The green hydrogen industry says it needs the Biden administration and Congress to push on the demand side and pull on the supply side if it wants the technology to play a part in reducing the nation’s carbon emissions.
So far, President Joe Biden’s plans to promote the cutting-edge fuel have been light on specifics. But his team is about to get a nudge that includes a push of tougher emissions standards and a pull of tax credits and research funding—all of which green hydrogen proponents say will help stimulate investment.
“Using the president’s bully pulpit is an incredible activity that will help move this industry forward,” said Morry Markowitz, president of the Fuel Cell and Hydrogen Energy Association.
Green hydrogen uses renewable energy to split hydrogen atoms from oxygen atoms in water molecules through a process known as hydrolysis. The fuel has long been used in vehicles, houses, portable power, and other applications, but about 95% of it is made using steam reforming of natural gas, according to the Energy Department.
A coalition of 11 large companies, including Shell, Toyota, and Hyundai, announced Tuesday they’re teaming up to advocate for hydrogen energy—though not necessarily green hydrogen—on the grounds that the technology will help the U.S. cut carbon emissions and create new, well-paying jobs.
Meanwhile, green hydrogen’s backers are already armed with a wish list that includes repurposing natural gas lines to transmit the resource and spending money to look into how it can be stored.
‘Money to Be Made’
The Biden administration’s broad promises, if taken together, could give the technology a meaningful push.
Biden pledged in his clean energy blueprint to create a new office, known as the Advanced Research Projects Agency on Climate, to develop innovative technologies like next-generation electrolyzers to create green hydrogen energy more cheaply than can be done by using shale gas.
Biden also committed to using existing pipelines to transport green hydrogen, making it available to power plants at the same price as conventional hydrogen within a decade.
More recently, U.S. climate envoy John Kerry made a business case for green hydrogen, saying at a Jan. 27 White House briefing that big banks, asset managers, private investors, and venture capitalists are discovering that “there’s a lot of money to be made” in green hydrogen and other emerging sectors of the economy.
The same day, Energy Secretary nominee Jennifer Granholm said during her Senate confirmation hearing that hydrogen is an important technology for reaching net-zero carbon emissions by 2050. She also spoke about the job creation potential of blue hydrogen, which is produced with natural gas as a feedstock, meaning it’s not carbon-free.
The DOE didn’t immediately respond to questions about what specific steps it would take to promote green hydrogen.
The National Academies of Sciences also threw its weight behind the issue in a Tuesday report, saying technologies like hydrogen can help build the economy, create high-quality jobs, and address social injustice in the energy system—all of which are key goals of the Biden administration.
Joining Solar and Wind
In the meantime, the industry needs tax credits to help scale up green hydrogen, said Paul Wilkins, senior director of federal government relations at fuel cell maker Bloom Energy.
“That’s been done with other sectors, and it works,” Wilkins said. “Solar and wind production tax credits have helped those industries scale up and bring down costs.”
Clean Energy for Biden, a group of industry leaders supporting the president, recently called for a credit of between 40 cents and $2 per kilogram of domestically-made clean hydrogen carriers, such as ammonia, phasing down to zero over 10 years. The group also wants a manufacturers’ tax credit of $500 per kilowatt of capacity of U.S.-made electrolyzers, the devices that convert water and electricity into usable hydrogen.
Locking down a tax credit would require the cooperation of Congress. The House and Senate did approve a range of hydrogen credits in H.R. 133, the coronavirus stimulus bill, though not the kind the industry is calling for.
Nevertheless, some Republicans have shown support for the technology, such as Sen. Todd Young (R-Ind.), who cosponsored a bill in the last Congress that would include hydrogen among the renewable resources eligible for the renewable electricity production tax credit.
Young’s office didn’t immediately respond to questions about whether he would reintroduce the bill in the new Congress, but the fact that he brought the measure forward only two months ago suggests he remains open to the idea. In December, Young called hydrogen “an emerging energy source that we must seriously target today.”
The production costs of green hydrogen will have to drop by 70% to 80% from current levels to be cost competitive with gray hydrogen, which is made from coal or natural gas, according to Fabio Ranghino, head of strategy and sustainability at asset management firm Ambienta.
For now, green hydrogen costs 150% more than gray hydrogen, which is made with natural gas, according to Bloomberg New Energy Finance. But it’s also expected to be cost-competitive within 10 years, and 20% to 45% cheaper by 2050.
Several other countries are already embracing green hydrogen in Europe and Asia, including Japan, Korea, and China, said the hydrogen energy association’s Markowitz.
“You may have ups and downs, peaks and valleys,” he said. “But one thing is becoming increasingly clear, and that is the trend line.”
Help on the Demand Side
Another boost for green hydrogen could come on the demand side, in the form of tougher emissions standards for both cars and power generation, Wilkins said. Those types of measures would make clean technologies like hydrogen more attractive by comparison.
Biden already has ordered the Transportation Department and the EPA to review Trump administration rules that eased auto emissions standards and is expected to take a crack at rewriting greenhouse gas standards for power plants.
A third lever Biden could pull would be to create infrastructure that can move hydrogen, perhaps by repurposing the existing natural gas system, said Jack Brouwer, director of the National Fuel Cell Research Center at the University of California, Irvine.
“This is what the federal government should be responsible for doing,” Brouwer said. “This is a shared infrastructure. It enables long-duration storage, it lets you transmit it across mountains—it’s got a lot of features that we like.”
Making that transition would not be technically difficult because most natural gas pipelines are capable of carrying hydrogen, with minor tweaks.
Another infrastructure idea, posited by the House Select Committee on the Climate Crisis, is to help state and local governments build a network of publicly available charging stations for hydrogen fuel cells and electric vehicles.
R&D and Storage
A fourth role Biden could play would be to pour money into more research and development. Much is already known about how to generate, transport, and deploy green hydrogen, but work remains to be done on the storage side, Brouwer said.
One key unanswered question is whether hydrogen can safely be stored in underground former oil fields, which is where natural gas is stored today, he said.
The private sector also has a role to play in spinning out smart ideas and bringing technological advancements to market, said Peter Terium, head of energy, water, and food at Neom, a planned city in Saudi Arabia that claims to be working on the world’s biggest green hydrogen project, aiming to provide 650 tons per day of the fuel.
The Energy Department, in the dying days of the Trump administration, issued a report that listed storage along with production, delivery, conversion, and applications as research targets.
Whatever course the Biden administration ends up charting, it will have to be careful not to promote the use of green hydrogen in settings where it’s unlikely to be a cheap, useful alternative to existing energy technologies, said Rachel Fakhry, an analyst for the Natural Resource Defense Council’s climate and clean air program.
“We need a very strategic framework for how we get green hydrogen going, and how we channel it into the right sectors from the outset,” she said.