The Legal Implications of India’s Green Hydrogen Policy

The approval of the National Green Hydrogen Mission (NGHM), announced on 4 January 2023 by the Indian government’s Ministry of New and Renewable Energy (MNRE), is a step towards achieving net zero carbon emissions by 2027 and a decarbonised nation. It also evidences India’s focus on becoming energy-independent by 2047.

With the approval of NGHM, India aims to become a green hydrogen producer on a global scale. To achieve this objective, the Indian government has taken an integrated approach through various central and state government agencies – of which MNRE is the central co-ordinating agency.

The NGHM has enumerated a phased approach for transition from fossil fuels to green hydrogen over a period of several years, with Phase I planned from 2022 to 2025–26. The first phase focuses on developing R&D for the production of green hydrogen while simultaneously working on establishing the regulatory framework.

Phase II (2026 to 2029–30) is expected to focus on competitive growth in the production of green hydrogen across various sectors, including maritime shipping, iron and steel and transport, and fertiliser industries.

In 2022, a report on the Green Hydrogen Policy (GHP) was published by NITI Aayog, the Indian government’s public policy think tank. This comprehensive report laid a stepping-stone for formulating the NGHM.

As a step towards achieving the targeted production of green hydrogen and green ammonia, the GHP provides several incentives, such as:

Distribution companies can charge such projects only procurement costs, wheeling charges, and a small margin as determined by the relevant state electricity regulatory commission.

Further, the GHP provides for the setting up of bunkers by green hydrogen and green ammonia producers near ports to store GA intended for export/use by the shipping industry. For such bunkers, the space would be provided by the port authorities at applicable charges.

Moreover, the GHP offers an incentive by way of granting the green hydrogen/green ammonia plants “open access” to source renewable energy in a time-bound manner within 15 days of receipt of a complete application. In order to determine the open access charges, the Ministry of Power has notified the Green Energy Open Access Rules 2022 (“the Rules”) in respect of green energy.

The Rules apply to the generation, purchase and consumption of green energy – including the energy from waste-to-energy plants – and seek to increase both the ease and scale of consumer access to green energy. Furthermore, the Rules state that the tariff is to be determined separately by the appropriate commission empowered to amend the relevant regulations in order to provide green energy open access to consumers.

On 8 July 2022, the Ministry of Power notified the Power System Operation Corporation (POSOCO) as the Central Nodal Agency responsible for setting up a single window system for renewable energy under the Rules. POSOCO will also set up a national portal to serve consumers India-wide.

Additionally, the Rules seek to cast a uniform Renewable Purchase Obligation (RPO) on all obligated entities, including distribution licensees. Green hydrogen and green ammonia have also been included in the fulfilment of RPO obligations.

In order to achieve the GHP target, several ministries/departments (eg, the Ministry of Petroleum and Natural Gas and the Department of Fertilisers) in consultation will develop methodologies and guidelines for those corporate/public sector entities that must submit periodic reports to a designated agency for monitoring. Technological interventions will be developed for online/real-time monitoring.

Also, the Ministry of Petroleum has suggested the inclusion of hydrogen in the definition of “mineral oils” as an amendment to the Oilfield (Regulation and Development) Act 1984 via the Oilfields (Regulation and development) Amendment Bill 2021, so that the government may grant licences for its exploration and production. However, this suggestion has not yet been accepted.

Along with the amendments sought to various relevant existing legislations, the regulatory framework for water resources and land use – both of which are necessary for the production of green hydrogen – has yet to be put in place. So far, none of the Ministries have enacted specific legislation in this respect.

For this reason, as stipulated under the GHP, the Indian government is undertaking integrated planning and implementation of renewable energy capacities, transmission infrastructure, power banking facilities, energy storage, and associated power system projects.

The Bureau of Indian Standards is said to be developing standards and regulations to enable the hydrogen ecosystem, including the adoption of international standards. The Ministry of Road Transport and Highways is also developing standards and regulations for automotive applications. The regulatory provisions to permit the operation of hydrogen-fuelled vehicles and other applications will need to be notified within 12 months of the notification of the NGHM.

Lastly, safety regulations will need to be developed in accordance with the global Green Hydrogen Mission safety norms. The adoption of a separate regulatory framework for the storage and dispensing of hydrogen also needs revisiting in order to be in line with global technology developments and industry requirements.