The Biden administration recently made a $7 billion bet on a new industry. Clean hydrogen, it hopes, will move the United States closer to its climate goals, reinvigorate manufacturing, and shore up the workforce of the fossil fuel industry.
But clean hydrogen as an industry is in its infancy, and there’s plenty of ambiguity around even its most basic terms. “Clean hydrogen” means different things to different people, and some types of “clean hydrogen” aren’t all that clean.
Hydrogen is the H in H20, and as the most abundant element in the universe, it shows enormous promise as a potential energy source for fueling sectors of the U.S. economy (like heavy transportation and heavy industry) that electrification and renewables can’t serve.
Like with gasoline, an engine can burn hydrogen to generate electricity. Hydrogen releases zero carbon emissions and minimal air pollutants when burned, and in a fuel cell, water is its main byproduct.
In order to work as a fuel, pure hydrogen first needs processing, and as of right now, the process can be either clean or not-so-clean. Nearly all the hydrogen currently produced comes from fossil fuels, and Big Oil stands to benefit the most from this federal investment. That means that scaling hydrogen, through its current production processes, could actually make climate pollution worse or consume the grid’s existing clean power.
There are a number of ways that hydrogen is currently processed, each defined by its own color and with varying climate impact.
Ninety-five percent of the hydrogen currently produced in the country is a not-very-clean gray hydrogen. The process uses steam to heat methane derived from natural gas. This causes the natural gas to separate into hydrogen gas, carbon monoxide, and carbon dioxide molecules. Used mainly to refine petroleum and metals and produce industrial chemicals, it’s an incredibly energy-intensive process.
A small but growing subset of the industry, blue hydrogen also uses steam methane reforming but introduces carbon capture and storage to limit the methane leakage. That should reduce climate change impact, at least in theory (carbon capture and storage haven’t yet been proven at scale).
The production of green hydrogen uses electrolysis, which creates a chemical reaction that divides water into oxygen and hydrogen molecules. The process uses no methane or other fossil fuels, requiring no carbon capture. When renewables generate the electricity needed to produce green hydrogen, it ranks as the cleanest way to make hydrogen. But it’s expensive compared to its dirtier cousins, at least for now.
With this investment, the Biden Administration is essentially giving life support to Big Oil and its troubling environmental track record. But the flip side is that the government can then set the terms of the new hydrogen industry. It will get to decide which processes of hydrogen production to approve.
That move could have big implications for the new industry. By taking these initial steps, the Biden administration could help set up both the funding and the political alliances needed to grow a new industry.
A clean hydrogen industry will require extensive infrastructure to deliver on its promise. On October 13, President Biden announced the launch of seven new hubs across the nation that will establish the new industry by producing hydrogen fuel. These hubs represent just the first step in a multiyear, multibillion-dollar journey to help the country reach net zero emissions. The Biden Administration says that once the hubs are up and running, they’ll reduce 20 million metric tons of carbon dioxide from our atmosphere.
The Department of Energy (DOE) will invest $7 billion to back the hydrogen hubs, envisioned as sprawling networks of facilities and pipelines that cover hundreds of miles. The Biden administration picked the seven hubs from 79 proposals submitted to the DOE by private-public partnerships. The hubs will be located in states in the Midwest, California, the Pacific Northwest, the Gulf Coast, and Appalachia.
The Biden administration hopes this initial federal funding will attract another $40 billion from private investors and include added government subsidies. These could boost both the demand for and production of clean hydrogen.
The White House says that two-thirds of the federal funding will go toward green hydrogen development. But at least two of the seven hubs will use mainly blue hydrogen, which requires natural gas. The Midwest and Mid-Atlantic hubs will also draw from existing sources of nuclear power. This decision has drawn criticism from environmentalists, who would rather see the hubs use only green hydrogen, to avoid fossil fuel use entirely.
As of now, the government is still setting the exact terms for what counts as clean hydrogen, and many questions remain. Will facilities producing blue hydrogen need to use carbon-capture standards? How will hubs minimize natural gas leaks?
This makes the next move from the White House all the more critical. The Treasury Department is currently designing standards that will determine the final shape of the burgeoning hydrogen economy. The Internal Revenue Service (IRS) will also play a role in developing policy that determines how the industry operates and how much pollution it generates.
Energy providers, environmentalists, and government policy leaders will argue over these coming decisions, as the stakes are high. To ensure the reduction of greenhouse gases, the hydrogen industry will need to take the right shape.
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Published December 1, 2023 5:10PM
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