A watershed revitalisation

Green Hydrogen is being seen as a key tool for decarbonisation globally, with the Indian government envisaging the National Green Hydrogen Mission driven by lofty targets of 5 MMTPA (Metric Million Tonnes per annum) by 2030 and a massive 20,000 crore outlay of funds in the form of production incentives and ecosystem enablers. With India's growing hydrogen demand expected to rise to almost 11 MMTPA by 2030, Green hydrogen has the potential to account for nearly 45 per cent of the total demand. This demand is across various industries that currently use hydrogen, such as refining, steel, and ammonia, and new developing use cases, such as transport, blending with natural gas as cooking fuel, etc.

Green hydrogen, considered the fuel of the future, is made by driving renewable electricity through electrolysers into water, thus producing hydrogen and oxygen gas. Cost of renewable electricity and that of the electrolysers thus emerge as the two main cost drivers. India is well placed in terms of renewable energy due to its growing RE capacity available at competitive prices compared to the rest of the world. However, cost and availability of electrolysers are expected to be a bottleneck.

India is projected to need 35-40 GW of electrolyser capacity by 2030 to meet its targets, which is almost six times the current global capacity. With only a handful of domestic manufacturers in this space, producing these electrolysers is likely to be a constraint. One of the critical bottlenecks that will hamper the meeting of this target is the availability of critical and rare metals that are pivotal to manufacturing electrolysers. There are two broad types of electrolyser technologies that are commercially used: alkaline (ALK) and PEM electrolysers. Alkaline electrolysers primarily rely on nickel, whilst PEM electrolysers require loadings of platinum and iridium. India is estimated to need 18.4 tonnes of platinum, 49,000 tonnes of nickel and 42 tonnes of iridium to meet the additional demand from Green Hydrogen Production alone. This additional demand is more than the current annual demand for these metals in all the other industries. Moreover, these critical metals are also required for other upcoming technologies such as battery storage, fuel cells, catalytic converters, etc., creating further stress on already constrained supplies.

The critical issue with these metals is that their supply is limited to certain countries, and India entirely depends on imports from these countries to meet their current domestic demand. Reserves of platinum and iridium are primarily concentrated in Africa and Russia, and Nickel reserves are concentrated in Indonesia, with its supply chain dependent on China. Moreover, India is entirely devoid of platinum and nickel reserves, with none of the resources currently present in India being economically feasible to be mined. Taking platinum as an example, we see that out of the total resources of only 11.6 tonnes that are present in the country, 50 per cent of these are indicated, that is, they might have the potential to be mined in the long term, but the economic feasibility is unknown. The rest are inferred and reconnaissance resources which puts them in the very long term category. The indicated resources might take up to 17 years to change from being resources to actual production. Even considering a best-case scenario where all the indicated resources are converted into reserves, they might provide less than 30 per cent of the total platinum required solely for GH2 by 2030. An analysis of nickel resources in the country also gives a similar picture. All of this stresses a pivotal shortfall that can hamper both India's GH2 vision and its larger sustainability goals. It also emphasises the need for critical interventions on the supply side to secure reserves of these critical and rare metals. Self-production is thus an inadequate option, as seen by the state of Indian Reserves in the country.

One option to secure the supply of these critical metals would be to create a strategic reserve through stockpiling. The Government should create a company whose purpose will be to manage the rare metals reserves in the country; they can do so by acquiring platinum and nickel at higher than usual quantities for a couple of years to safeguard the supply of these metals for the Green Hydrogen and the cleantech ecosystem in India. An analysis shows us that building a stockpile for platinum results in savings of up to USD 204 million as compared to relying on assured imports as per demand every year. Similarly, creating a stockpile of nickel and iridium (both of which are also entirely import-dependent) saves more than USD 300 million whilst only considering the requirement of these metals to produce Green Hydrogen. Savings can be much higher if India creates a stockpile of these rare metals, considering the need for these metals for batteries, fuel cells, catalytic converters, etc and considering the inherent risk of volatility in the prices of these metals.

India is no stranger to creating strategic reserves for the security of supply, with reserves currently in place for petroleum and foodgrains. The Government manages India's petroleum reserves through ISPRL (Indian Strategic Petroleum Reserves Limited), which holds reserves to meet India's crude requirements for up to nine-and-a-half days. Although these petroleum reserves suffer from high storage costs, these reserves have helped safeguard India from price shocks and act as insurance against future supply uncertainties. Seen as a success, a new strategic reserve for natural gas (in PPP mode) is also under planning. Moreover, creating a similar strategic reserve for these rare metals is advantageous to petroleum and natural gas as it is not expected to have high associated storage costs.

A similar strategy is followed by the USA, which has a similar scenario to India with little to no indigenous production of platinum and nickel, for which their reliance is both on assured imports and creating a strategic stockpile reserve to assure security of supply. Similarly, the EU recently introduced the Critical Raw Materials Act, recognising the need for action to secure the supply of these metals. They do so by signing strategic partnerships with producer nations and setting up companies in resource-rich areas such as Africa. India has also started recognising the need for the same by recently amending the Mines and Minerals Act by adding nickel and platinum to a list of thirty critical materials that hold strategic importance for the nation's economic progress and national security. Moreover, India also entered the Mineral Security Partnership (MSP) with the US, UK and EU with a central focus on reducing dependence on China.

In essence, India should follow a multi-pronged approach to secure the supply of these crucial metals. Firstly, there is a need to strengthen the supply chain internationally, with a focus on stockpiling these resources in potential partnerships with different producer nations. Secondly, it would be crucial to enhance the domestic ecosystem through better and more comprehensive geological exploration (only 10 per cent of the geological potential of the country has been explored yet). There is a need to invest in R&D by potentially reducing the loading per electrolyser, thus decreasing the over-reliance on these metals and fast-tracking the reconnaissance of current potential platinum and nickel resources in the country.

India has set ambitious targets for the future of Green Hydrogen in the country and is betting big on the same. However, recognising the potential roadblocks that may plague this journey, there is a need for action. A concerted approach is required among all stakeholders – both public and private, to help India achieve its lofty goals and come to the forefront of the world in terms of clean energy and Green Hydrogen production.

The writer is an undergraduate student at IIT Delhi. Views expressed are personal