Hydrogen and the EPA power plant rule: 3 issues to watch

By David Iaconangelo | 05/03/2023 07:15 AM EDT

New power plant regulations may allow greater use of hydrogen, but industry observers say that unless the fuel is produced through a “clean” process before it reaches a power plant, it may do little for U.S. emissions.

Hydrogen tank and turbines on blue sky background.

Power plants are expected to be allowed to execute a historic reduction in their emissions by burning hydrogen under soon-to-be-released EPA regulations. iStock

Upcoming EPA regulations are expected to allow power plants to execute a historic reduction in their emissions partly by burning hydrogen.

But many questions remain about whether hydrogen will be a viable climate tool: Few power plants today are using it at scale, and some industry observers say that unless it is produced through a “clean” process before it reaches a power plant, it may not make a significant dent in U.S. emissions overall.

Currently, most hydrogen is produced with natural gas. While that “gray” hydrogen may emit little or no carbon at a power plant when burned, giving it an advantage over coal and gas, its production is emissions-intensive.


It also may be years until lower-carbon versions of hydrogen become available at scale for use in power plants across the United States.

Yet the idea of burning hydrogen at power plants has many backers — including some major utilities — and Congress has approved subsidies for new and potentially cleaner ways of making the fuel. “Green” hydrogen, made from water and renewable electricity, and “blue” hydrogen, derived from natural gas and paired with carbon capture, are expected to be eligible for tax credits from the Inflation Reduction Act.

Some energy modelers and environmentalists argue that many supposedly clean production techniques for hydrogen could actually raise emissions, unless the federal government sets strict rules, however.

Others say that burning hydrogen may not be the most efficient way for power plants to decarbonize, even if the fuel is produced through a low-carbon process.

“I’m really skeptical [hydrogen in power plants] will be a major solution,” said Rachel Fakhry, senior advocate for the Natural Resources Defense Council’s climate and clean energy program.

She said NRDC doesn’t oppose the fuel’s use to make electricity, adding it could serve as a form of long-duration energy storage for power plants. But “I think the facts just don’t support the notion” that hydrogen could serve as a main way for gas plants to zero out their emissions, she said.

Reducing plants’ emissions by directly capturing them would be more efficient than mixing hydrogen into natural gas, she said. Building out renewables paired with battery storage will be the most important way of all of cleaning up the power sector, she added.

Promoting low-carbon production of hydrogen has been a focus of the Biden administration. Along with creating the first tax credit for low-carbon hydrogen, Congress allocated $8 billion in infrastructure law funds for Energy Department-backed demonstrations of the fuel’s production, storage, transport and consumption.

The first wave of low-carbon hydrogen production in the United States could grow out of those demonstrations. The Department of Energy has received applications from coalitions in nearly every state, and said it expects to make the first awards to hydrogen hubs in the fall. At least one of the hubs must demonstrate the fuel’s use in power plants, under the 2021 infrastructure law.

In the meantime, analysts are waiting to see how EPA will address hydrogen’s carbon footprint.

Scott Segal, a lawyer at Bracewell LLP who has lobbied for major utilities and hydrogen companies, said the agency would be on “thin legal ice” if it based a power plant standard on the origin of the hydrogen.

“The use of hydrogen, irrespective of its production process, has the same effect on power plant operations and emissions. So, I think engaging in upstream speculation seems beyond the Agency’s authority,” wrote Segal in an email.

Some courts have endorsed governments’ authority to analyze the life-cycle emissions of fuels when establishing environmental regulations, however, said Michael Gerrard, director of Columbia University’s Sabin Center for Climate Change Law.

For instance, a federal appeals court has upheld the state of California’s right to impose a low-carbon fuel standard for vehicles, he noted. Legal challenges to EPA’s rules may attack the agency’s authority to verify the source of hydrogen used in power plants, he predicted. “It’ll be raised as an issue,” Gerrard said.

Here are three issues to watch with hydrogen when EPA delivers its draft rules:

What does industry want EPA to do?

EPA has offered few public details about how hydrogen might be allowed under the coming power plant rules.

Spokespeople for the agency declined to comment in response to E&E News inquiries, saying the proposal is still under interagency review and subject to change.

But EPA’s administrator, Michael Regan, has hinted in recent months that hydrogen could serve as a key technology for complying with its coming rules, saying at one March public appearance that EPA would “encourage the best technologies around natural gas, and also be prepared for the hydrogen boom.”

Many influential trade and environmental groups also have offered suggestions for how the agency should address hydrogen.

The Edison Electric Institute has said EPA’s rules should allow new gas plants to introduce hydrogen and carbon capture into gas plants gradually. According to comments the group made to EPA, new gas plants could be built in ways that make them retrofit-ready.

“Hydrogen is an emerging energy technology that holds tremendous promise as a tool to aid in reducing emissions across a variety of sectors and applications, including potential use in turbines,” EEI said in recent comments to the agency.

NRDC says EPA should base its standards around the use of carbon capture — not hydrogen. The agency could model its rules on systems that capture and store 90 percent or more of power plants’ emissions, said Fakhry.

Basing the standards on hydrogen “co-firing” — blending the fuel with natural gas — would result in far more modest emissions reductions from gas plants than using carbon capture and storage, she argued.

“If EPA were to come up with a standard based on just hydrogen co-firing, then we’d end up with a much less ambitious standard,” said Fakhry.

The Fuel Cell and Hydrogen Energy Association (FCHEA) declined to speculate on what EPA’s rules might mean for hydrogen adoption in power plants.

In an emailed statement, FCHEA President and CEO Frank Wolak urged the agency to recognize hydrogen as a tool for decarbonizing the power system and said the fuel was “already a major factor in the clean energy economy.”

The Inflation Reduction Act, which created hydrogen’s production tax credit, and the bipartisan infrastructure law were “strong first steps,” said Wolak. But hydrogen’s future as a clean resource “hinges on implementing federal policy to continue increasing the production of clean hydrogen,” he added.

Todd Snitchler, the president and CEO of the Electric Power Supply Association, said in a statement that his group had “concerns about how new rules could drive natural gas generation retirement and impact the ability to meet America’s rising power demand at a reasonable cost, particularly when combined with the push to further electrify all sectors of the economy.”

Companies that are members of the group were studying ways to use hydrogen, carbon capture and other technologies in order to reduce emissions, he said, adding that “policy aspirations must align with operational realities.”

Is hydrogen technology ready for power plants?

Many of the country’s biggest power utilities have experimented with blending relatively low volumes of hydrogen into the natural gas that powers turbines at power plants.

Florida Power & Light Co. said earlier this year it will test a gas blend in its turbines that includes 5 percent hydrogen, for instance.

But doing so would likely require the introduction of new — and possibly more expensive — turbines and associated equipment, in part because burning hydrogen can raise NOx emissions significantly compared to natural gas.

For instance, one of the world’s biggest turbine suppliers, General Electric Co., has projected that a 100 percent blend of hydrogen in a gas turbine could double NOx emissions, unless turbine operators also make use of special equipment. NOx is a criteria pollutant that can exacerbate respiratory illness, making it a concern for public health advocates and environmental justice groups.

GE and other manufacturers say they either have developed or are developing state-of-the-art equipment that can control NOx emissions while burning hydrogen at close to 100 percent concentrations.

But the overall costs of those strategies would depend on the price of hydrogen itself, among other factors. Making the fuel with little or no emissions is rare in the United States and currently costs several times more than the conventional, high-emissions type made with natural gas.

Storing and transporting clean hydrogen to buyers could inflate those costs further. DOE’s hydrogen hub funds are likely to fund some solutions, but little has been made public about what those could be and whether they are easily replicable.

One major test of hydrogen’s use in power plants is being funded by DOE’s Loan Programs Office.

Last June, LPO finalized a $504 million loan guarantee for the Advanced Clean Energy Storage project in Utah. Under that award, the Los Angeles Department of Water and Power and the Utah-based Intermountain Power Agency are planning to transition a coal plant onto a mix of natural gas and hydrogen in 2025, then phase out natural gas entirely by 2045.

In the first phase of the transition, the power plant will burn a blend of 70 percent natural gas and 30 percent green hydrogen made with renewable power and stored in a salt cavern, according to Mitsubishi Power Americas Inc., which is supplying turbines for the site.

Under that hydrogen proportion, NOx levels will stay flat, said Mitsubishi representatives last year, but added that doing so with 100 percent hydrogen levels is part of the company’s “long-term goal and [research and development] program.”

Will hydrogen in power plants really slash U.S. emissions?

Another challenge for U.S. emissions is research concluding that reputedly low-carbon methods to produce hydrogen could be even worse for the climate than conventional methods relying on natural gas.

For instance, extracting hydrogen from water using electricity from the grid — rather than from dedicated wind or solar facilities — could cause emissions to spike, according to one peer-reviewed study from Princeton University researchers last year.

A separate 2021 study published in Energy Science & Engineering found that making gray hydrogen — the conventional sort made from natural gas — or even the “blue” type, which adds carbon capture to the process, would be worse for the environment than burning natural gas alone.

If that were the case, any benefit of lower emissions at a power plant from hydrogen could be offset by high emissions during the manufacturing process.

Under the Inflation Reduction Act, hydrogen producers can only receive subsidies when each kilogram of hydrogen emits 4 kilograms or less of CO2, on a life-cycle basis.

That means the Treasury Department could refuse tax credits to hydrogen producers if it turns out the fuel isn’t really made through a low-emissions process. But conventional hydrogen is currently the cheapest type.

That raises the question of what role EPA will play in verifying that power plants are actually reducing overall U.S. emissions through the use of hydrogen, said Julie McNamara, deputy policy director of climate and energy at the Union of Concerned Scientists.

“That’s going to be a very, very consequential issue,” she said.

“EPA will have to set rigorous accounting frameworks here. Because the alternative could really result in increased emissions,” added McNamara.

EPA’s rule comes as the Treasury Department is expected to deliver guidance in coming months that will decide how hydrogen producers must measure their emissions when seeking to claim clean production tax credits from the Inflation Reduction Act.

Emissions researchers and environmental groups are at odds with renewable developers over the best way of keeping emissions down while also encouraging the growth of new hydrogen production.

Reporter Jean Chemnick contributed.