The global industry's interest in green hydrogen has hit record highs as a decarbonisation and energy storage solution. Hydrogen has potential in a variety of applications, including as a heat source in metal processing, a source of fuel for the long haul trucking and shipping industries and an energy storage solution for infirm renewable power.
In her speech on the Union Budget 2021 Finance Minister Nirmala Sitaraman, India has announced the publication of the National Hydrogen Energy Mission NHEM, which was originally referenced in the Prime Minister's 2021 Independence Day speech.
The biggest challenge facing India is to develop and demonstrate green hydrogen technologies, including transportation technologies that are economically viable and cost-competitive, and to create a robust supply chain and delivery mechanism for these technologies.
We believe that the Union Budget 2022 -- 23 will develop on the preliminary announcements in the Union Budget 2021 -- 22 and focus on meeting these challenges.
A six-point policy submission by the India Hydrogen Alliance, a coalition of industry participants, was made by the Ministry of New and Renewable Energy and the NITI Aayog.
The submissions include the setting up of a public-private task force to prepare a milestone-based national hydrogen roadmap, the creation of a national fund with participation from industry players, sovereign partners, multilaterals, etc. The promotion of domestic manufacturing of electrolysers, the setting of global harmonised and inter-operable standards for hydrogen storage, transport and dispensing, the creation of large-scale demonstration projects and the creation of separate industry groups to drive hydrogen commercialisation in various industries are among the objectives of the plan to cover the entire supply chain and raise $1 billion by 2030.
The creation of a fund for research and development spending in the Union Budget 2022-23 and the publication of a roadmap that sets out the goals of the NHEM over the course of at least the next financial year are some of the things that have been submitted by various stakeholders, according to the submissions made by various stakeholders.
More specifically, the research and development efforts should focus on the development and economisation of green hydrogen technologies through public-private partnerships, funding pilot and demonstration projects and setting standards in respect of various components of the green hydrogen supply chain.
It is important to have India a top producer and potential exporter of green hydrogen, as a result of India's significant renewable energy potential.
The possibility of scaling up the cross-sector use of green hydrogen in the transport and power sectors, to start and the refurbishment and use of existing natural gas pipelines for the transport of green hydrogen should also be explored.
The introduction of green hydrogen purchase obligations for various industries for which green hydrogen is a potential decarbonisation solution and the introduction of a viability gap funding scheme with a focus on heavy mobility are some of the key policy interventions that are expected to be announced in the upcoming budget.
This would deliver on the promises made by various government representatives and stakeholders over the last year.
The extension of tax benefits for the infrastructure sector to green hydrogen-related activities is one of the fiscal incentives that could be announced as part of the roadmap.
This includes 100% accelerated depreciation benefits on new investments in green hydrogen technologies and tax deductions i.e. After commencement, a deduction of a percentage up to 100% of the income and profits of a company that is involved in developing green hydrogen for specified assessment years is required under Section 80 IA of the Income Tax Act, 1961.
Similar impetus was provided to renewable energy in its nascent stages, and the extension of these benefits to hydrogen projects with links to renewable energy is a natural next step.
The domestic market duties and taxes on import of green hydrogen supply chain components should be minimal until the incentives for domestic manufacturing of these components are created.
The budget could consider a provision of state offtake guarantees for hydrogen components, such as electrolysers and low-interest loans, for the setting up of green hydrogen system demonstration and production facilities.
India will not fall behind in the global green hydrogen race that is currently ongoing because of all of these measures and incentives.