The US Department of Energy (DOE) is trying to clean up the hydrogen supply chain and is casting a wide net. Natural gas and nuclear power are part of the plan, but green hydrogen from renewable resources is clearly ahead.
New clean hydrogen hubs for the US
Hydrogen is attracting attention as a zero-emission fuel for cars, trucks, boats, locomotives and other vehicles. However, hydrogen plays a far larger role in the global economy. Fertilizers, food processing, toiletries, and pharmaceuticals are among the many other uses.
To avoid the worst impacts of climate change, the global economy needs to decarbonize the hydrogen supply chain. That would have been next to impossible just a few years ago, when natural gas was the main raw material for hydrogen production.
Most of the world’s hydrogen supply still comes from natural gas, but the picture has shifted in recent years. The game changer is low-cost wind and solar power. With a low-cost source of zero-emission electricity, the global hydrogen economy is beginning to focus on electrolysis systems that extract “green” hydrogen gas from water.
The Energy Division has supported research and development for the green hydrogen industry and is now taking the next step in scaling the commercial market. In June, the agency announced it would allocate $8 billion to establish at least four regional clean hydrogen hubs across the country.
The program is funded by the bipartisan infrastructure bill, and there’s a catch. As much as the Department of Energy seems to favor green hydrogen made from renewable resources, the law mandates diversity in the supply chain.
The Department of Energy’s grant announcement states that “at least one H2Hub shall demonstrate the production of clean hydrogen from fossil fuels, one H2Hub from renewable energy and one H2Hub from nuclear energy”.
Although the law mandates only one gas-based hydrogen hub, it also includes a geographic diversity clause aimed at opening the door to a second gas-friendly hub.
“Each H2Hub will be located in a different region of the United States and will utilize the abundant energy resources in that region, including at least two H2Hubs in regions with abundant natural gas resources,” the Department of Energy said.
The mystery of “clean” hydrogen
The Department of Energy will begin accepting proposals for hydrogen hubs in the fall. In the meantime, various states are already running to the committees to submit their proposals.
Pennsylvania, Ohio and West Virginia have already joined forces to propose a gas-friendly H2 hub with carbon capture. That makes sense given the sizeable gas reserves of all three states. Hydrogen production could also salvage plans for a new petrochemical center in the Ohio Valley region. The Department of Energy promoted the plan during the Obama administration, and it has yet to be fully implemented.
The Ohio Valley plan makes sense from the perspective of gas stakeholders. However, public opinion is working against natural gas, “clean” hydrogen or not. Part of the problem involves the potent greenhouse gas methane, which escapes from gas wells through transmission networks and storage facilities along the entire natural gas supply chain.
The potential for water pollution, as well as other local environmental and health impacts, has also attracted more attention over the years. Documented effects include an increased risk of low birth weight babies and childhood leukemia in the vicinity of gas fracking sites.
Green hydrogen is in the lead
Against this dark background, growth in the gas-based hydrogen market is difficult to see. Manufacturers are rushing to clean up their supply chains in response to consumer demand and sustainable policy making. They are looking for ethical sourcing opportunities as well as decarbonization.
The Department of Energy’s funding opportunity requires successful H2Hub proposals to demonstrate a plan for commercial viability beyond their grant expiration date, and the emergence of competition from green hydrogen players could cause Ohio Valley’s plans and other serious problems .
Right next to the Ohio Valley region is the US Northeast, where vast offshore wind power resources could be brought into play for green hydrogen production. Earlier this year, coastal states of New York, New Jersey, Massachusetts and Connecticut joined forces to propose a green hydrogen hub. Maine and Rhode Island also joined as partners last week.
The northeastern hydrogen node could also count on its nuclear fleet for support. Hydrogen and nuclear researchers have studied the potential of nuclear power plants to run more efficiently and economically in a grid scenario with more wind and sun, and green hydrogen production could help achieve this goal.
To be clear, the 2011 Fukushima nuclear disaster and Russia’s murderous rampage across Ukraine cast a long shadow over nuclear plant safety. However, the possibility of shutting down all 90 or so remaining commercial reactors in the US is remote, at least for the foreseeable future. In addition, the bipartisan Infrastructure Act also provides for a role for nuclear power in the Clean Hydrogen Hub program.
More green hydrogen sources for the US
To the extent that nuclear power plants can help accelerate wind and solar development while giving natural gas an edge in the clean hydrogen space, the H2Hub partnership appears to have a major advantage in the Northeast.
That could explain why other hub partnerships are hedging their bets on green hydrogen, regardless of whether they have fossil resources in hand or not.
Earlier this year, for example, Colorado, New Mexico, Utah and Wyoming announced a new H2Hub partnership aimed at harnessing the region’s extensive wind and solar resources along with biomass. While the proposal opens the door to fossil-fuel procurement with carbon capture, the massive ACES project for green hydrogen and energy storage in Utah shows the coalition is moving in a more sustainable direction — one that’s more responsive to the needs of today’s consumers and consumers Company aligns prospects.
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