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Green Hydrogen

Why in the news?

• Peter Parry, Chairman of Global Energy and Natural Resources at Bain & Company, has urged Countries to establish five-year plans for building a robust market ecosystem for green hydrogen.

• He believes that such plans provide clarity for investors, outlining immediate investment opportunities and incentive structures, and fostering market development.

Green Hydrogen

• Green hydrogen is a sustainable energy carrier produced through a process called electrolysis, using renewable energy sources like wind or solar power.

National Hydrogen Strategies and the Role of Five-Year Plans

• Many countries have developed national hydrogen strategies, providing a vision for the future, but Peter Parry emphasizes the need for them to publish five-year plans, which serve as the practical starting point for realizing these strategies.
• A five-year plan offers a policy perspective on short-term actions and incentives.
• For example, the US Inflation Reduction Act has made significant strides by offering clean hydrogen production tax credits, which unlock conversations on investment incentives.

Global Initiatives

• The US Inflation Reduction Act introduces incentives for green hydrogen producers, aligning with the nation’s green hydrogen goals.
• India has launched a National Hydrogen Mission with incentives and targets for domestic green hydrogen production.

Bilateral Agreements vs. Open Market

• Presently, the green hydrogen market primarily relies on bilateral agreements between producers and customers.
• As the green hydrogen ecosystem matures, an open market where consumers and producers can interact becomes essential for growth.

Green Hydrogen’s Versatility

• Green hydrogen is versatile, finding applications in “hard-to-abate” sectors like petroleum refineries, fertilizers, and steel.
• Export-oriented industries consider green hydrogen adoption to mitigate potential disruptions caused by Europe’s carbon tax.