New Delhi

India is open to allowing carbon credit transfers to countries that buy green hydrogen from it and a framework in this regard is being worked out with Japan, Union Minister for Power, RK Singh, said. The country is also piloting a second green steel project – using hydrogen to make steel – as reporting under EU’s proposed Carbon Border Adjustment Mechanism (CBAM) comes into effect.

According to Singh, discussions are underway with other countries too.

While India will start with carbon credit transfers for buyers of green hydrogen, it could explore similar trading options for carbon credits generated across other renewable power sector users like wind and solar.

Rules regarding transfer of carbon credits and sale outside India are also expected over the next few days.

Also read: What will be the impact of the EU’s carbon border adjustment mechanism on Indian exports?

“We are working on selling carbon credits outside India, specially for those who are buying green hydrogen for us. Japan has sent us a draft on carbon trading. And we seem satisfied with it. We would most likely progress with it,” he told mediapersons at a press conference on “Transformative and Future Ready Infrastructure”.

“In other renewable sectors, which also generate carbon credit, we could look at similar trading options at a later stage,” Singh added.

Green Processes

Hydrogen can be used as a fuel and is made by splitting water (H2O) into two molecules — hydrogen and oxygen — via electrolysis. If the devices or electrolysers used for such separation of molecules are done through renewable energy, then the product is green hydrogen. Green hydrogen, as the name suggests, would be free of greenhouse gas emissions.

According to the Minister, India is already running pilot projects and developing new processes under its Green Hydrogen Mission, which aims at reducing the carbon footprint of Indian products that are exported.

CBAM Rules

To a specific question on how India is handling the proposed CBAM rules – where reporting of carbon standards on products sold to Europe become mandatory October 1, Singh said, “trade aspect is being looked into by the Ministry of Commerce”.

“The other aspect is reducing the carbon content of the items that are being exported to Europe. Thats why we brought in this green hydrogen. We already have these pilots running on green steel and will come out with another pilot on green steel to ensure that future steel offerings have lower carbon content. Similarly, other industries too have to reduce the carbon content in their product by adopting different processes,” he said.

According to the Minister, switching over to such processes will take time and “it cannot happen over-night”. “You are running pilots, developing processes. As far as CBAM is concerned, their logic is that the levy is on taxes on domestic industry to discourage high carbon contnet; and also have a similar levy or duty on imports,” he said.

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