April 6, 2023 - Your Scoop in CDR!
Updated: Apr 12
The outlook for U.S. hydrogen hubs: Who's applying and what they … In 2022 alone, private equity and venture firms spent over $5 billion on hydrogen-related companies on the tailwinds of the 2021 Infrastructure Investment and Jobs Act (IIJA). Beyond authorizing $1.2 trillion of investment in infrastructure upgrades to help the United States transition to a zero-carbon economy, the legislation allocated $8 billion for the Department of Energy (DOE) to fund four Regional Clean Hydrogen Hubs—or H2Hubs—across the U.S., and DOE has indicated that it may use the funding to support the development of as many as ten H2Hubs. The hubs will be localized centers for the production, transportation, storage, and end-use of hydrogen. This first-of-a-kind demonstration program intends to catalyze domestic clean hydrogen production in the United States and can serve as a platform and framework for operationalizing the technological and commercial advances developed through DOE’s Hydrogen Shot program, which aims to bring the cost of production down by 80% to $1 per kilogram in one decade.
Decarbonization of hard-to-electrify end-use sectors: The hydrogen hubs program has the potential to catalyze the decarbonization of industries such as marine shipping, heavy-duty trucking, aviation, steel making, and industrial process heating – sectors that were responsible for nearly 16% of U.S. emissions in 2018. These sectors would greatly benefit from the availability of low-carbon hydrogen. We expect some of these industries to be firmly planted within a hub—for example, industrial facilities that use hydrogen instead of natural gas to fuel their high temperature processes. Other end-users like marine shipping, heavy-duty trucking, and aviation will flow between hubs – stopping in regions across the U.S. to refuel with low-carbon hydrogen or hydrogen derivatives.
Connective infrastructure and export potential: For in-hub users like industrial facilities, hydrogen will often be supplied directly from the producer to the end-user by short pipelines. For other end-use sectors—particularly transportation—the distribution of hydrogen will be much more dispersed. CATF expects the hydrogen hubs program to foster the creation of hydrogen and ammonia-fueled transportation corridors that stretch between the hubs. This will create stronger economics for individual hubs, accelerate their development, and foster the build-out of a global hydrogen network, potentially positioning the U.S. to become a hydrogen exporter via our ports.
Lowering costs and driving investment: Coupled with the hydrogen production credit from the Inflation Reduction Act (Section 45V), which gives hydrogen projects that begin construction before 2033 a tax credit of up to $3.00 per kilogram of clean hydrogen produced based on its carbon intensity, the hydrogen hubs program should help lower the cost of hydrogen production and creates significant incentive for project developers. The required 50% non-federal cost share will also attract private and state pools of capital to enter the hydrogen market.
Job creation and community benefits: There is significant potential for the hubs program to drive localized clean technology job creation and workforce development opportunities. Additionally, when clean hydrogen is utilized in the transportation sector, it has the potential to improve local air quality, especially around ports and heavy-duty-trucking corridors. Additionally, the requirement that 40% of benefits from federal funding flow to historically disadvantaged communities means that the hubs chosen will need to have robust community benefits plans.
Why New York Could Be the New National Model for Climate Policy In recent weeks, both houses of New York’s legislature have approved a historic plan to start a publicly funded renewable energy program, the state’s best hope for meeting its own emissions reductions goals. Only the Democratic governor is standing in the way. If the bill’s proponents prevail, New York could become a model for how state and local climate policy could lead the country forward in the coming years.
These are inspiring examples. But if it succeeds, New York’s Build Public Renewables Act (BPRA) could potentially be the boldest challenge yet to the fossil fuel industry. That’s because of the principle it establishes: that the state should be empowered to provide clean energy if the private sector fails to. The bill is therefore seen by proponents and detractors alike as a possible foundation for socializing and centralizing control of all energy in order to effectively address the climate crisis and keep energy affordable and accessible to all. It provides a way of ensuring that public interest, rather that the profit motive, dominates energy generation.