Adani Group pilots green hydrogen, green ammonia initiatives amid climate funding woes

Adani Total Gas is pioneering efforts to reduce emissions by co-firing a blend of coal and green ammonia at its Mundra facility and blending green hydrogen in Shantigram, a high-end real estate development in Gujarat that serves 4,000 homes. 

These initiatives are part of the conglomerate’s broader strategy to decrease India’s reliance on natural gas imports as the country transitions to greener energy sources, according to Arun Sharma, Adani Group's head of sustainability and climate change, who spoke during a panel discussion at the Mint Sustainability Summit 2024 in New Delhi.

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"The combustion point of coal and green ammonia is very similar...we are doing a feasibility study in Mundra of a 330 MW thermal power plant which will co-fire 20% green ammonia, which will roughly reduce its emissions by 20%. The cost of fuel increases, but it is still cheaper than a natural gas power plant," Sharma explained. 

"We are looking at a pilot for carbon capture from the cement plant, and then with our green hydrogen value chain, converting that into methanol...we are looking at pilots very seriously in this decade, so that we are ready for prime time, as we are able to bring down the cost of green hydrogen," he added.

Sharma emphasized the urgency of rapid electrification for India’s green transition, alongside decarbonization efforts with a focus on manufacturing and exporting green ammonia. 

"Electrification for India, like anywhere in the world, is the only way to reduce greenhouse emissions. Even if much of the electricity is coming from thermal power, battery electric vehicles will reduce air pollution and eventually with green hydrogen costs coming down and infrastructure coming up, heavy duty trucks and other heavy duty vehicles will move to green hydrogen, because batteries are unlikely to scale up to heavy duty vehicles," said noted.

Highlighting India’s potential in the global green ammonia market, Sharma said that the country has the capacity to compete globally in producing green ammonia, especially as one of the largest fertilizer economies. By leveraging its solar, wind, and green hydrogen value chains, India can become a significant exporter of green ammonia, he said.

The Adani Group is also focusing on capturing carbon dioxide from its cement business and converting it into methanol through its green hydrogen value chain. This initiative aims to reduce India’s dependency on countries like Saudi Arabia for carbon storage. 

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"The European Union has decided to call it "green methanol" because it is processed emissions, and so it creates an economic incentive to go that way. But in the long term, you can take that methanol and convert it into building material like PVC (polyvinyl chloride), which stores the carbon dioxide for hundred years," said Sharma.

Role of investment in India’s green transition

Despite these ambitious green energy initiatives, funding remains a challenge. 

The panel, consisting of experts in climate resilience, literacy, and renewable energy, emphasized that climate funding is crucial for India’s green transition.

When questioned about India’s persistent demands for the global north to fund green growth in the global south, despite the inadequacies, the panel highlighted the need for domestic funding to address climate risks.

India is also actively working on climate change while advocating for more funding from the global north, said Hisham Mundol, chief adviser, Environmental Defence Fund India. “It is necessary to make those asks. But the biggest driver is by making regular finance greener, making sure that domestic institutional investors understand climate risks. If you are investing capital into a blast furnace for a steel operation, it is going to last for sixty years. It will be unable to sell a gram in Europe in ten years because of both it's emission profile and its cost. So rework those economics in a different way."

Mundol also pointed out that India’s investment in research and development lags other nations. “The price of green hydrogen needs to come down, and that will only happen when we invest more in R&D - not just for renewables, but R&D in general. It is 0.6% of our GDP, compared to the industrial average of 1.6%, and the 3-3.5% in the US,” he noted. “Of the R&D spent in the country, 40% comes from the private sector. In industrial countries, it is 70%. So we need more money going into R&D, and we need more private sector money going in.”

Sourabh Kumar, vice-president, Global Energy Alliance for People and Planet, discussed the role of multilateral development banks (MDBs) in climate funding. He indicated that the Indian government is advocating for changes to the Bretton Woods system, which he argued is ill-equipped to tackle climate change. “They (multilateral development banks) have become completely risk averse. They really don't want to do anything but a plain vanilla lending to a sovereign. Instead, the MDB money should be able to leverage the private sector, which is currently not happening at all,” Kumar said, adding that private investment will flow only when risks are mitigated and returns are assured.

Investments from pension funds and sovereign wealth funds, typically driven by returns, can play a crucial role in advancing new technologies and democratizing green energy, according to Aarti Khosla, Director of Climate Trends. "Is there something to be done to move away from just lithium, and to move into technologies which are better, which don't have reliability on lithium and cobalt? There is a role of private investment, there is a role of sovereign wealth funds, there is a role of pension funds in looking at these new nascent technologies and making them real champions of the future," said Khosla.

Khosla also underscored the urgent need for adaptation in the face of rapid climate change. "Governments are negotiating on a 2.6-3.0 degree Celsius pathway now," she noted, highlighting the preparedness of nations to address accelerating climate challenges.

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The financial risks posed by climate change are immense, with an estimated $800 billion at stake annually due to climate-related events like cyclones, floods, and rising sea levels, warned Arun Prothi, director general, Climate and Disaster Resilient Infrastructure. 

He added that this potential asset loss represents roughly one-seventh of annual GDP growth.