It Isn’t Easy Being Green at US Department of Energy

by Duane Nichols on June 6, 2023

Diagram to become modern art in “Museum of Technical Wonders”

US DOE Sets Vision for Major Clean Hydrogen Scale-Up

From an Article by Lauren Craft, Energy Intelligence News, June 5, 2023

US DOE of President Joe Biden’s administration has rolled out a national clean hydrogen strategy that acts as an important signal for the emerging industry, but leaves unanswered questions about which types of hydrogen would be promoted.

The 99-page strategy aims to set a unified vision around scaling up US clean hydrogen production to 50 million metric tons by 2050, which would in turn cut 10% of US greenhouse gas emissions between now and then.

That 10% reduction would see decreases from multiple sectors of the economy — particularly hard-to-decarbonize industries where hydrogen is increasingly eyed as a replacement for fossil fuels.

In the industrial sector, this includes segments like cement and steel, and in transportation, this includes heavy-duty trucking, maritime vessels and aviation, explained White House Climate Adviser Ali Zaidi in a call with reporters. The plan also eyes clean hydrogen uptake in agricultural sectors and energy use within buildings, Zaidi added.

Despite the broad appeal of the landmark Inflation Reduction Act, (IRA) the US has faced criticism for mixed messages on the energy transition, with investors finding it difficult to reconcile sometimes-conflicting signals from various agencies, lawmakers and states. The new strategy marks an attempt to deliver more clarity on the clean hydrogen front — while rallying the government around a unified goal and earning consensus and mutual trust from the private sector.

Biden administration officials said they canvassed views of industry and other stakeholders beforehand and used those to shape the strategy.

US Energy Secretary Jennifer Granholm said a major objective of the new strategy is to provide certainty across the different points in the clean hydrogen value chain.

“When you’re creating an entirely new sector — which is what the clean hydrogen economy will be — you have to do everything, everywhere all at once,” she said in a call with reporters. “That means looking at supply-side strategy, the workforce, the offtake strategy to make sure there are going to be customers. You have to look at the physical locations of supplies, where will hydrogen be taken from, delivered to, and by what means.”

Experts are saying that clean hydrogen investments are lopsided at present. Investments in production are ramping up, but spending is lagging on infrastructure and offtake agreements. Some say this is to be expected, with production bound to lead and downstream investments eventually expected to catch up.

Elephant in the Room ~ The government has not yet spelled out the answer to a major unanswered question: What, from the point of view of the government, constitutes “clean hydrogen”? Granholm said Monday that this is an “important consideration” and to “stay tuned.”

Although so-called green hydrogen produced using renewable electricity would obviously be fundamental to the strategy, the role remains unclear for blue hydrogen produced using natural gas with CCS, pink hydrogen made using nuclear power, or similar varieties.

The same cloud of uncertainty surrounds the hydrogen production tax credits included in the IRA. Many have lamented that the Treasury Department has not yet released guidance about what types of hydrogen would fully qualify for the $3 per kilogram incentive based on lifecycle emissions intensity.

That’s a key consideration for oil and gas companies like Exxon Mobil that are betting on blue hydrogen as a way to help scale up the hydrogen economy and perhaps eventually pave the way for green hydrogen.

Blue hydrogen — and, of course, conventional gray hydrogen produced using unabated natural gas — are far more cost-competitive today than green hydrogen.

Broader Vision Suggested ~ The high price tag of clean hydrogen hasn’t gone unnoticed by administration officials. The new strategy was characterized as a way to help achieve scale and meet the Department of Energy’s target of lowering clean hydrogen costs roughly 80%, to $1/kg, over the next decade.

The plan also mirrors the DOE’s effort to establish hydrogen hubs around the country, which has attracted an expansive list of project and concept proposals.

Granholm said Monday that the hub initiative is undergoing peer review and that her department hopes to unveil more details of the envisioned hubs, including their locations, this September.

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