Image credit: Freepik
A recent study by ICF, (a World Bank arm) presented to the Petroleum and Natural Gas Regulatory Board (PNGRB), suggests that replacing grey hydrogen with green hydrogen at refineries will have minimal impact on consumer fuel prices. The study explores potential mandates ranging from 5% to 100% green hydrogen usage, highlighting that even a 50% blending mandate would raise fuel prices by only 2.5%. A smaller 10% mandate would increase prices by just 0.5%.
These calculations assume natural gas prices at USD 2/mmbtu, green hydrogen at ₹380 per kg, and crude oil at USD 80 per barrel. Refineries, which primarily use hydrogen to remove sulfur from fuel, are the largest domestic hydrogen consumers, followed by fertilizer producers.
The government has debated a 25% green hydrogen mandate by 2030 but has not implemented it due to resistance from refineries. They argue that such a mandate would render their recent investments in grey hydrogen facilities redundant and lead to higher consumer prices. However, the study’s findings suggest these concerns may be overstated, given the minimal impact on final fuel costs.
The report also assesses the feasibility of blending hydrogen into natural gas pipelines. It finds that up to 2% hydrogen blending is achievable with minimal changes, while a 10% blend is technically possible but requires case-by-case analysis. Beyond 10%, blending becomes challenging, as it demands significant system upgrades. The study suggests that developing dedicated hydrogen pipelines and infrastructure could be more cost-effective than pursuing higher blending levels in existing pipelines.
The study underscores the potential of green hydrogen mandates to promote clean energy without burdening consumers, providing a viable policy option for India’s energy transition.
