Karnataka's green hydrogen plans hit a roadblock

Bengaluru: Karnataka’s plan to tap into green hydrogen has hit a policy and infrastructure roadblock as the Siddaramaiah government weighs the benefits and costs of embracing the fuel that is touted as pivotal to achieving net zero.

What this dithering means is that investments worth Rs 2 lakh crore pending in this sector won’t take off anytime soon.

Green hydrogen is produced through electrolysis, which is the process of splitting water into hydrogen and oxygen using electricity generated from renewable sources like solar, wind or hydropower, according to the Ministry of New and Renewable Energy.

The fuel so produced would be emission-free and cut carbon in steel production, shipping and transportation among other areas.

Since at least 2022, Karnataka — a leader in renewable energy — has received investment proposals in green hydrogen worth Rs 2 lakh crore. 

The Karnataka Green Hydrogen Policy 2024-29 is yet to get the government’s approval due to questions on what the cost-intensive sector can offer in terms of jobs and revenue. 

Under the policy, the government is looking at a potential burden of Rs 20,000 crore through subsidies and incentives to businesses investing in green hydrogen manufacturing. 

"There are issues of policy on fiscal incentives and power evacuation infrastructure that need to be settled," Chief Minister's Additional Chief Secretary LK Atheeq said. "Also, right now, we don’t see a convincing case for incentives because of the low potential for employment and GST,” he added.

Green hydrogen units can employ only 15-20 persons for every Rs 100 crore invested. Also, Karnataka's plan is to export green hydrogen made here, which needs requisite infrastructure.

"Green hydrogen is viable either for captive units of industries like steel, which have a green mandate, or for export-oriented units," Atheeq said.

The export-oriented units need to be located on the coast. "Renewable energy production is largely concentrated in the north of the state. The state has power evacuation lines of 440 kV. We'll need 650 kV and above built from north Karnataka to the coast. Planning for the same is under way," Atheeq said, adding, "The Cabinet will discuss these issues and decide sometime soon.”

Last year, Energy Minister K J George told the Legislative Council about Karnataka's potential in green hydrogen despite it being expensive.

"There's been disruption in gas supply from Russia to Europe and the Americas. Karnataka can send green hydrogen to those places," he said, adding that a team of officials even visited Australia to study green hydrogen production there.