US Announces Hydrogen Hub Funding

There’s a new hydrogen story building in the US, but this time, it’s not about Cillian Murphy in IMAX 65mm.

What happened: On Friday, US President Biden announced $7 billion in federal grants through the Bipartisan Infrastructure Law and the Inflation Reduction Act (IRA) to boost seven regional clean hydrogen hubs across the US.

• The seven hubs are: Mid-Atlantic, Appalachian, California, Gulf Coast (Texas), Heartland, Midwest, and Pacific Northwest.

Background on hydrogen: It’s mainly used today for fertilizer production and various industrial processes. But due to it emitting no emissions when burned, many are keen to see hydrogen used in hard-to-abate industries like cargo transport—long-haul trucking, marine shipping, and airplanes.

Currently, most hydrogen is produced from natural gas or coal which, uncaptured, generate carbon emissions. Each of the new hubs will be considered ‘clean’ by using either carbon capture or renewable electricity in hydrogen production.

• Though, the Financial Times pointed out a study by Cornell and Stanford that estimated blue hydrogen, made from reforming natural gas, can have a carbon footprint up to 20 percent larger than the direct burning of gas for heat.

The announcement: The funding is the largest federal investment into the hydrogen industry to date, attracting almost 80 project application submissions and is expected to mobilize more than $40 billion in private investment.

• The US Department of Energy expects the projects will result in 3 million tons of hydrogen per year, “tens of thousands” of jobs, and end-use reductions equivalent to the annual emissions of 5.5 million gas-powered cars.

More funding is expected: An additional $5 billion through the IRA should be announced by year-end to provide tax credits for clean hydrogen production.

However, a growing debate between environmental groups, project developers, unions, and legislators on how the subsidies should be distributed is making for challenging work.

Zoom out: The success or failure of the hubs looks to hinge on two main factors: the second round of tax credits which the Biden administration is currently struggling to finalize and whether the right level of demand will manifest itself in time to support the upcoming projects.

$7 billion may seem like a lot of money to us folks that cringe at prompts for 25 percent barista tips, but it’s estimated just one hydrogen hub could cost around $10 billion.