The Department of Energy (DOE) announced seven projects on Friday. It received $7 billion to construct significant hydrogen hubs, providing a major boost to the emerging U.S. industry. This crucial step aligns with the Biden administration’s climate goals.
According to a White House statement, the DOE funding should reduce 25 million metric tons of carbon dioxide annually. This is roughly equivalent to removing 5.5 million gasoline-powered vehicles from the road each year. This investment, praised by Secretary of Energy Jennifer Granholm, lays the groundwork for a new American-led clean energy sector.
Moreover, numerous hydrogen coalitions competed for funding. They were authorized by the 2021 bipartisan infrastructure law, resulting in the selection of seven projects: the Mid-Atlantic Hydrogen Hub, the Appalachian Hydrogen Hub, the California Hydrogen Hub, the Gulf Coast Hydrogen Hub, the Heartland Hydrogen Hub, the Midwest Hydrogen Hub, and the Pacific Northwest Hydrogen Hub. These hubs consist of a mix of private sector groups and state governments.
President Joe Biden will travel to Philadelphia to promote the Mid-Atlantic hub. This will utilize both renewable and nuclear energy for hydrogen production. This initiative could transform the U.S. hydrogen sector allowing for substantial growth in the coming years. Therefore, the country will no longer be reliant on fossil fuels,
Furthermore, the Biden administration aims for 10 million metric tons of “clean” hydrogen annually by 2030. Thus potentially reducing U.S. greenhouse gas emissions by up to 20% over the coming decades.
Hydrogen production involves extracting hydrogen atoms from water and combining them with oxygen in a fuel cell. It is a process considered “green” when powered by renewable energy. Mixing hydrogen with natural gas results in “blue hydrogen,” provided the gas plants capture the carbon emissions.
DOE envisions these hydrogen hubs as models for production, storage, transport, and consumption. The selected projects will span 16 states. In addition to the $7 billion for the hubs, DOE plans a $1 billion program to incentivize hydrogen demand.
The hubs represent linked regional assets with the potential to form a national hydrogen economy over time.
DOE expects each hub to produce clean hydrogen as part of its portfolio. This will mark a significant test for the agency, although the specific applications for the awardees aren’t definite yet.
The Office of Clean Energy Demonstrations administers the hydrogen program. It also represents a change in DOE’s historical focus on basic research and development for energy systems.
The seven hubs could produce 3 million metric tons annually which is nearly one-third of the 2030 goal. It could also generate over $40 billion in private sector funds, although there isn’t any confirmation on this funding yet.
DOE will need to finalize negotiations with the awardees and disburse a portion of the $7 billion. The funding process is long-term, and the projects themselves will span several years.
Private sector supporters see this announcement as an opportunity to attract investments and advance projects.
Industry stakeholders are also eagerly awaiting the Treasury Department’s guidance on the hydrogen tax credit, known as 45V. This tax could influence hub proposals and investment strategies.
The debate over “hourly matching” in tax credit guidance is ongoing, with different stakeholders expressing contrasting viewpoints. Environmentalists advocate for measures that prioritize GHG reduction and long-term sustainability.
Some in the climate research community support growing the hydrogen industry before emphasizing immediate emissions reductions. The hubs that will produce the hydrogen are likely to export and use it in various sectors, from power generation to transportation.