vision to convert into reality, government and industry must act in sync along five priorities.
1.Domestic Demand:
If we are not a big player domestically, we cannot be a major player in the international market. The mission introduces a Strategic Interventions for Green Hydrogen Transition (SIGHT) fund for 5 years, with ₹13,000 crore as direct support to consume green hydrogen. This will encourage heavy industries to increase demand, offering economies of scale by which suppliers can reduce prices.
Another approach is to leverage government procurement. As the second-largest steel producer in the world, can India aspire to become the largest green steel producer? Costs of green steel, made from green hydrogen, are currently much higher, but could be reduced with economies of scale and changes in production technologies.
2. Attracting foreign investment:
Green hydrogen production projects announced/underway in India are far fewer compared to others. Green hydrogen is difficult and expensive to transport. The mission envisions green hydrogen hubs to consolidate production, end use and exports. A mission secretariat can ensure project clearance is streamlined and reduce financial risks to attract FDI and FII into the sector.
3.Targeting value addition
Third, the SIGHT fund offers ₹4,500 crore to support electrolyser manufacturing under the performance-linked incentive (PLI) scheme. Currently, manufacturers are importing stacks and assembling them. We must become more competitive — with targeted public funding — in manufacturing the most critical and high-value components of electrolysers in India.
Electrolyser technology must be improved to achieve higher efficiency goals, specific application requirements, be able to use non-freshwater, and substitute critical minerals.
4. Establish bilateral partnerships to develop resilient supply chains
Globally, about 63 bilateral partnerships have emerged; Germany, South Korea and Japan have the most. Using yen- or euro-denominated loans for sales to Japan or to the EU, respectively, could reduce the cost of capital and help us become export competitive. The mission allocates ₹400 crore for R&D, which can be leveraged to crowd in private capital into technology co-development. Indian companies should consider joint projects in countries with good renewable energy resources and cheap finance.
5.Creating a common global framework for Green Hydrogen:
Finally, India must coordinate with major economies to develop rules for a global green hydrogen economy. In the absence of it, attempts for rules and standards are being driven by collectives of private corporations rather than through structured intergovernmental processes. There are already signs of conflicting regulations and protectionist measures in major markets. These put India’s ambitions at risk.
Conclusion:
India’s G20 presidency is an opportunity to craft rules for a global green hydrogen economy. Green hydrogen will be a critical industrial fuel of the 21st century. India is well-positioned to show leadership — in our collective interest and that of the planet.
Editorial 2. Multilateral reforms as a priority in the G-20
Context:
While assuming the G-20 presidency in December 2022, India stated that its agenda would be inclusive, ambitious, action-oriented, and decisive. New Delhi also said that its primary objectives are to build global consensus over critical development and security issues and deliver global goods. This resulted in placing multilateral reform as one of the top presidential priorities for India.
Accordingly, the G-20 idea bank, Think 20, also placed multilateral reforms as one of its priorities. The T20 Task Force on TF7 (‘Towards Reformed Multilateralism’) aims to construct a roadmap for ‘Multilateralism 2.0’.
About G 20:
The group of twenty or G20 is an annual meeting of leaders from the countries with the largest and fastest-growing economies. It is an advisory body, not a treaty-based forum and, therefore, its decisions are recommendations to its own members.
G20 membership represents around 80% of global GDP, along with two-thirds of global trade and population.
(G 20 member countries)
Importance of multilateralism:
Multilateral cooperation today is confronting multiple crises:
- Due to persistent deadlocks, multilateralism has lost the majority’s trust.
- Multilateralism is facing a utility crisis, where powerful member-states think it is no longer useful for them.
- Increasing great-power tensions, de-globalisation, populist nationalism, the pandemic, and climate emergencies added to the hardships.
- This impasse led states to seek other arenas, including bilateral, plurilateral and minilateral groupings, which subsequently contributed to further polarisation of global politics.
- Disruptions such as the COVID-19 pandemic have reversed the social and economic progress that the global society made in the past couple of decades.
- Most of the challenges nations face today are global in nature and require global solutions. Pressing global issues such as conflicts, climate change, migration, macroeconomic instability, and cybersecurity can indeed only be solved collectively.
Barriers to reform:
Reforming multilateralism is a difficult task for various reasons:
- Multilateralism is deeply entrenched in global power politics. As a result, any action in reforming multilateral institutions and frameworks automatically transforms into a move that seeks changes in the current distribution of power. Modifications in the distribution of power in the global order are neither easy nor normal. Moreover, it may have adverse implications if not done cautiously.
- The status quo powers see multilateral reforms as a zero-sum game. For instance, in the context of the Bretton Woods system, the U.S. and Europe believed reform would reduce their influence and dominance. This makes decisions about reform in these institutions, by consensus or voting, hard.
- Multilateralism appears at odds with the realities of the emerging multiplex global order. The emerging order seems more multipolar and multi-centred. Such a situation facilitates the formation of new coalitions of the like-minded, which makes the reform of older institutions and frameworks more challenging.
Way forward for G-20 and India:
To fix the malaise within multilateralism, G-20 needs to devise multiple solutions.
- The limitations of multilateral cooperation is that competing interests and the dominance of powerful states are there to stay in multilateral platforms. Therefore, while supporting multilateral cooperation, G-20 should continue encouraging minilateral groupings as a new form of multilateralism and try to transform them into multi-stakeholder partnerships. Creating networks of issue-based minilaterals, particularly in areas related to the governance of the global commons will be helpful in preventing competitive coalitions where other actors play the same game to their advantage, leading to a more fragmented world order.
- To overcome the trust, legitimacy and utility crises of multilateralism, the world requires a model, and the G-20 can be one. However, to fit the purpose, the group needs to be more inclusive without sacrificing efficiency. For example, including the African Union as a permanent member and the UN Secretary-General and General Assembly President as permanent invitees would be helpful to enhance its legitimacy.
- Similarly, to address the crisis of trust and utility, G-20 should put all its efforts into solving one or two pressing global issues and showcase it as the model of new multilateralism. Food, fuel and fertilizer security can be one such issue.
Conclusion:
G-20 may constitute an engagement group dedicated to bring the narrative to the forefront of global discourse. India should also urge the upcoming chairs of the grouping, Brazil and South Africa, to place multilateral reforms as their presidential priorities.