BY: ROBERT ZULLO, STATES NEWSROOM, NEBRASKA EXAMINER, OCTOBER 16, 2023

The Friday announcement that seven projects had been selected to receive $7 billion in seed money to kickstart the production of clean hydrogen across the country was billed by President Joe Biden’s administration as a major step toward slashing carbon emissions, creating thousands of domestic jobs and positioning the U.S. as a clean energy leader.

“I’m here to announce one of the largest advanced manufacturing investments in the history of this nation,” Biden said during an appearance in Philadelphia. “Seven billion dollars in federal investments that’s going to attract $40 billion in private investments in clean hydrogen.”

However, there’s also criticism over a lack of transparency by the Department of Energy around the application and selection process and those who are dubious about the ways some of the newly minted “hydrogen hubs” intend to produce the gas, which the administration called “crucial to achieving President Biden’s goal of American industry powered by American clean energy.”

Hydrogen, which releases no carbon emissions when burned, is seen broadly as a key part of cutting emissions from hard-to-decarbonize sectors of the economy, such as steelmaking and cement manufacturing, aviation, shipping and other areas. There’s more controversy around uses like blending it with natural gas to burn in power plants or for heating. How climate-friendly hydrogen is depends on how it’s produced. Currently most hydrogen in the U.S. is produced using natural gas, so-called “gray” hydrogen. “Green” hydrogen is produced by an electrolysis process with clean energy. “Blue” hydrogen is fossil-fuel derived but coupled with carbon capture, in which CO2 is filtered out of emissions and stored.

Four of the projects (the Appalachian, Gulf Coast, Heartland and Midwest hydrogen hubs) that the DOE announced as winners will use fossil fuels to produce hydrogen. (In the bipartisan infrastructure law, Congress required that at least one hub “demonstrate the production of clean hydrogen from fossil fuels.”)

“There are so many ways hydrogen can go wrong. … We’re really concerned with the number of projects that rely in part or in whole on fossil fuel-based hydrogen production,” said Julie McNamara, a deputy policy director at Union of Concerned Scientists’ climate and energy program. “For hydrogen to be a clean energy solution, it has to be cleanly produced and it has to be strategically used.” In some scenarios, environmental groups worry the hydrogen could actually increase U.S. greenhouse gas emissions.

‘Overly optimistic and unproven assumption’ ~ A report last month by the Institute for Energy Economics and Financial Analysis, an Ohio nonprofit, found that the U.S. government “significantly understates the likely impact of producing hydrogen from fossil fuels on global warming.” The assumption that 1% of the methane being used to produce hydrogen will be emitted into the atmosphere is “far less than recent peer-reviewed scientific analyses have found and that has been identified by airplane and satellite emission surveys,” the report says. It also notes that using fossil fuels to make hydrogen cleanly depends on the “overly optimistic and unproven assumption that hydrogen production projects will be able to capture almost all of the carbon dioxide they create.”

In short, said David Schlissel, one of the report’s authors, blue hydrogen is not a great idea when you consider emissions from the entire process, from producing natural gas to shipping and storing the hydrogen and the unknowns of trying to use carbon capture and storage at scale.

“That’s the concern with all of this hydrogen hype” ~ We fear, and it’s based on our analysis, that the money the government is going to spend on blue hydrogen production is going to result in the continued emission of greenhouse gases for decades,” he said. “We worry about the waste of money. But we really worry about the waste of time and giving fossil fuel companies the opportunity to build infrastructure that depends on their continued operation. That’s the real concern, to keep the world addicted to fossil fuels.”

Schlissel and other critics also questioned the lack of details released by the Department of Energy about the projects, noting that much of the application materials have been treated as trade secrets by the states and the DOE. It’s unclear how the DOE scored the projects for funding, he added.

“How much hydrogen is going to be produced? What are going to be the CO2 emissions? How much CO2 is going to be captured? Then, where is it going to be used?” he said. “DOE and the applicants have taken the position that everything is confidential.”

The department’s press office did not respond Friday to a list of questions, including one about how projects were evaluated. “We would encourage the DOE to be as transparent as they possibly can, especially for the communities where they’ll be proposed,” said Patrick Drupp, director of climate policy for the Sierra Club, one of the nation’s largest environmental groups.

‘This is not trivial’ ~ Perhaps even more important than the hub applications that were selected, Drupp and McNamara say, are the debates ongoing at the Internal Revenue Service around the final rules for the hydrogen tax production credit created by the 2022 Inflation Reduction Act.

“While these hubs are large and there is a significant amount of money on the table, the hydrogen production tax credit could potentially dwarf that amount of money,” McNamara said. “That makes it all the more critical that how the administration determines what is truly clean energy is rigorously done.”

The final shape of those rules, which are linked to the intensity of greenhouse gas emissions of the hydrogen source, could be the difference between a boon and a boondoggle on the scale of the biofuels industry, a pair of climate economists wrote in a recent Washington Post op-ed.

“Using fossil-generated electricity or siphoning off renewables subsequently back-filled by fossil power to operate electrolyzers — which would occur under loose guidance — generates at least twice the carbon emissions that status-quo gas-derived hydrogen emits,” a coalition of environmental groups, developers and other organizations wrote to the Treasury Department in February. “Weak guidance could therefore force Treasury to spend more than $100 billion dollars in subsidies for hydrogen projects that result in increased net emissions, in direct conflict with statutory requirements and tarnishing the reputation of the nascent ‘clean’ hydrogen industry.”

Groups like the Natural Resources Defense Council and the Rocky Mountain Institute say the final rules should incorporate a “three pillars” approach. The first is “additionality,” meaning a new hydrogen electrolyzer that is connected to the electric grid is responsible for ensuring the added electric demand they are creating is being met by new low-carbon generation. The second is “time-matching,” requiring electrolyzers’ electric consumption to match its hydrogen production. The third pillar, deliverability, would require hydrogen producers to get clean electricity from within their region.

McNamara said the guidance is expected to be finished by the end of the year. “This is not trivial,” she said. “Hydrogen can be a valuable tool for the clear energy transition but it is not a given … and getting it wrong comes with enormous consequences for climate and public health.”

SOURCE: https://nebraskaexaminer.com/2023/10/16/so-many-ways-hydrogen-can-go-wrong-hub-announcements-viewed-with-caution/

By David Iaconangelo | April 7, 2023

The Department of Energy is set to begin reviewing dozens of proposals to build the nation’s first “hubs” of low-carbon hydrogen, a critical step that could help determine how much the fuel cuts emissions and which companies benefit from its deployment.

Funded with $8 billion in the 2021 infrastructure law, the hubs are meant to demonstrate the production, storage, transport and consumption of “clean” hydrogen made with less than half the carbon emissions associated with natural gas-derived production of the fuel.

On Friday, DOE will stop accepting full proposals from hydrogen hub applicants, kicking off a review that will culminate in the first $6 billion to $7 billion of award announcements this fall. Many of the proposals are backed by state governments and industry coalitions that include oil and gas companies and renewable developers.

Under the infrastructure law, DOE is required to select a mix of hubs that use a variety of fuels in the production process, including renewables and fossil fuels. Six to 10 projects are expected to be selected this year.

Hydrogen advocates ultimately hope the competition will plant the seed of a broader clean industry, in tandem with the Inflation Reduction Act’s new tax credits for the fuel’s production. Yet DOE’s hydrogen hub process is facing tough questions, particularly on whether the fuel will really prove to be as cheap, clean and abundant as its backers say.

Nichole Saunders, a senior attorney at the Environmental Defense Fund, said the hydrogen hubs “will represent the U.S.’s first attempt at demonstrating what quote, unquote clean hydrogen might look like. So all eyes are watching. Both in the U.S. and globally,” she added.

Hydrogen is a focus for the Biden administration, which sees clean production of it as a must for achieving climate goals — especially for the decarbonization of manufacturing and other hard-to-electrify processes.

Federal subsidies are also an olive branch to the oil and gas industry. Administration officials like Energy Secretary Jennifer Granholm often describe clean hydrogen as a new business opportunity for oil and gas companies that would align with U.S. net zero goals. Natural gas companies are eager to blend hydrogen into existing pipelines.

The hubs’ designs are likely to draw intense scrutiny from environmentalists, emissions researchers and pipeline safety advocates, however. Many of those groups are wary that publicly funded hubs could still emit significant amounts of greenhouse gases, endanger residents when hydrogen is stored or transported, suck up scarce water resources, prolong the burning of natural gas, or release pollutants that exacerbate respiratory illness.

Federal watchdogs and House Republicans also are watching public spending on the hubs and developers’ ability to meet targets. DOE’s Office of Inspector General has questioned whether the department is ready to efficiently disburse billions of dollars for clean energy demonstrations while controlling for fraud and waste (Energywire, Aug. 22, 2022).

Some of the nation’s largest energy companies have sponsored research finding that the hydrogen hubs program may not blossom into a nationwide industry for the fuel — at least not without new forms of help from the federal government (Energywire, Feb. 9).

>>> Here are four things to watch as DOE selects the hubs:

1. Who’s chasing the money?

Governors, state energy officials and even federal lawmakers have expressed eagerness to lure a share of hydrogen hub funds to their districts. State officials in every region of the country have backed industry coalitions that participated in an earlier phase of the hub competition, DOE said late last year (Energywire, Jan. 3).

They include Democratic governors in New York and California, who want to promote “green” hydrogen made from renewable electricity and water, and Alaska’s Republican Gov. Mike Dunleavy, who has backed using natural gas and carbon capture to make “blue” hydrogen. They also include federal lawmakers like Sen. Joe Manchin (D-W.Va.), the chair of the Senate Energy and Natural Resources Committee.

On Tuesday, Manchin’s office announced plans for what it described as a multibillion-dollar “anchor project” for a West Virginia hydrogen hub — an ammonia production facility that would use carbon capture. The hub, which is also supported by the state’s Republican governor, Jim Justice, and a coalition of natural gas, chemical and ammonia producers, is expected to apply for DOE funds.

But so far, the identities of many applicants to the DOE program — and the details of what they want to do — remain a mystery. After receiving a flood of 79 “concept papers” outlining ideas for a hydrogen hub, DOE whittled down the field in December by encouraging the authors of 33 concept papers to submit a full application. But DOE has declined to reveal which companies and states were behind those concept papers. And many of the industry coalitions that have advertised their participation in the competition have not offered key details on their plans, such as the production methods for their proposed hub and their expected rate of CO2 emissions.

In March, environmental justice and climate advocates in California issued a news release that accused state officials of shutting out community groups from hydrogen hub planning.

Bahram Fazeli, policy director with Communities for a Better Environment, said a state-backed hub coalition “has not met even the most basic standards of transparency and meaningful community engagement.” Fazeli’s group was joined by others like the Center on Race, Poverty & the Environment and state chapters of the Sierra Club and the Natural Resources Defense Council.

Heather Purcell, a spokesperson from the California Governor’s Office of Business and Economic Development, said that her office had invited community and environmental justice leaders to participate in several workshops in addition to holding “over two dozen in-person and virtual meetings.”

DOE has faced similar criticisms. In a March 29 letter to Granholm, the Environmental Defense Fund wrote that “DOE’s early actions … suggest a tendency toward project secrecy.” The group urged DOE to undertake several actions — including disclosing details from last year’s concept papers — to make sure that local communities are allowed to take part in hubs’ planning.

“The lack of transparency, we think, is a real problem,” said Alan Krupnick, a senior fellow at the nonprofit Resources for the Future, which has tracked early developments in the hub competition. “The public demands that these activities be scrutinized. And DOE is erring on the side of secrecy.”

During a press event hosted by the National Association of Hispanic Journalists on Wednesday, Granholm said that details on the hydrogen hub proposals would be made public after the department makes its selections this summer.

“Obviously we’re still in the process of selections,” she said. “The question is, after that, at what point does it become fully available? And we will make the information available that we can, exempting confidential information. We want to be transparent, but it will likely be after the selections, obviously,” she added.

Jeremy Ortiz, a DOE spokesman, defended the department’s practices, pointing out that applicants were required to include a plan describing their engagements with community and labor groups, as well as their work to bring benefits to disadvantaged groups.

“DOE will support successful applicants and host communities in ongoing community engagement as reflected in the Community Benefits Plans throughout the full project scope,” he added in an email.

Some lawmakers in the Republican-controlled House, meanwhile, are turning new attention on oversight of clean energy demonstrations. One bipartisan bill introduced in February by leaders of the House Science, Space and Technology Committee would require DOE’s Office of Clean Energy Demonstrations, which oversees the hydrogen hubs, to deliver a report to Congress that includes contracts struck by DOE with award recipients, a list of project milestones and “any material modifications” to the project.

2. What comes after the deadline?

Department officials will judge the hub proposals on five basic criteria, comprising technical merit, financial viability, the envisioned speed and strength of construction, the qualifications of the applicants, and plans to bring benefits to local communities and disadvantaged areas.

According to the infrastructure law, at least one of the hydrogen hubs should use fossil fuels as a feedstock. Another must produce its hydrogen from renewable energy. A third must use nuclear power. Two of the hubs must be sited in natural gas-producing regions.

DOE is also required to pick at least one hub that demonstrates hydrogen’s consumption within the power sector, heavy industry, residential and commercial heating, and transportation, respectively.

Once DOE selects the winners, the money will flow out slowly and in phases, meaning the department’s support isn’t guaranteed over the long term.

Over the first year to 18 months, for instance, DOE and the hub coalitions will undertake planning and analysis aimed at making sure the concepts are “technologically and financially viable,” with input from local groups, according to DOE’s funding announcement last year. No more than $20 million will be available for each hydrogen hub during that first phase.

In subsequent phases, hydrogen developers will finalize engineering designs and agreements with offtakers and local communities, followed by construction and installation. The final phase will include the collection and analysis of data on the hubs’ operation and performance, according to DOE.

In other words, the hard work has scarcely begun for hydrogen hub coalitions. “We’re on the first major step of a very long journey,” said Krupnick of Resources for the Future.

3. How clean will the hubs be?

Perhaps the most contentious question surrounding DOE’s process is what level of greenhouse gas emissions the department will enforce in exchange for federal funds. Last summer, DOE issued a draft of a clean hydrogen production standard, with what it described as nonbinding “guidance” on the hubs’ emissions (Energywire, Aug. 23, 2022). The hubs’ production facilities should aim to emit no more than 2 kilograms of CO2 for every kilogram of hydrogen, DOE recommended. That was in line with the emission limits laid out in the bipartisan infrastructure law.

On a life-cycle basis, when factors outside the production facilities are considered, the hubs should try to limit CO2 emissions to 4 kilograms, DOE’s guidance added. That expanded accounting could include emissions derived from extracting natural gas that would later be used as a feedstock for hydrogen production, for instance. The 4-kilogram limit is less than half of the 9-kilogram benchmark level typically associated with “gray” hydrogen production, where the fuel is extracted from natural gas. Four kilograms is also the maximum amount of life-cycle carbon emissions allowed for companies wanting to claim production tax credits for clean hydrogen under the Inflation Reduction Act.

The climate law’s limits are likely to become a benchmark for the DOE hubs’ participants, if they want to be financially viable over the long term, according to observers. “I think a lot of these hubs would want to take advantage of that tax credit,” said Aaron Bergman, a fellow at Resources for the Future. But there is still no single methodology that “clean” hydrogen companies must use when they measure and report their emissions.

The closest thing to such a methodology is being developed by the Treasury Department. Officials there are due to release guidance in coming months for the Inflation Reduction Act’s hydrogen tax credits. For hydrogen hub coalitions, access to those tax credits could hinge on the Treasury Department’s guidance.

The Treasury process has also generated controversy. For instance, many developers want to use emissions-intensive grid electricity to derive hydrogen from water molecules. Environmentalists and emissions researchers say that practice could be bad for the climate and disagree with developers about when Treasury should allow it (Energywire, Dec. 23, 2022).

Others have said “blue” hydrogen tied to natural gas use and carbon capture should not be supported, considering it involves continued use of fossil fuels. The process is favored by the oil and gas industry but opposed by some green groups.

Then there are questions about how hydrogen produced by the hubs could be used. Emissions researchers point out that burning hydrogen in power plants, for example, could generate nitrogen oxide emissions in large enough volumes to inflame respiratory illness in residents. Some environmentalists also say that using the fuel for building heat would be unreliable, expensive and possibly unsafe.

“It’s really hard to predict right now” how clean the hydrogen hubs will prove to be, said Saunders of the Environmental Defense Fund. “It’s a genuinely difficult question. I think it’s too early to say,” she added.

4. Where will all the hydrogen go?

Currently, nearly all of the hydrogen made in the U.S. is derived from fossil fuels using emissions-intensive processes.

But some hub coalitions say that shrinking hydrogen’s carbon emissions isn’t their biggest challenge — rather, it’s figuring out what to do with the fuel after they’ve made it.

“Production isn’t the hard part,” said Anja Richmond, program director at the Wyoming Energy Authority, which is part of a four-state alliance seeking to win hydrogen hub funds. “Building up that supply [of clean hydrogen] is important, but we need to make sure that supply has a place to go.”

Outside of the Gulf Coast, few regions of the U.S. have pipelines that are ready to transport hydrogen or facilities where the fuel could be stored, for instance.

A lack of connective infrastructure could make it harder to slash the cost of decarbonized hydrogen to levels that would interest buyers.

The hydrogen hubs will only have to resolve that problem on a medium scale, since the fuel’s production, storage, transport and consumption must all be demonstrated within a single region under DOE’s program.

Richmond said some participants in her coalition, known as the Western Interstate Hydrogen Hub, would consume some of the hydrogen in their own facilities. Xcel Energy, for instance, is planning to blend the fuel into its natural gas networks, she said. Other participants include Avangrid, Dominion Energy Utah and the National Renewable Energy Laboratory.

Others have highlighted the challenge of building up demand for clean hydrogen — particularly to a degree that would turn the regional hubs into a national industry.

One February report published by the Energy Futures Initiative, a group led by former Energy Secretary Ernest Moniz, concluded that the federal government should step in as a guaranteed buyer of low-carbon hydrogen, among other steps (Energywire, Feb. 9).

But the DOE competition is also driving planning activities that may lead to hydrogen projects even if the applicants fail to win a share of federal funds, said Brett Perlman, CEO of the Center for Houston’s Future. Perlman’s group is a convener of the HyVelocity Hub, a Texas-based coalition that comprises oil majors Chevron and Exxon Mobil, hydrogen producer Air Liquide, and renewable developer Ørsted, among others.

Members of the coalition would “absolutely” move forward with smaller pieces of the larger hydrogen hub vision “irrespective of the DOE money,” he said. “The transition is already happening.”

Friday’s deadline for full applications marks only the “end of the beginning” for the hydrogen hubs program, added Perlman. “This is a long process. We’re just getting started.”

SOURCE: https://www.eenews.net/articles/doe-hydrogen-hubs-4-issues-to-watch/

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