Opinion | Can Nepal transition to a green hydrogen economy?

Nepal is among the countries most vulnerable to climate change and its effects, including severe water-induced disasters and extreme hydro-meteorological events such as drought, storms, floods and inundation, landslides, debris flows, soil erosion, and avalanches.

The energy-related Greenhouse Gas (GHG) emissions accounting for two-thirds of global greenhouse gas emissions are primarily responsible for climate change. For a reasonable likelihood of staying below 1.5 °C of global warming, net anthropogenic GHG emissions should decline by around 45 percent by 2030, from 2010 levels, reaching net-zero by around 2050. As a result, many governments are proposing GHG reduction and/or net-zero emission policies.

At present more than Rs 200 billion a year is used to import fossil fuels in Nepal, which is around 10 percent of our GDP. The demand for fossil fuel here is expected to rise six times in 2050 compared to 2010. While the rest of the world is gearing up to cut dependency on fossil fuels, such exponential growth in demand for petroleum products in Nepal is alarming. The rapid increase in the loss of Nepal Oil Corporation due to the high demand for subsidized imported fuels is a serious threat to the national economy. It is high time for strategic decisions and impactful action to help Nepal transition to carbon neutrality and energy independence.

Hydropower development has been a national priority, with more than 20,000 MW of projects under different stages of development. The forecast domestic demand for electricity for the next few years is much lower than its production. The peak demand for electricity for 2021 was already lower than installed capacity. By the end of 2028, Nepal could have an excess of 3500 MW of installed hydropower projects, whose production might go to waste if proper energy management and policies are not soon defined.

Export of excess hydroelectricity through a cross-border grid connecting South Asian countries is being discussed. But geopolitical complexities and high energy prices in Nepal may limit this possibility. Increasing domestic consumption of electricity by such a large amount in a short period seems impractical too. There is thus a need for a consolidated approach to replace the surging demand for fossil fuels with the surplus supply of electricity.

Also read: Nepal’s Tarai plains have a Chinese dream

Hydrogen is one of the globally emerging carriers of renewable electricity, contributing to a low carbon economy. Hydrogen is extracted from water using an electro-chemical machine called an electrolyzer. The hydrogen gas produced from renewable energy sources is green hydrogen. At present, the average cost of green hydrogen on the international market is $3-5 a kg, and the target is to bring it below $1 a kg by the end of this decade. Groundbreaking research and innovation and policy-based interventions to promote renewables as the primary supply of energy is pushing green hydrogen to overtake fossil fuel both technically and economically.

Hydrogen alone could be responsible for 22 percent of global energy demand by 2050, from less than 0.1 percent at present. Oil-producing counties in the Gulf have already started investing in mega-scale green hydrogen production from solar panels installed in deserts. Oman is preparing a 30GW green hydrogen production facility, ahead of UAE with 25GW. Saudi Arabia is about to complete a 4GW production facility in its zero-carbon Neom City. India has announced its “National Hydrogen Mission for Energy Independence by 2047” by pumping $1.35 trillion on hydrogen infrastructure.  Australia, Canada, China, and the US are also announcing their mega-scale projects. Strategic investments at present will lead to a higher share of the global market in green hydrogen in the future.

Green hydrogen can be produced with 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 for end-users. For the run-off-river projects, green hydrogen can act as a virtual reservoir in wet seasons. In Nepal, the projected surplus electricity energy ranges from a minimum of 2,102 GWh for 2022 to 16,820 GWh for 2028. When this surplus energy is used to produce hydrogen, annual production will vary between a minimum of 8,410 tons with 20 percent surplus energy utilization in 2022, to a maximum of 336,384 tons with 100 percent utilization in 2028.

Hydrogen produced in 2028 can replace approximately 1.2 million kL of gasoline fuels from the transport and industrial sectors in Nepal. About 80,000 tons of green hydrogen can meet the current national demand of 800,000 tons of urea fertilizer a year. Use of green hydrogen as a clean heat in household and industrial applications can reduce dependency on solid fuels, coal, LPG, and furnace oils by large amounts. There are possibilities for existing and future process-based industries like mining and steel, vegetable ghee, and chemical industries to create demand for green hydrogen locally and promote sustainable low-carbon industrial development.

Also read: Opinion | Time to tweak our electoral system

There is a need for a consolidated program initiated and owned by the government to establish and incubate a green hydrogen economy for Nepal, and to prepare the business sector to take over commercial applications in a competitive manner in local, regional, and international markets.

It is high time for energy transition in Nepal with proper use of its immense hydropower and abundant solar energy sources to strategically replace 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 energy transition for Nepal. This will have a significant impact on the energy mix of the country and energy export alternatives. The transition process demands strong political and social commitments, high-level knowledge transfers from university to the industry and business sector, and willingness from the commercial and business sectors to diversify their income with green hydrogen.

Kathmandu University (KU) has recently established the Green Hydrogen Lab with a vision “Nepalese industries specialized to produce, store, transport, and use green hydrogen energy at a commercial level”. KU has been conducting research to adapt global technological advancements in the context of Nepal and lobbying the government, private and other stakeholders for policy-based intervention of green hydrogen.

Recently, the Ministry of Energy has formed a coordination committee under the secretariat of the Water and Energy Commission to study the role of green hydrogen for balancing demand and supply of hydropower. The study report is expected to recommend a policy-level decision to open the door for incubating businesses based on green hydrogen technology for the public and private sectors.

The author is Team Leader, Green Hydrogen Lab and Assistant Professor, Department of Mechanical Engineering, Kathmandu University