Legal Framework for Hydrogen Economy

Climate change has become a global concern over the last few decades. In an effort to slow down climate change, many countries have taken steps to cut down carbon emissions and to control and save the environment from rising temperatures as well as the depletion of icebergs. Non-renewable resources such as coal, crude oil, etc are limited in stock and may exhaust in the years to come. Hence it is high time to explore the possibilities of hydrogen, which has an outstanding calorific value. Hydrogen has enthralled generations of people, along with visionary minds like Jules Verne. Energy security is as important as national security and food security. The ongoing war between Russia and Ukraine has shown the entire world how energy issues can have a global impact. There appears to be a paradigm shift in the energy sector in India, though oil & gas will continue to remain a significant resource for the next two decades. It is believed that hydrogen would dominate the years to follow. There is a global shift in favor of practices that enable us to get closer to net-zero and hydrogen has been identified as an environment-friendly resource. The energy sector in India is primed for becoming a hydrogen economy and the session on “Legal Framework for Hydrogen Economy” at The India Law Forum organised by The SKOCH group explored the potential of and challenges to the same as well as discussed the existing regulatory framework, governing the sector and potential policy changes that may empower it further.

The potential of hydrogen and the early mover advantage

Hydrogen has long been termed as the fuel of the future but has, to date, never quite made it a major player in the energy market. Hydrogen technologies have undergone several periods of hype over the last few decades, initially stimulated by the oil crisis in 1973. This was when countries all across the globe started exploring alternative sources of energy to reduce imports. Between rapid climate change and the Net Zero pledge, the virtual cycle of hydrogen deployment has, once again, started to gain momentum, and it appears that, finally, the potential of hydrogen will be reaped to accelerate the process of the energy transition. Many countries such as South Korea, Japan, the Netherlands, European Union, and China are fast emerging as leaders in the hydrogen sector. Now a vast opportunity awaits for India to capture the enormous parts of this market. This is because India has a large domestic market, with the current government focussing more on green energy. In light of the same, it is pertinent that India develops a legal framework to explore hydrogen. It is imperative to regulate the production, transportation, storage, usage, and disposal of hydrogen, including fugitive emissions. 

In India, the commercial usage of hydrogen has just begun to traverse the road to large-scale use. Currently, India regulates hydrogen use through policies, but legislation is required to fill in the loopholes created by these policies. The Ministry of New and Renewable Energy (MNRE) started working on a hydrogen mission in late 2018. On 15th August 2021, the Hon’ble Prime Minister of India launched a National Green Hydrogen Mission with very focused objectives. The first objective is to decarbonise major sectors of the economy. Second, to make India self-sufficient in the energy sector. Third, to make India a global hub for production and exports. This also refers to the production of electrolyzers and other types of equipment. Fourth, to become an inspiration for the global clean energy transition. This refers to making efforts to make India a leader in the arena of the global clean energy transition. Lastly, to create enough and more employment opportunities. India and Germany have recently signed a joint declaration of intent on the Indo-German hydrogen gas task force. The Ministry of New and Renewable Energy revealed that the joint proclamation was signed virtually by the Union Minister of Power and the New and Renewable Energy and the German Ministry of Economic Affairs and Climate Change. Both countries are dedicated to establishing a national green hydrogen economy. A long-term objective is to minimize emissions while protecting the ecosystem.

South Korea, for instance, has already qualified hydrogen statutes, while countries like China, the Netherlands, and the EU are stepping forward to create dedicated laws and regulations for hydrogen. Other countries, like Saudi Arabia, the United States of America, and Japan, are investing heavily in R&D projects on hydrogen. R&D projects on hydrogen started early in India, but due to a lack of cluster response in early adoption by Industries, coupled with a lack of effective implementation policies, we are still at the nascent level compared to some other countries. Maharashtra-headquartered company Advik High-tech has formed a joint venture with Australian Green Energy Company, Pure Hydrogen Corporation. Pure hydrogen is going to establish a hydrogen production facility in India. This 5149 joint venture will see Advik holding the majority share while the remaining stake will be held by Pure Hydrogen. This new entity aims to sell, transport, and distribute hydrogen across India. The company will also be in a position to supply FCEV buses and trucks, which could put India at the forefront of hydrogen production, sale, and distribution globally.

Regulation of Hydrogen and potential disputes- An analysis

Hydrogen, which has a good calorific value generated by electrolysis, is stored in pressure vessels and used in various things. Here comes PESO. PESO (Petroleum and Explosives Safety Organisation) regulates reservations, compressed gases, cross-country pipelines, petroleum products, etc. PESO is responsible for the approval of these projects and further licensing. In Gujarat itself, there are 111 CNG stations. This is the greatest in the country, with the largest number of CNG stations. Now, hydrogen is going to enter this particular sector. PESO has granted around 14 LNG stations in Gujarat. In the next phase, its regulation and safety concerns will be given importance. Safety is seen as a paramount concern by many relevant bodies in relation to the regulation of the Indian hydrogen industry. 

It would be prudent to adopt standards and regulations explicitly dealing with hydrogen to ensure that all aspects of the hydrogen industry are dealt with. In India now, hydrogen safety is regulated by the explosive act. In fact, the Gas Cylinder Rules 2016 and Static Mobile Pressure Vessel Rules 2016 play an important part. Any compressed gas has to be regulated under the Gas Cylinder Rules. A cylinder with a volume exceeding 500 ml but not exceeding a thousand liters will come under the Gas Cylinder Rules and exceeding thousand-cylinder liters will come under the purview of the pressure vessels. In the case of hydrogen vessels, a license under the SMPV (Static and Mobile Pressure Vessel) Rules has already been provided. Hence, many hydrogen tankers are running in the country. They were licensed under Ls2 of the SMPB rules already.

On the other hand, the type 4 cylinders are said to be the future of the auto industry as it is very light in weight and are also considered safe. The most challenging part of this entire process as a whole is the storage of hydrogen. Hydrogen is a very low-density gas and it must be stored at high pressures ranging from 350 bar to 700 bar to get a good quantity and mileage for vehicles. Storing it in a steel tank is not viable as the wire weight of the steel tank at such high pressures will go very high, bringing down the total transportation economy. 

One of the crucial issues that the panelist mentioned is reducing the carbon footprints of the developing world. It is indeed the developed world’s responsibility to assist the developing world in reducing the carbon footprint, in the transfer of technology, and adopting new renewable energy sources, including hydrogen. International funding must come in for the developing world. Here it must also be understood that all the initiatives can’t be financed through international funding. Collaboration within the developing world is the need of the hour. At the same time, another issue is that focus must also be given to developing institutes like the IITs and other institutes of higher education into the center of excellence after the identification process. One must realise that whatever we do today in one place is just going to have an impact globally. Today because many people are doing the same thing, it has enabled repetition. People are not coming together or partnering to take out the best benefits.

The development of the hydrogen regulatory framework in India will be a complex process involving different industries, stakeholders, and international counterparts, which is coming up now. Therefore, it is promising that each of these states, especially Kerala, will collaborate with one another, involving the best range of industry stakeholders, especially Marine, to develop a system there. One of the panelists also feels that if the entire process is carried on carefully in an efficient manner, then there is nothing to be worried about.

Understanding the Kerala model

Kerala would probably be the first state to become carbon neutral by 2050. Even the local bodies have started working on it. The first EV policy was brought in around 2019. It was then understood that hydrogen would be more feasible so that the battery could be replaced as far as the bus trucks and heavy-duty vehicles are concerned. Hence in the first pilot project, the Kerala government did a scanning of all the legislations of the country. All those legislations, rules, and sections which needed to be amended in the country to make hydrogen as fuel were identified. This was then shared with concerned authorities of the government of India. At first, the Kerala government is planning to start with intracity buses, after which they will start introducing intercity buses. According to the prepared roadmap, 3000 buses and a thousand trucks are to be electrified in a sense, so naturally, the fuel cell, the requirement of hydrogen comes to roughly around 25,000 tons in a year. Parallelly, the Kerala government is working on the water transport sector. The government, along with the help of German funding, has constructed a water metro where the LTO battery is used. The Kerala government has also requested TERI to prepare a DPR for the waterway as the National waterway is going to get commissioned in the next six months.

Suggestions

The panelists made the following recommendations during the panel discussion:

• • It is very important for the developed world to ensure that the developing economies keep pace with the latest technologies. In order to maintain these technologies, a center of excellence should be set up which would take care of everything. 
  • Also, in some way, the government must provide financial help. If we have a look at the last budget, about 2.6 billion dollars were allocated to boost the manufacturing of solar modules and the government’s flagship production link incentive scheme. There was nothing of that sort for hydrogen. 
  • The doctoral and post-doctoral students should be encouraged to work on various aspects of hydrogen so that the expenses come down and it becomes user-friendly. 
  • One of the panelists also suggested that there should be a centre of excellence on hydrogen production with a major focus on R&D along with training the manpower to adopt the technology. 
  • There is a need to increase the number of demonstration projects.
  • The developing countries must come forward and work as a consortium. Efforts should be made to have international funding along with local fiscal and non-fiscal initiatives. 
  • Green hydrogen would cost less in the years to come when the cost of electrolyzers would go down. However, the cost of creating infrastructure would remain. Green hydrogen will not be produced at the same rate all through the day, which means that it is important to have hydrogen storage to make it round the clock supply for hydrogen. 
  • It must be noted that in the case of regulation of standards, efforts must be given to following global standards, which would help in having interoperability of technology and of equipment.