Experts CornerKhaitan & Co

“There’s one issue that will define the contours of this century more dramatically than any other, and that is the urgent and growing threat of a changing climate.”

Barrack Obama

A common consensus seems to be rapidly emerging around the world that hydrogen will play a decisive factor if we were to attain the goals set out in the Paris Agreement, 2015 — of achieving net zero carbon emissions by 2050 to limit the global warming below 2 degrees celsius above pre-industrial levels. The phrase “hydrogen economy” is not a new concept. Currently, hydrogen is primarily utilised in the refining and chemical sectors and mostly produced from fossils, attributing for 6% of global natural gas use and 2% of coal consumption and is the primary cause for 830 MtCO2 of annual CO2 emissions[1]. In order to reduce the costs for producing and using clean hydrogen with carbon capture, usage and storage technologies, scaling the production of clean hydrogen will play a massive role.[2]

It is abundantly transparent that hydrogen energy presents diverse benefits over other power sources including:

  1. clean energy source for sustaining zero carbon energy programmes;
  2. abundance in source;
  3. diminishes carbon footprints;
  4. almost zero emissions; and
  5. usage in the automotive industry.

Therefore, the immediate need to capitalise the potential of low-carbon hydrogen and use it for a comprehensive range of applications as a feasible surrogate to liquid and fossil fuels cannot be overstated.

Hydrogen is generally categorised in accordance with the way it is produced and is catalogued by colour. Some of the colours of hydrogen rainbow are listed below[3]:

  1. Blue – Blue hydrogen is generated using methane gas, but the carbon is captured and
  2. Brown/Black – Brown/black hydrogen is extracted from fossil fuels out which mainly it is coal.
  3. Turquoise – Turquoise hydrogen is produced by a process known as “methane pyrolysis” to produce hydrogen and solid carbon.
  4. Grey – Grey hydrogen is the most common form and is generated through steam reformation of natural gas or methane.
  5. Green – Green hydrogen is produced by electrolysis using electricity generated by renewable sources such as wind energy and solar energy.
  6. Pink – Pink hydrogen is generated via electrolysis using electricity generated from nuclear power.
  7. Purple – Purple hydrogen is made using nuclear power and heat through combined chemo thermal electrolysis splitting of water.
  8. White – White hydrogen is naturally occurring geological hydrogen found in underground deposits and produced through fracking.
  9. Yellow – Yellow hydrogen is produced by electrolysis using solar power.

Many experts believe that distinct legal mechanisms will have to be administered in connection with production and usage of hydrogen production, depending on numerous factors such as the manner in which it is produced or if the production is using renewable or non-renewable energy.

India’s regulatory framework

Recent global incidents of uncommon wildfires, droughts and floods and immense apprehensions about changing climatic conditions have prompted even a developing country like India to contemplate a swift shift towards sustainability and aggrandise its sustainable goals by dint of policy framework.

The Ministry of New and Renewable Energy (MNRE) pioneered its first hydrogen and fuel cell roadmap in the year 2006[4] and MNRE has always considered “hydrogen” as its vision towards a sustainable future. However, the framework around “hydrogen” related policies was never formulated in a specific legislation. For example, renewable energy resources are regulated by MNRE, usage of pipelines to transport fuel and like products are governed by the Ministry of Petroleum and Natural Gas. Lately, amendments in the Oilfield (Regulation and Development) Act, 1984 were suggested by the Ministry of Petroleum and Natural Gas Oilfields (Regulation and Development) Amendment Bill, 2021[5] dated 15-6-2021 wherein hydrogen was included in the definition of “mineral oils” in order to facilitate the Government to permit a licence for its exploration and production. Scenarios like this has led for a push for an aerodynamic legislation which governs the framework in relation to hydrogen.

The National Hydrogen Mission (NHM) was launched on 15-8-2021 with the objective to make India a global hub for green hydrogen production and export. The NHM aims to enable production of 5 million tonnes of green hydrogen by 2030 and the related development of renewable energy capacity. As a positive step in the direction envisaged by NHM, on 17-2-2022, the Ministry of Power announced the green hydrogen policy (GHP).[6]

Green Hydrogen Policy (GHP)

Some of the salient features of GHP inter alia include:

  1. Production and development of green hydrogen as well as green ammonia.
  2. Waiver of inter-State transmission charges for a period of 25 years if the projects are commissioned before 25-6-2025.
  3. Banking shall be permitted for a period of 30 days for renewable energy used for making green hydrogen and green ammonia and the charges in relation to the same will be as per the charges fixed by the State Electricity Regulatory Commission, which shall not be more than the cost differential between the average tariff of renewable energy bought by the distribution company in the previous year and the average market clearing price in day ahead market during the month in which the renewable energy is banked.
  4. Distribution companies are also authorised to acquire and supply renewable energy to the manufacturers of green hydrogen and green ammonia which shall only be charged at the cost of such procurement including wheeling charges and a small margin as may be determined by the State Commission.
  5. Allotment of land in renewable energy parks for manufacturing green hydrogen/green ammonia. Further, it also permits manufacturers of green hydrogen/green ammonia to set up bunkers near ports for storage of green ammonia for export/use by shipping, at applicable charges.
  6. Additionally, MNRE will establish a single portal for all statutory clearances and permissions required for manufacture, transport, storage and distribution of green hydrogen/green ammonia and such agencies/authorities are time-bound to clear such clearances/permissions, preferably within 30 days from the date of application.

Challenges faced by the Hydrogen Sector

One of the foremost obstacles faced by the hydrogen sector is that the production of low-carbon hydrogen is still in the embryo phase in commercial terms. As there is minuscule commercial scale at the present, low-carbon hydrogen production is not a commercially feasible substitute. Another challenge is that there is no resolute hydrogen legislation in place in most of the countries and dedicated framework governing manufacture, usage, storage and transport of hydrogen needs to be put forth in order to facilitate growth.

 

Hydrogen projects are expected to play a colossal role in decarbonising our energy usage and working towards a clean and sustainable future. National strategies and efficacious public-private partnerships will be essential to nail the big fish and to warrant assured success.

India, by announcing the GHP has taken a step in the right direction towards attaining energy sufficiency using clean and renewable sources of energy. Further, MNRE is supporting industrial, academic and research institutions to tackle the obstacles in production of hydrogen from renewable energy sources, its safe and efficient storage, and its usage for energy and transport applications. MNRE has extended substantial support to R&D in this field resulting in development and demonstration of internal combustion engines, two wheelers, three wheelers, and minibuses that run on hydrogen fuel. India has already set up two hydrogen refuelling stations at Indian Oil R&D Centre, Faridabad and National Institute of Solar Energy, Gurugram.[7]

While it is paramount that India accelerates in the field of development and manufacturing of hydrogen technologies, it will also be fundamental for other countries to progress towards the same goal. In the words of Christine Lagarde, Managing Director of the International Monetary Fund, “Climate Change is a collective endeavour, it is collective accountability, and it may not be too late.” The only hope to achieve the targets set at Paris Agreement is to massively scale the manufacturing and deployment of hydrogen technologies which will result in significant reductions in the cost thereby making utilisation of hydrogen as an indisputable substitute to fossil fuels.


† Partner, Khaitan & Co.

†† Associate, Khaitan & Co.

[1] See HERE.

[2] See HERE .

[3] See HERE .

[4] See HERE.

[5] See HERE .

[6] See HERE.

[7] See HERE .

Case BriefsSupreme Court

Supreme Court: In the case where the National Green Tribunal directed the State of Madhya Pradesh to ensure that no dealer and/or outlet and/or petrol pump should supply fuel to vehicles without Pollution Under Control (PUC) Certificate, the bench of Arun Mishra and Indira Banerjee, JJ has held that NGT had no power to pass such direction as the stoppage of supply of fuel to vehicles not complying with the requirement to have and/or display a valid PUC Certificate is not contemplated either in the Central Motor Vehicles Rules, 1989 or in the National Green Tribunal Act, 2010.

“Motor Vehicles not complying with the requirement of possessing and/or displaying a valid PUC Certificate cannot be debarred from being supplied fuel.”

The Court said that when a Statute or a Statutory Rules prescribed a penalty for any act or omission, no other penalty not contemplated in the Statute or a Statutory Rules can be imposed. When a Statute requires a thing to be done in a particular manner, it is to be done only in that manner.

After going through the relevant provisions, the Court summarized that driving a vehicle without a pollution PUC certificate entails:

  • suspension of registration certificate;
  • imprisonment which may extend to three months;
  • fine which may extend to Rs.10,000/- or both
  • disqualification for holding licence for a period of three months
  • imprisonment for a term which may extend to six months or with fine which may extend to Rs.10,000/- or with fine.

It further noticed that as per Rule 116(8) and (9), the suspension of the certificate of registration is temporary. The suspension is until such time as a certificate is produced before the Registering Authority certifying that the vehicle complies with sub Rules (2) and (7) of the Rule 115 of the Central rules. A Certificate of Registration is also to be deemed to have been suspended, until a fresh Pollution Under Control certificate is obtained.

“There can be no doubt that strong measures must be taken to protect the environment and improve the air quality whenever there is contravention of statutory rules causing environmental pollution. Stringent action has to be taken, but in accordance with law.”

The Court, hence, noticed that in passing blanket direction, directing the appellant State Government to ensure that no dealer and/or outlet and/or petrol pump should supply fuel to vehicles without PUC Certificate, de hors the Central Motor Vehicles Rules, NGT overlooked the fact that no vehicle can either be repaired to comply with pollution norms, nor tested for compliance with the political norms upon repair, without fuel.

Hence, the NGT had no power and/or authority and/or jurisdiction to pass orders directing the Appellant State Government to issue orders, instructions or directions on dealers, outlets and petrol pumps not to supply fuel to vehicles without PUC Certificate.

The Court, however, directed that the State shall strictly implement compliance of Rules 115 and 116 and penalize all those who contravene the said Rules in accordance with the provisions of the 1989 Rules.

“The Registration Certificate of vehicles which do not possess a valid PUC Certificate shall be forthwith suspended and/or cancelled, and penal measures initiated against the owner and/or the person(s) in possession and/or control of the offending vehicle, in accordance with law.”

[State of Madhya Pradesh v. Centre for Environment Protection Research and Development, 2020 SCC OnLine SC 687, decided on 28.08.2020]