For a country that imports more than Rs200 billion worth of oil annually, and where consumption is rising by the year and the trade deficit is ever widening, producing hydrogen fuel can be the best way to achieve energy self-sufficiency, experts said, but this can happen only if the government makes it a national agenda.

The production of hydrogen fuel is economically feasible and environmentally wise, and will help to reduce fossil fuel dependency, said academicians and researchers engaged in Green Hydrogen Lab funded by Nepal Oil Corporation.

“Whether hydrogen fuel will be feasible and economical all depends on government policy,” said Biraj Singh Thapa, assistant professor at the Department of Mechanical Engineering at Kathmandu University and also the team leader of Green Hydrogen Lab.

“We have electricity and water, the major components required to produce hydrogen fuel. Investment in physical infrastructure is all that is needed to produce hydrogen fuel in the country,” Thapa said.

Hydrogen fuel can be used as an alternative to petrol, diesel, liquefied petroleum gas (LPG) and coal. It can even power hydrogen generators for electrification and utilisation that run on fossil fuels.

"Firstly, the production of hydrogen fuel will play a key role in lessening the trade deficit that is caused by the import of petroleum products," he said. "Secondly, it has become important to think about Nepal's energy security as it is totally dependent on petroleum products from India. And thirdly, rising pollution in recent times has become a huge challenge for the country, and hydrogen fuel is a boon to eliminate pollution."

Green Hydrogen Lab's vision of Nepali industries specialised in producing, storing, transporting and using green hydrogen energy on a commercial level resulted in a project named Technology Transfer and Local Adaptation for Developing NOC as a Hydrogen Fuel Producing and Distributing Company, which was funded by a Rs50 million research grant from Nepal Oil Corporation.

Under the two-year project, Kathmandu University will be producing hydrogen and also working on storage and end-use systems. It will convert gasoline powered internal combustion engine vehicle to hydrogen fuel cell vehicle for demonstration purposes.

The project will also provide recommendations to the government for policy guidelines for green hydrogen, emphasising production, storage and end-use of green hydrogen as a future fuel for Nepal.

Producing 1 kg of hydrogen fuel requires approximately 50 units of electricity, and it allows a car to run for 60-70 km depending on the condition. This is comparable to diesel in terms of efficiency and cost, as per Thapa.

“If the electricity tariff is reduced, the price of hydrogen fuel will drop automatically,” he added.

“Utilising surplus electricity at a subsidised rate, we can produce hydrogen at a cost of $1 per kg,” Thapa said. "This is economically feasible, it can be produced within the country and is environmentally friendly."

The country needs policy, regulation, pilot projects and private businesses willing to invest in it as capital running into billions is needed to build hydrogen plants, storage facilities, refuelling stations and vehicles that run on hydrogen, Thapa said.

"It might require a huge investment to create a value chain for hydrogen fuel, and it also takes time," he added. "The government should start working on this now, and gradually decrease the dependency on petroleum products by investing in hydrogen fuel."

According to the import data of the Trade and Export Promotion Centre, Nepal imported petroleum products worth Rs175.53 billion in the fiscal year 2020-21 while the import bill stood at Rs164 billion in the fiscal year 2019-20.

The import of petroleum products was impacted in these two fiscal years with the government imposing lockdowns at different times to control the spread of the virus, leading to a decline in consumption.

The country imported petroleum products valued at Rs216.42 billion in the fiscal year 2018-19.

Nepalis consume 90 percent more fuel than they did five years ago. The country’s petroleum demand has been increasing by 10 percent annually despite regular supply of electricity.

Petroleum products are one of Nepal's largest imports, and the country is totally dependent on India for its fuel requirement. Nepal also imported coal worth Rs25.78 billion in the last fiscal year.

Surendra Kumar Paudel, managing director of Nepal Oil Corporation, said, "It depends on how successful the project is, and it will take time to produce alternative fuel. The project is targeted at the next 15 years, and the growth in the use of fossil fuel will not go down."

Paudel added, “We do not have a policy by when hydrogen fuel will replace fossil fuels, and nobody can guarantee it. The consumption of diesel and petrol will not decline before 2040 globally, even though the growth rate may go down some."

“We will see growth in the use of diesel and petrol till 2035, and it will be constant after that,” he said.

Paudel cited electric vehicles as an example, explaining that these cars entered the country many years ago, but their numbers on the streets are still very small.

"In the case of hydrogen fuel cell cars, the conversion of our vehicles will be gradual as it costs more,” he said.

"But instead of planning for alternative fuel, the government is doing just the opposite by investing in projects to import more gasoline which shows its focus is not on reducing dependency on fossil fuels," insiders said.

In July 2019, the Amlekhgunj-Motihari pipeline, a 69.2-km-long Nepal-India cross-border petroleum pipeline, was launched. It currently transports only diesel.

Nepal Oil Corporation has been working on extending the oil pipeline from Amlekhgunj to Chitwan. The corporation is planning to develop a second cross-border petroleum pipeline linking Siliguri and Jhapa. It has also proposed to build an oil storage plant and gas bottling plant.

Thapa said that many nations have introduced hydrogen energy road maps, but Nepal has not even started discussing energy transition. As India brings hydrogen energy, the road map has introduced an action plan for less carbon zero goals. But the Nepal government does not have clear answers to reach net carbon zero emission by 2050 as opting for electric vehicles only is not going to help in achieving the target, he added.

“Nepal signed the initiative in 2015, but it does not have any plan to achieve it,” he added.

According to Thapa, except in clause number 14 that says hydrogen can be used for vehicles in Environment Policy 2019, hydrogen has not been recognised at the policy level.

For this to happen, a long-term vision policy is required, and there should be a stable government to implement it.