Clean Hydrogen Development Faces Challenges

A recent study requested by the U.S. Department of Energy (DOE) has found that “clean” hydrogen energy development will not grow enough under current policies to meet the nation’s climate goals.

The DOE in 2021 requested that the National Petroleum Council (NPC) study seven questions related to identifying key challenges and critical enablers to achieve at-scale deployment of low-carbon, or “clean” hydrogen in the United States. The NPC is a federally chartered and privately funded advisory committee that makes recommendations to the Secretary of Energy and executive branch of government.

The request coincided with the passage of the federal Inflation Reduction Act (IRA) and Infrastructure Investment and Jobs Act (IIJA), both of which provided funding and tax credits for a number of clean energy programs, including $7 billion for the development of up to 10 regional clean hydrogen hubs around the country. The hubs are to form the foundation of a national clean hydrogen network to decarbonize hard-to-abate sectors of the economy, like heavy industries (steel and cement production) and heavy-duty transportation.

Hydrogen is a clean energy source that emits only water vapor. However, it is presently expensive to produce, particularly if electrolyzed from water molecules. Blue hydrogen produced from natural gas using steam reformation is currently the lowest-cost method of production, but produces carbon dioxide emissions. In order to be considered “clean” most of the emissions must be captured and stored.

One of seven projects selected for funding is the Appalachian Regional Clean Hydrogen Hub, which is based in West Virginia but also includes partners across Pennsylvania and Ohio. ARCH2 plans to focus on production of blue hydrogen.

A NPC advisory committee did an in-depth analysis of the entire emerging industry, concluding that current federal policies “are insufficient to deploy low carbon intensity (LCI) H2 at the scale necessary to support the U.S. net zero target by 2050.” The report makes a number of policy, research and development, and safety recommendations.

The Harnessing Hydrogen report found that clean hydrogen can play a key role in reducing emissions in the hard-to-abate sectors. “If deployed at-scale, LCI H2 could abate approximately 8% of U.S. carbon emissions by 2050. Achieving net zero in the United States will require deploying multiple technologies, including LCI H2, and could cost up to 3% of the Gross Domestic Product (GDP) annually.”

It also found that hydrogen demand would need to increase by nearly seven-fold compared to the current market to enable cost-effective achievement of U.S. net zero ambitions. The report also states that multiple hydrogen production methods will be needed and will vary depending on region.

The report calls for additional policies to help bring down the cost of hydrogen and stimulate demand for its use by making it attractive to investors. Streamlining the permitting process is also needed, as is prioritizing research and development and ensuring that public safety and health are protected. Also needed are improved efforts to reduce methane emissions from natural gas used in the hydrogen supply chain.

The emerging hydrogen industry will face some large challenges as it is developed, the report indicates. The regional hydrogen hubs will play an important role in determining its future.