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India makes plans for EVs, green hydrogen
From government to businesses, India is accelerating its pace to keep up with the wave of global vehicle electrification. India hopes to rid itself of uneasiness caused by the mass amount of energy it has imported during the petroleum age, but the age of electrification may bring even more instability to India’s energy security.
Oil became the world’s most important strategic resource after World War II. Compared to domestic reserves and widespread international coal mining, oil has continued to be a major source of unrest for India since its founding over 70 years ago.
While semiconductors have surpassed oil as China’s biggest imported commodity, data from the World Trade Organization (WTO) indicate that oil was still India’s largest imported commodity in 2020. Oil imports were valued at US$64.58 billion, surpassing gold, India’s second-largest import, by over US$40 billion.
In light of this data, the Indian government is promoting vehicle electrification as the key to leading India away from the uneasiness caused by energy in the petroleum age. However, what this has done is shift India’s dependence in the transportation sector from petroleum to lithium batteries.
Electric vehicles (EV) currently use various battery technologies. Since the technology for lithium batteries is the most mature, the cost is expected to continue falling to a level acceptable to Indian consumers.
Other technologies such as metal-air batteries and solid-state batteries have yet to achieve large-scale commercialization. In fact, it’s possible that the automotive supply chain may be transformed into one dominated by EVs before these other technologies even reach commercialization.
Compared to oil, lithium reserves are concentrated in a small number of countries, particularly Argentina, Bolivia and Chile, which together make up South America’s Lithium Triangle. The concentration of lithium in these countries is likened to the concentration of oil in less developed countries with unstable political situations, like the Middle East.
India itself has natural lithium reserves. In 2021, the first important lithium reserve site was discovered in Mandya, Karnataka. However, the reserve only holds 1,600 tons, according to a report by Livemint, an amount that is nothing compared to 9.2 million tons in Chile.
The Geological Survey of India also found seven other sites to mine, but they must wait until the demand for lithium in India is high enough to make the value of mining worthwhile before going forward.
The concentration of the lithium supply chain in East Asia, particularly China, makes India feel uneasy. According to data from the International Trade Center, lithium-ion batteries imported by India in 2016 amounted to US$300 million. In 2020, that number grew to over US$1 billion. Among that, the amount of lithium batteries India imported from China for the same period went from US$240 million to US$580 million. Although the dependence on imports from China fell from 80% to 54%, India still heavily relies on them as a source for imports.
India also has plans for future cars. It aims to reward the local auto supply chain with a production-linked incentive scheme (PLI). India will subsidize investments and sales for EVs and clean vehicles such as hydrogen-fueled vehicles that ae made in India. Fuel cell vehicles (FCV) together with the announcement from the National Hydrogen Mission in 2021 are expected to encourage the production of green hydrogen in India.
The production process for green hydrogen is the biggest consumer of energy, but it can be supported by India’s inherent geographical advantages and the fast growth of renewable energy in recent years. Up to now, though, India has only taken its first steps toward green hydrogen development.
Compared to the rapid development of the EV supply chain in China, the development of hydrogen-fueled vehicles is concentrated in Japan and South Korea. It should also be noted that India sells nearly 20 million two-wheeled vehicles annually, and hydrogen-powered scooters have yet to become commercialized.
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