Dr. Biraj Singh Thapa
Kathmandu; Climate change has been one of the most pressing issues in recent decades. It has been attracting the attention of scientists, businesses, and governments all around the world, and has established itself as the main driving factor for survival and development. Nepal is among the countries, which are the most vulnerable to climate change and its effects that include severe water-induced disasters and extreme hydro-meteorological events like drought, storms, flooding and inundation, landslides, debris flows, soil erosion, and avalanches.
Energy-related greenhouse gas (GHG) emissions that cover around two-thirds of the effluence globally are the primary factor for climate change. For a reasonable likelihood of staying below 1.5 °C of global warming, net human-induced GHG emissions should decline by around 45 percent by 2030, from 2010 levels, reaching net-zero by 2050. As a result, governments of a number of countries including the USA, China, India and EU members, have proposed GHG reduction and/or net-zero carbon emission policies.
At present, Nepal spends almost around Rs 300 billion annually on imports of fossil fuels. The figure makes up about 13 percent of the country's GDP. It is expected that demand for fossil fuels in Nepal could rise up to 6 times by 2050 than that of 2010. While many other countries are gearing up to cut its dependency on fossil fuels, such an exponential growth in demand for petroleum products in Nepal is very alarming. The rapid increase in the financial loss of Nepal Oil Corporation, the state-owned monopoly for petroleum supply, created by surging demand for the subsidized imported fuels, has put a serious threat even to the financial health of the national economy. It is high time to act on making strategic decisions and impactful actions to transform Nepal into a carbon-neutral and energy-independent country.
Currently, Nepal has put more focus on hydropower development by considering the sectorunder national priority for economic development. The country is now having projects of over 20,000 MW of hydropower production at different stages of development. Despite having larger number of pipeline projects for electricity production, forecasted domestic demand for electricity even for the next few years is much lower than its production. While peak demand for electricity in 2021 was already lower than installed capacity, Nepal is expected to have an excess of 3500 MW of hydropower projects by 2028. In this context, Nepal could face even larger wastage of the produced electricity if proper energy management approaches and policies are not introduced soon.
Nepal is rigorously looking forward to exporting excess hydroelectricity by using cross-border grid connection to the South Asian Countries, particularly to India. However, the mountainous country may hit a snag in its plans due to geopolitical complexities and high prices for its produced energy. Increasing domestic consumption of electricity in large amounts seems difficult in the current situation. There is a need for a consolidated approach to replace the surging demand for fossil fuels by the surplus electricity being produced inside the country.
As an alternative, hydrogen is one of the emerging technologies globally that has been sought to take forward the use of renewable electricity and contribute to a low carbon economy. Hydrogen can be extracted from water using an electro-chemical machine called an electrolyzer. The electric current is applied to split water into its constituents-- hydrogen, and oxygen. Hydrogen gas, when produced from renewable energy sources, is called green hydrogen. When it passes through a fuel cell, it regenerates electricity by reacting with oxygen to produce water. Thus, the green hydrogen cycle is completely free from carbon emissions.
At present, the average cost of green hydrogen on the international market is USD 3-5 per kg, which is sought to stand below USD 1 per kg by the end of this decade. The groundbreaking research, innovation and policy-based interventions to promote renewables as the primary supply of energy are pushing green hydrogen to take over fossil fuels both technically and economically.
Most of the developed countries have already released their policies and strategies to promote and adopt green hydrogen as the future energy carrier. For example, the United Kingdom has announced a policy to make its economy coal-free by October 1, 2024. Norway is stopping sales of new cars running on fossil fuels after 2025. Denmark is aiming for all domestic flights to be fossil fuel-free by 2030. These and several other countries have eyed green hydrogen-based technologies to achieve their low-carbon goals.
Hydrogen alone is expected to meet 22 percent of global final energy demand by 2050 from less than 0.1 percent at present. This will be a commercial commodity to stand at over USD 2.5 trillion, with a capacity to reduce up to six gigatons of CO2 emissions annually. The oil-producing Arabian nations have already started to invest in mega-scale green hydrogen production facilities from solar panels installed in deserts. Saudi Arabia is installing the 4 GW hydrogen production facilities in its zero-carbon Neom City. Oman is preparing for 30 GW of Green Hydrogen production facilities ahead of the UAE with 25 GW of capacity.
India has announced its “National Hydrogen Mission for Energy Independence by 2047” by pumping an investment of USD 1.35 trillion into hydrogen production related infrastructure. Several other countries including Australia, Canada, China, and the US are announcing their mega-scale projects in the segment. It is evident that the strategic investments at present will lead to a higher share of the global market for green hydrogen in the future.
Green hydrogen can be produced in different amounts depending on the daily and seasonal variations in electricity demand and supply. This can be effective in maintaining the quality and reliability of the national grid increasing productivity at the end-users. For run-off-river projects, green hydrogen can act as a virtual reservoir in wet seasons.
In Nepal, the projected surplus of electricity energy ranges from a minimum of 2,102 GWh in 2022 to 16,820 GWh in 2028. When this surplus energy is used to produce hydrogen, a total annual production varies between a minimum of 8,410 tons with 20 percent surplus energy utilization in 2022, and a maximum of 336,384 tons with cent percent utilization of surplus energy in 2028.
The hydrogen from surplus electricity in 2028 can replace approximately 1.2 million kl of gasoline fuel from the transportation and industrial sectors in Nepal. About 80,000 tons of green hydrogen can meet the production capacity of Urea fertilizer to meet the current national demand of 800,000 tons per year. The use of green hydrogen as clean heat in household and industrial applications can reduce dependency on solid fuels, coal, LPG, and furnace oils by a large amount.
There are high possibilities for existing and future process-based industries such as mining and steel, vegetable ghee, and chemical industries to induce demand for green hydrogen locally and promote sustainable low-carbon industrial development in Nepal. There is a need of a consolidated program to be initiated and owned by the government to establish and incubate the green hydrogen economy for Nepal, and prepare the business sector to take over the commercial applications in a competitive manner at local, regional, and international markets.
It is a high time for the energy transition in Nepal, with proper use of its immense hydropower and abundant solar energy sources, to strategically replace the use of fossil fuels in both commercial and residential sectors. Green hydrogen can play a vital role as an energy carrier and could be one of the promising links in the energy transition for Nepal. This will have a significant impact on the energy mix scenarios of the country and the energy export alternatives in the future. The transition process demands for a very strong political and social commitments; high-level knowledge transfers from university to the industry and business sector, and willingness from the commercial and private sectors to diversify their income with green hydrogen.
Recently, the Ministry of Energy has formed a Coordination Committee led by the secretariat of the Water and Energy Commission to conduct a study on the role of green hydrogen in balancing the demand for and supply of hydroelectricity. The study report recommended the government to implement policy-level decisions to open the door for incubating businesses based on green hydrogen technology from the public and private sectors. The federal budget of Nepal for the year 2079/80 has included the plans to build green hydrogen and green ammonia-based fertilizer industry in Nepal. With this, Nepal has stepped into the era of a 'Green Hydrogen Economy'.
It is likely that several international companies and agencies could come forward to invest in hydrogen-related business development in Nepal in the future. Independent study reports have indicated that Nepal has the possibility to be one of the cheapest producers of green hydrogen by 2035. It is evident that Nepal can choose to be an exporting country of green hydrogen and its derivatives, with the proper planning and development of energy infrastructures. This, however, will require the proper addressing of policy gaps, setting up legal frameworks, and formation of an institutional setup to incubate green hydrogen as a commercial commodity in Nepal.
Dr Thapa is a Team Leader, Green Hydrogen Lab, Associate Professor, Department of Mechanical Engineering, Kathmandu University; this article is taken from the Urja Khabar bi-annual Journal published on 22nd June, 2022
