In an interview, Parry said that a five-year plan would give investors the required clarity regarding immediate investment roadmap and incentive structure and help create the required market.

“We have seen a number of countries produce a national hydrogen strategy, or a national hydrogen proposition which tends to look into the future and describe a world, which is somewhat a difficult to imagine exactly. But what would be helpful is for those same folks to publish the five-year plan. Its the kick-starter to the hydrogen strategy,” he said.

“So, what is the five-year plan from a policy perspective, which is why something like the (US) Inflation Reduction Act has such a big impact in the debate. We’ll see how big an impact it has in the flow but what it did was it unlocked part of the conversation about, okay, so if you’re going to invest, here’s the incentive structure within which you can invest.”

Under the Act, green hydrogen producers would get clean hydrogen production tax credit (PTC) for facilities that commence construction by the end of 2032, along with additional credits across the value chain among other incentives.

Similarly, India has also announced a National Hydrogen Mission under which its it has rolled out two incentive schemes worth ₹17,000 crore for production of green hydrogen and manufacture of electrolyzers, apart from other incentives for R&D and pilot projects. The central government targets domestic production of 5 million tonnes of green hydrogen annually and make India a global green hydrogen hub.

The Bain & Company executive further said that currently there are more of bilateral discussions and contracts in terms of green hydrogen sale, and in the long run with the growth in the green hydrogen ecosystem a marketplace would have to come up for consumers and producers to interact.

“I think today it’s going to be kind of end-to-end producer to customer, bilateral, discussions and agreements, but it needs to be more than that. You can go and source most commodities in a different way through an open market. And if there’s an open market in hydrogen, I think that would help. But it’s not coming tomorrow. It needs to come with scale. And so there’s a little bit of that market formulation to take place,” he added.

Green hydrogen would be used in a number of sectors including petroleum refineries, fertilizer and steel, which are called “hard-to-abate” sectors in terms of carbon emission.

The use of green hydrogen gains significance as several export- oriented industries are preparing to avoid the disruption which may be caused by Europe’s carbon tax.

Parry also said that although energy transition is the term used to describe the move towards alternative or renewable energy from fossil fuels, currently, the world is witnessing more of addition of renewable energy, rather than replacement of fossil fuels, due to rising energy demand and concerns of energy security.

“Transition is a term that has been used for a long time, but what we’re actually experiencing is an addition rather than the transition at this point. So we’re adding a lot to the energy system through the introduction of renewables at scale, and the introduction of bio or green molecules at scale.”

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Updated: 30 Oct 2023, 10:18 PM IST