A hydrogen hub is a a cluster of assets that produce and process hydrogen fuel as an alternative to fossil fuels. (Photo by Andreas Rentz/Getty Images)
The Friday announcement that seven projects had been selected to receive $7 billion in seed money to kickstart the production of clean hydrogen across the country was billed by President Joe Biden’s administration as a major step toward slashing carbon emissions, creating thousands of domestic jobs and positioning the U.S. as a clean energy leader.
“I’m here to announce one of the largest advanced manufacturing investments in the history of this nation,” Biden said during an appearance in Philadelphia.”Seven billion dollars in federal investments that’s going to attract $40 billion in private investments in clean hydrogen.”
However, there’s also criticism over a lack of transparency by the Department of Energy around the application and selection process and those who are dubious about the ways some of the newly minted “hydrogen hubs” intend to produce the gas, which the administration called “crucial to achieving President Biden’s goal of American industry powered by American clean energy.”
Hydrogen, which releases no carbon emissions when burned, is seen broadly as a key part of cutting emissions from hard-to-decarbonize sectors of the economy, such as steelmaking and cement manufacturing, aviation, shipping and other areas. There’s more controversy around uses like blending it with natural gas to burn in power plants or for heating.
How climate-friendly hydrogen is depends on how it’s produced. Currently most hydrogen in the U.S. is produced using natural gas, so-called “gray” hydrogen. “Green” hydrogen is produced by an electrolysis process with clean energy. “Blue” hydrogen is fossil-fuel derived but coupled with carbon capture, in which CO2 is filtered out of emissions and stored.
Four of the projects (the Appalachian, Gulf Coast, Heartland and Midwest hydrogen hubs) that the DOE announced as winners will use fossil fuels to produce hydrogen. (In the bipartisan infrastructure law, Congress required that at least one hub “demonstrate the production of clean hydrogen from fossil fuels.”)
“There are so many ways hydrogen can go wrong. … We’re really concerned with the number of projects that rely in part or in whole on fossil fuel-based hydrogen production,” said Julie McNamara, a deputy policy director at Union of Concerned Scientists’ climate and energy program. “For hydrogen to be a clean energy solution, it has to be cleanly produced and it has to be strategically used.”
In some scenarios, environmental groups worry the hydrogen could actually increase U.S. greenhouse gas emissions.
A report last month by the Institute for Energy Economics and Financial Analysis, an Ohio nonprofit, found that the U.S. government “significantly understates the likely impact of producing hydrogen from fossil fuels on global warming.” The assumption that 1% of the methane being used to produce hydrogen will be emitted into the atmosphere is “far less than recent peer-reviewed scientific analyses have found and that has been identified by airplane and satellite emission surveys,” the report says. It also notes that using fossil fuels to make hydrogen cleanly depends on the “overly optimistic and unproven assumption that hydrogen production projects will be able to capture almost all of the carbon dioxide they create.”
In short, said David Schlissel, one of the report’s authors, blue hydrogen is not a great idea when you consider emissions from the entire process, from producing natural gas to shipping and storing the hydrogen and the unknowns of trying to use carbon capture and storage at scale.
“We fear, and it’s based on our analysis, that the money the government is going to spend on blue hydrogen production is going to result in the continued emission of greenhouse gases for decades,” he said. “We worry about the waste of money. But we really worry about the waste of time and giving fossil fuel companies the opportunity to build infrastructure that depends on their continued operation. That’s the real concern, to keep the world addicted to fossil fuels.”
That’s the concern with all of this hydrogen hype.”
Schlissel and other critics also questioned the lack of details released by the Department of Energy about the projects, noting that much of the application materials have been treated as trade secrets by the states and the DOE. It’s unclear how the DOE scored the projects for funding, he added.
“How much hydrogen is going to be produced? What are going to be the CO2 emissions? How much CO2 is going to be captured? Then, where is it going to be used?” he said. “DOE and the applicants have taken the position that everything is confidential.”
The department’s press office did not respond Friday to a list of questions, including one about how projects were evaluated.
“We would encourage the DOE to be as transparent as they possibly can, especially for the communities where they’ll be proposed,” said Patrick Drupp, director of climate policy for the Sierra Club, one of the nation’s largest environmental groups.
‘This is not trivial’
Perhaps even more important than the hub applications that were selected, Drupp and McNamara say, are the debates ongoing at the Internal Revenue Service around the final rules for the hydrogen tax production credit created by the 2022 Inflation Reduction Act.
“While these hubs are large and there is a significant amount of money on the table, the hydrogen production tax credit could potentially dwarf that amount of money,” McNamara said. “That makes it all the more critical that how the administration determines what is truly clean energy is rigorously done.”
The final shape of those rules, which are linked to the intensity of greenhouse gas emissions of the hydrogen source, could be the difference between a boon and a boondoggle on the scale of the biofuels industry, a pair of climate economists wrote in a recent Washington Post op-ed.
“Using fossil-generated electricity or siphoning off renewables subsequently back-filled by fossil power to operate electrolyzers — which would occur under loose guidance — generates at least twice the carbon emissions that status-quo gas-derived hydrogen emits,” a coalition of environmental groups, developers and other organizations wrote to the Treasury Department in February. “Weak guidance could therefore force Treasury to spend more than $100 billion dollars in subsidies for hydrogen projects that result in increased net emissions, in direct conflict with statutory requirements and tarnishing the reputation of the nascent ‘clean’ hydrogen industry.”
Groups like the Natural Resources Defense Council and the Rocky Mountain Institute say the final rules should incorporate a “three pillars” approach. The first is “additionality,” meaning a new hydrogen electrolyzer that is connected to the electric grid is responsible for ensuring the added electric demand they are creating is being met by new low-carbon generation. The second is “time-matching,” requiring electrolyzers’ electric consumption to match its hydrogen production. The third pillar, deliverability, would require hydrogen producers to get clean electricity from within their region.
McNamara said the guidance is expected to be finished by the end of the year.
“This is not trivial,” she said. “Hydrogen can be a valuable tool for the clear energy transition but it is not a given … and getting it wrong comes with enormous consequences for climate and public health.”
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