The Department of Energy outlined Monday how hydrogen could become a major source of clean energy in the United States, even as the prospective industry awaits important decisions from other Biden administration agencies.
The U.S. National Clean Hydrogen Strategy and Roadmap lists dozens of actions to be taken through 2035 by policymakers, industry, regulators and others to promote the production, transport, storage and consumption of low-carbon hydrogen.
Overall, the fuel could slash the country’s greenhouse gas emissions by 10 percent through 2050, relative to 2005 levels, DOE said.
To do so, the United States should aim to make about 10 million metric tons of low-carbon hydrogen per year by 2030 — about the same volume that is created today using a high-emissions process, according to the strategy document. Annual low-carbon production should then double by 2040 before reaching 50 million metric tons by 2050, it said.
Energy Secretary Jennifer Granholm, on a Monday press call, described the national strategy as a road map for the “colossal effort” of scaling up a “clean” hydrogen industry and said the fuel could create up to 100,000 jobs by 2030. Clean hydrogen would emit less than half of the CO2 equivalent emitted by today’s hydrogen production processes.
“This is an enormous opportunity. It’s going to require not just a whole-of-government effort but a whole-of-America effort to get us there,” Granholm said.
Federal agencies will prioritize hard-to-decarbonize sectors — such as heavy industry, aviation, steelmaking, chemical production, ships, and medium- and heavy-duty vehicles — as consumers of low-carbon hydrogen, according to the document.
Those priorities may be different from the priorities of many natural gas utilities that say hydrogen should become a widespread substitute for fossil fuels in buildings, where it could serve as a fuel for space and water heating. DOE’s national strategy endorses that as an option only when there are “limited alternatives” such as electrification.
Another fossil fuel industry priority — hydrogen co-firing, or mixing the fuel into natural gas at power plants — also received clearer and more prominent backing in DOE’s national strategy than in a draft version released last year.
That change follows EPA’s release last month of proposed emissions standards that would let gas plant operators mix hydrogen into natural gas as a way to comply. Yet co-firing remains an unpopular idea with some environmentalists who suspect it could raise emissions of nitrogen oxides (NOx) and serve as a pretext to keep expanding natural gas capacity on the grid.
The Biden administration also plans to center its work on achieving major cost reductions for low-carbon hydrogen, it said in the strategy. One prominent initiative, DOE’s Hydrogen Shot, seeks to bring the cost of clean hydrogen to $1 per kilogram — a benchmark price used by the agency for the current high-emissions type of hydrogen — by 2031.
Agencies will also try to seed a clean hydrogen industry by focusing on regional networks. That is chiefly oriented around DOE’s hydrogen hubs program, which is funded with $8 billion from the 2021 bipartisan infrastructure law. The first awards are expected in the fall.
The national strategy for clean hydrogen development is the first to emerge from the Energy Department, despite decades of early-stage research into the fuel at DOE, Granholm said on the Monday press call.
The strategy was required under the bipartisan infrastructure law, which also calls for it to be updated every three years. David Turk, DOE’s deputy secretary, said during an afternoon showcase of the department’s hydrogen work that the document is a “living strategy” that will help “keep all of us accountable” for hydrogen’s growth in the United States.
‘Waves’ and challenges
Energy Department officials foresee three “waves” of clean hydrogen adoption, with each wave crashing when low-carbon hydrogen becomes just as cheap and practical as carbon-intensive fuels, according to the strategy.
Refineries, transit buses and long-haul truck operators, ammonia producers, and operators of forklifts and heavy machinery could switch to hydrogen in the first wave. Power plants, medium-duty trucks, steel producers and airlines could join the transition in the second wave, followed by cement makers, container ships and methanol producers in the third, DOE said.
Bringing down the cost of low-carbon hydrogen remains a primary challenge for the nascent industry, although the production tax credits, hydrogen hubs and other federal incentives would close the gap in many cases, according to DOE’s strategy.
Other persistent challenges for the industry include wariness among potential hydrogen buyers, difficulties in getting local permits, and improving safety regulations for hydrogen’s storage and transport by pipeline, the department said. And “concerted efforts” should be made to address community-level concerns about hydrogen leakage as well as the prospect of increased NOx emissions from hydrogen burned in gas turbines, according to DOE.
Waiting for Treasury
One question that continues to swirl in the hydrogen policy world is how clean the fuel will really be.
Last year’s Inflation Reduction Act created tax credits for clean hydrogen that require producers to limit emissions to 4 kilograms of CO2 equivalent for every kilogram of hydrogen in order to qualify for the credits. That is less than half of the 9 kilograms of CO2 equivalent that hydrogen production today typically entails.
DOE has also adopted a Clean Hydrogen Production Standard that takes the 4-kilogram limit as an aspiration — but not a hard mandate — for industry coalitions that want to win a share of $8 billion in hydrogen hubs funding for large-scale demonstrations. The standard was released in draft form last year and finalized by DOE on Monday.
But the Treasury Department has yet to release guidance for how prospective hydrogen developers must track and report their emissions, while seeking the IRA’s tax credits. The details of that guidance have become deeply contentious
Environmentalists and emissions researchers have led calls for strict emissions accounting requirements meant to keep “green” hydrogen developers from generating large volumes of emissions from their use of grid electricity. Green hydrogen is usually understood as being made from renewable electricity and water.
On the other side of the debate are trade groups representing renewable power developers and investor-owned utilities, which argue that Treasury should preserve flexibility for hydrogen developers seeking to use grid power for that process rather than dedicated renewables.
DOE’s road map didn’t account for the details of what that Treasury guidance may say, according to a department spokesperson.