Green premium
Topic: Environment and Sustainable Development · NCERT: Beyond NCERT
Meaning
The green premium is the extra cost of choosing a clean option instead of the fossil-fuel option that does the same job.
Green premium = Cost of clean option − Cost of fossil option
A high green premium is the main barrier to the energy transition, because buyers usually pick the cheaper, dirtier option. Policy tries to shrink the premium through subsidies, carbon pricing and scale-driven cost cuts.
Example
If a tonne of steel made with green hydrogen costs ₹60,000 and a tonne made with coal costs ₹45,000, the green premium is ₹15,000 per tonne. Once the premium falls to zero or below, the clean option wins on price alone.
Related concepts
- Energy transition
- Energy trilemma
- Energy intensity
- Coal phase-down
- Grey hydrogen
- Blue hydrogen
- Green hydrogen
- Green ammonia
- Hydrogen economy
- Carbon capture, utilisation and storage