Biden Administration may spend billions funding 'clean' hydrogen made with fossil fuels

Biden Administration may spend billions funding 'clean' hydrogen made with fossil fuels

June 8, 2023

As one of its strategies to address climate change and accelerate the transition to cleaner fuels, the Biden Administration released a hydrogen roadmap on Monday that detailed plans to expand the production of hydrogen as a fuel that burns without releasing carbon dioxide.

The plan includes a proposal to jumpstart the U.S. hydrogen market by investing $8 billion in regional hydrogen production and distribution centers, earmarked in the Bipartisan Infrastructure Law passed in November 2021. These hydrogen production sites would split water molecules into hydrogen using electricity, or synthesize hydrogen from natural gas, capturing and storing the carbon dioxide made in the process. Hydrogen fuel would then be moved from these "hubs" via pipelines, sometimes hundreds of miles, and stored in tanks and underground caverns. Then the hydrogen would be burned or fed into energy-producing fuel cells to power industrial sites or move heavy trucks.

But nearly half of the proposed hydrogen production hubs under consideration for federal funding could make hydrogen from fossil fuels, raising doubts about how “clean” the fuels would really be.

The Department of Energy (DOE) is administering the grant program, which would select six to 10 regional hubs to receive up 50 percent of their funding through the initiative The agency is considering 33 applications for regional hydrogen hubs. The DOE will announce the recipients this fall.

“We are tasked by Congress with using the hydrogen hub funds to create sooner rather than later the pillars of a national hydrogen economy,” said David Crane, director of the DOE’s Office of Clean Energy Demonstrations. “That guides us towards replicable, long-term, commercially viable hubs with the strongest possible ripple effect.”

Industries in the U.S. currently produce about 10 million metric tons of hydrogen per year using methods that aren’t considered clean. The U.S.’s goals include increasing production to 10 million metric tons of “clean” hydrogen per year by 2030, 20 million by 2040, and 50 million by 2050.

Hydrogen fuel can be produced in different ways. Hydrogen made using solar or wind power and water in theory produces no greenhouse gas emissions. Hydrogen can also be made with natural gas and other fossil fuels, which gives it a larger greenhouse gas footprint. In practice, experts say producing zero carbon hydrogen is difficult, in part because hydrogen can leak from pipes and equipment and – when released to the atmosphere – acts as a more potent climate-warming gas than carbon dioxide (CO2).

Currently, hydrogen produced in the U.S. generates roughly 10 to 12 kilograms of carbon dioxide for every kilogram of hydrogen made. The goal of federal hydrogen policies is to bring down greenhouse gas emissions associated with hydrogen production to less than 4 kilograms of CO2 for every kilogram of hydrogen.  However, that’s only a target, not a requirement. And the DOE has said that hydrogen generated in a taxpayer-supported production hub does not need to meet the 4-kilogram-of-CO2 target to receive federal funding.

A map of existing hydrogen production units and pipelines in the U.S. included in the Biden Administration's hydrogen roadmap.

The hubs “will be evaluated on the degree to which the proposed H2Hub reduces emissions of greenhouse gases and criteria pollutants across the full life cycle compared to current and conventional technologies and processes,” the DOE stated on a web page.  The projects “also must demonstrably aid achievement of, but do not necessarily need to meet, the clean hydrogen production standard.”

However, tax credits for hydrogen production outlined in the Inflation Reduction Act, passed in August 2022, would require that qualifying projects meet that 4-kilogram threshold. The 10-year tax incentives vary from $0.60 per kilogram to $3 per kilogram of hydrogen produced.

The applications for regional hydrogen hub funding, which were due April 7, came from a wide array of sponsors – state and local governments, Native American tribes, corporations, universities, and nonprofits. The DOE has not released a list of applicants, but several groups tracking the initiatives have compiled lists based on press releases and other public announcements.

Resources for the Future, a nonprofit research institute, has identified 21 of the 33 groups that the DOE encouraged to apply. The names can be found here on the organization’s website.

According to the group’s research, the following 10 hubs encouraged to submit full applications would use only solar, wind, or other renewable energy sources to produce hydrogen:

Obsidian Pacific Northwest Hydrogen Hub, based in Oregon, Washington, and Idaho.  
Pacific Northwest Hydrogen Hub, based in Washington and Oregon.  
Alliance for Renewable Clean Hydrogen Energy Systems, based in California.  
Southwest Clean Hydrogen Innovation Network, based in Arizona.  
HARVEST Hydrogen Hub, based in Kansas. This hub would also use nuclear power to produce hydrogen.  
Midwest Alliance for Clean Hydrogen, based in Illinois, Indiana, Michigan, and Wisconsin.  
Great Lakes Clean Hydrogen, based in Ohio. This hub would also use nuclear power to produce hydrogen.
Mid-Atlantic Hydrogen Hub, based in the Washington, D.C., metro area.
Northeast Clean Hydrogen Hub, based in New York, Connecticut, New Jersey, Massachusetts, Rhode Island, Maine, and Vermont. This hub would also use nuclear power to produce hydrogen.
Hawaii Pacific Hydrogen Hub, led by the Hawaii State Energy Office.  

These five hubs would use a combination of renewable energy and fossil fuels plus carbon capture and sequestration:

Western Interstate Hydrogen Hub, led by the states of New Mexico, Utah, Wyoming, and Colorado.
HyVelocity Hydrogen Hub, based in Houston.  
Halo Hydrogen Hub, led by the states of Louisiana, Oklahoma, and Arkansas.  
Mid-Continent Hydrogen Hub, based in Iowa, Nebraska, and Missouri.  
Horizons Clean Hydrogen Hub / Trans Permian Hydrogen Hub, based in South and West Texas.

These four hubs would not use renewables, but would instead rely mainly on natural gas to produce hydrogen:

Heartland Hub, based in North Dakota, Minnesota, Montana, and Wisconsin.
Appalachian Regional Clean Hydrogen Hub, based in West Virginia, with cooperation from Ohio, Pennsylvania, and Kentucky.
Decarbonization Hub of Appalachia, based in Pennsylvania.
Mid-Atlantic Clean Hydrogen Hub, led by the City of Philadelphia.

For two of these regional hubs, it is unknown whether they plan to use renewables, fossil fuels, or other energy sources to produce hydrogen:

Leading in Gulf Coast Hydrogen Transition, based in Houston.  
Southeast Hydrogen Hub, based in Alabama, Georgia, Kentucky, Tennessee, North Carolina, and South Carolina.  

Whether the DOE encouraged or discouraged the following five hubs from submitting full applications is unknown:

FPL Cavendish Next-Gen Hydrogen Hub, led by Florida Power and Light.
Mississippi Clean Hydrogen Hub, Led by Hy Stor Energy and Clark & Lunn Infrastructure  
HyDeal LA, based in Los Angeles and Utah.
St. Louis Hydrogen Hub, led by a group of energy and manufacturing companies.
Centralia Hub, based in Centralia, Washington.

The DOE discouraged one hub from submitting a full application: 

Alaska Hydrogen Hub, led by the Alaska Gasline Development Corporation.

Details on most of the applicants are sparse, and the DOE has not released the applications that contain full descriptions of how the hubs would generate hydrogen, how it would be transported and stored, and who the end-users would be.

“This process has had about the same level of transparency as other funding opportunities (which is to say, not a lot),” said Yuqi Zhu, a senior research associate with Resources for the Future, in an email. “While DOE released some summary statistics which gave the number of total and encouraged applicants, we had to do our own research to identify the names of encouraged hubs. Given the magnitude of funding for this program and how closely linked these hubs will be to their local communities, we have been continuously urging for much greater transparency from DOE.”

However, some applicants have shared more specifics about the makeup of their proposed hydrogen hubs. For example, the Western Interstate Hydrogen Hub involves seven connected projects across New Mexico, Utah, Colorado, and Wyoming. According to a November 2022 concept note, the hub would comprise the following:

◦ On Navajo Nation land in San Juan and Torrance counties in New Mexico, energy company Avangrid would use renewable energy to produce hydrogen.  
◦ In Duchesne, Iron, and Sevier counties in Utah, solar energy firm AVF Energy would produce natural gas and hydrogen using wood from fire mitigation and environmental restoration efforts.  
◦ In Juab and Utah counties in the state of Utah, Dominion Energy would blend hydrogen into existing natural gas pipelines.  
◦ Libertad Power would produce hydrogen in San Juan and Lea counties in New Mexico to be used in “heavy-haul” transportation and to generate and store power.  
◦ At a 275,000-acre commercial farm in New Mexico owned by the Navajo Nation, Navajo Agricultural Products Industry would use hydrogen fuel to run farm equipment.
◦ In New Mexico, Colorado, and Wyoming, Tallgrass Energy would use renewable electricity sources to produce hydrogen, as well as using hydrogen to generate and store power, for use in transportation, heavy industry, and to supply electricity to the grid.
◦ Xcel Energy will use wind and solar generators to produce hydrogen on Colorado’s eastern plains.
◦ In Wyoming, Tallgrass Energy would produce hydrogen from natural gas and sequester associated carbon dioxide.

Despite the lack of requirements for the hydrogen hubs to be as clean as possible, Zhu, with Resources For the Future, said the Inflation Reduction Act Tax credit would create an incentive to make them cleaner over time.  

“Even in cases where hydrogen hubs are funded and do not initially meet the standard for clean hydrogen, they will still have incentive to reduce emissions to qualify for the ... tax credit,” Zhu said.

However, even supposedly clean hydrogen technology still comes with potential risks that could make its actual greenhouse gas emissions higher than assumed.

Potential pitfalls of "clean" hydrogen

To develop a common shorthand for different forms of hydrogen, energy experts often color-code hydrogen based on how it is produced and whether the carbon dioxide formed during its production is captured.  

The most common form is “gray hydrogen,” produced from natural gas using a process called steam reforming, with no effort to capture the resulting carbon dioxide (CO2) emissions. Gray hydrogen emits at least 10 kilograms of carbon dioxide per kilogram of hydrogen produced. About 95 percent of the hydrogen fuel made in the U.S. today is gray hydrogen, according to the DOE.

“Green hydrogen” uses electricity from solar and wind power and to extract hydrogen from water in a process called electrolysis that does not release CO2.  

“Blue hydrogen” is also made with natural gas, but its producers claim that they will capture much of the carbon dioxide emissions released and store the pollution underground. Assuming that 90 percent of the carbon dioxide emissions could be captured, blue hydrogen could emit approximately 3.2 kilograms of CO2 per kilogram of hydrogen produced. This process of carbon capture and storage, however, has never been proven on a commercial scale, and there are some doubts about whether it will work.

David McCabe, an atmospheric scientist with Clean Air Task Force, said he doubts that “blue hydrogen” would actually be as climate friendly as its advocates suggest.  This is because multiple studies have confirmed that methane leaks are common from natural gas wells, pipelines, storage sites, and other components of the natural gas system.  

“If you build your blue hydrogen plant, and you managed to capture 90 percent of your CO2 from that plant, that's great,” McCabe said during a June 1 webinar hosted by Environmental and Energy Study Institute. “The problem is your upstream methane emissions are so large, that you've really barely gotten anywhere, compared to if you had just burned methane directly.”

Global interest in clean hydrogen stems from its ability to replace fossil fuels in sectors where emissions reductions are considered difficult, such as in heavy trucking, chemical manufacturing, steel production, power generation, and liquid fuels. Mixed with oxygen, hydrogen can be burned in internal combustion engines, producing much less air pollution than burning diesel fuel or gasoline. However, hydrogen fuel – when burned directly -- can release harmful nitrogen oxide emissions. For this reason, some advocates argue not for the direct combustion of hydrogen fuel, but instead for the use of hydrogen in fuel cells, which combine hydrogen and oxygen to generate electricity and generate only water vapor as a byproduct.

In the U.S., only California has a large enough number of hydrogen fueling stations to make hydrogen fuel cell vehicles a viable option. The state currently has 57 fuel cell stations, mostly based in the San Francisco Bay Area and around Los Angeles. However, adoption of this technology has been slow. More people have been transitioning from gasoline- or diesel-powered cars and trucks to electric vehicles, which have many more charging stations.

Hydrogen can also be used in heavy industry, such as steel manufacturing, and in and power plants, where it can replace natural gas as a fuel source. Currently, most hydrogen in the U.S. is used in petroleum refineries, fertilizer and metals plants, and food processing facilities, according to the U.S. Energy Information Administration.

Making hydrogen a viable industrial fuel would mean not only producing the hydrogen, but also transporting and storing it. The U.S. currently has a limited hydrogen pipeline network, with 1,600 miles of pipelines, most of them in industrial areas of the Gulf Coast in Texas and Louisiana.  

U.S. Gulf Coast hydrogen pipelines in 2020. Map by the Pipeline and Hazardous Materials Safety Administration.

Ilissa Ocko, a senior climate scientist with Environmental Defense Fund, raised questions about the alleged “zero emissions” status of any hydrogen fuel.  Even green hydrogen, which theoretically has zero greenhouse gas emissions, can still contribute to climate change. Hydrogen is itself an indirect greenhouse gas and, because of its miniscule size, can leak through tiny holes and seams in pipelines, storage tanks, and other components of a hydrogen hub.

“We're not talking just about producing hydrogen, but producing hydrogen, moving hydrogen, storing hydrogen, managing hydrogen, and then ultimately using hydrogen,” Ocko said. “The hydrogen can escape into the atmosphere at any part of that process, and when it does, it can warm the climate.”

Brendan Gibbons
Oil & Gas Watch Reporter

Brendan joined EIP in June 2022 after working as an environmental reporter for the San Antonio Express-News, San Antonio Report, and the Times-Tribune in Scranton, Pennsylvania. In the nonprofit sector, before joining EIP Brendan served as assistant manager of a Texas clean water advocacy organization, the Greater Edwards Aquifer Alliance.

Biden Administration may spend billions funding 'clean' hydrogen made with fossil fuels

Biden Administration may spend billions funding 'clean' hydrogen made with fossil fuels

June 8, 2023
Brendan Gibbons
Oil & Gas Watch Reporter

Brendan joined EIP in June 2022 after working as an environmental reporter for the San Antonio Express-News, San Antonio Report, and the Times-Tribune in Scranton, Pennsylvania. In the nonprofit sector, before joining EIP Brendan served as assistant manager of a Texas clean water advocacy organization, the Greater Edwards Aquifer Alliance.