Green Hydrogen Policy 2080: Review and Challenges

 

Green Hydrogen Policy 2080: Review and Challenges

The Government of Nepal introduced its Green Hydrogen Policy in 2080 BS with an ambitious target of promoting multi-sectoral use of green hydrogen. This policy formally recognizes hydrogen as a form of energy. Using this policy as a benchmark, the government incorporated green hydrogen into the 16th Five-Year Plan, envisioning its use in transportation, industry, business commodities, and exports to neighboring countries such as India, China, and Bangladesh. Koshi Province has also integrated green hydrogen into its five-year plan, setting a target to produce green hydrogen by the end of fiscal year 2085-86 BS.

Nepal has immense potential for hydropower, with an estimated capacity of around 42,000 MW. The government aims to generate 28,500 MW of electricity by 2035 AD at an estimated cost of USD 46.5 billion. However, a critical question arises: will all this energy be consumed domestically? The answer is likely no. Given the current pace of economic growth and industrial investment, even 40% of the targeted generation may not be utilized. So, what is the best way to consume electricity domestically? The answer lies in producing green hydrogen for domestic use and adding value to the energy.

Exporting electricity to neighboring nations may seem like an option, but it is neither sustainable nor beneficial for Nepal’s long-term interests. Selling energy is akin to selling raw materials, which does not significantly benefit the common people. An ethical question also arises: are we taking all the risks of investing in hydropower only to sell electricity to other nations? Does this truly improve the lives of ordinary citizens? Planners must consider these issues carefully.

Green hydrogen offers the best solution for energy security and reliability. The policy promotes renewable energy integration and focuses on both domestic use and export of green hydrogen. However, implementing this policy comes with several challenges. Let’s discuss them:

Challenges in Implementing Green Hydrogen Policy

1. Legal Challenges
   There are no clear rules and regulations regarding hydrogen production, transportation, storage, and distribution. Investors may face legal uncertainties, and minor regulatory changes could jeopardize their investments. Additionally, Nepal lacks a dedicated regulatory body for hydrogen energy, which is critical given its highly flammable nature and associated safety risks.
   
   

2. Investment Model
   The government has not clarified whether investments will be made solely by the public sector, private sector, or through a public-private partnership model, as seen in hydropower projects. A clear investment framework is essential to attract foreign direct investment (FDI) and domestic investors.
   
   

3. Licensing Mechanism
   The hydropower sector suffers from a lack of transparency in license distribution, leading to issues such as license hoarding by private entities. To avoid similar problems, the licensing process for hydrogen projects must be competitive, transparent, and quality-focused.
   
   

4. Technology Transfer
   The government should adopt a technology transfer model, requiring companies to transfer technology after a specified period. If companies wish to continue operations post-license expiry, they can contract with the government; otherwise, the government should establish its own entity to manage such projects.
   
   

5. Undefined Use of Hydrogen
   While the policy mentions multi-sectoral use, it does not specify application areas. This ambiguity can lead to accidents, as seen in Pokhara involving high-profile individuals. Clear guidelines on hydrogen usage are necessary to prevent such incidents.
   
   

6. Distribution and Market Mechanism
   Hydrogen storage and distribution pose significant safety challenges. Nepal currently follows two energy distribution models:
   
   

Nepal Oil Corporation (NOC): Distributors procure oil from NOC and sell to consumers.

Nepal Electricity Authority (NEA): NEA purchases electricity from private producers and sells to consumers.
The government must decide which model or a hybrid approach will be adopted for hydrogen distribution.

7. Domestic Consumption
   Electric vehicles (EVs) are already expensive compared to petrol or diesel vehicles. Hydrogen vehicles, being a new technology, are even costlier due to limited production. Can Nepali citizens afford this technology? If hydrogen is intended for industrial use, a well-planned ecosystem is essential for sustainability.
   
   

8. Seasonal Storage of Hydrogen
   Nepal’s hydropower generates surplus energy during the wet season, often leading to spillage. This excess energy can be used to produce hydrogen via electrolysis. However, long-term storage of hydrogen remains a major challenge.
   
   

9. Regeneration for Energy Security
   The policy does not emphasize regenerating electricity from stored hydrogen to meet energy demands during shortages.
   
   

10. Government Roles
    Nepal has three tiers of government, but the policy does not clearly define their roles in hydrogen production and utilization. Effective coordination among all levels is crucial.
    
    

11. Bureaucratic Hurdles
    Most projects in Nepal face bureaucratic delays, increasing costs and timelines. Streamlining administrative processes is vital for successful adoption of hydrogen technology.

Conclusion

Hydrogen energy is widely regarded as the energy of the future. To secure a better tomorrow, we must act today. All three levels of government, the private sector, policymakers, and other stakeholders should collaborate strategically to introduce hydrogen energy into Nepal’s industrial and commercial sectors.