DOE just rolled out the clean hydrogen welcome mat

The Biden Administration on Friday announced seven recipients of infrastructure law funding dedicated to building a clean hydrogen industry from the ground up.

The regional clean hydrogen hubs, which span 16 states, will receive a combined $7 billion in funding. In theory, they have the potential to produce at least 3 million metric tons annually, amounting to a third of the U.S.’s 2030 production goals.

An additional $1 billion will be used to spur “demand-side support” for the hubs, which the White House hopes will generate over $40 billion in private investment, help bring the cost of clean hydrogen down, and (eventually) reduce end-use carbon dioxide emissions by 25 million metric tons per year.

But the path to a clean hydrogen economy remains a long one. In its report on commercial liftoff for clean hydrogen, the Department of Energy dubbed 2023 the start of the technology’s “commercial liftoff phase.” In the near-term, the department predicted challenges including cost of infrastructure, lack of long-term offtake contracts, and permitting. 

DOE said all of the hubs will use at least some renewable energy. Three are also expected to use nuclear power, while others will use fossil fuels combined with carbon capture and storage, as mandated by the law’s requirements. Roughly two-thirds of the total investment will be directed at green hydrogen produced using electrolysis. 

Green hydrogen, though seen as a potentially excellent tool for decarbonizing heavy industries, is still extremely expensive, not to mention scarce. Today, only about 1% of the 10 million metric tons of hydrogen produced annually in the US is green, and the technology faces several hurdles on its way to scale. Prices need to come down by at least 80% to meet DOE's target, and the necessary infrastructure — including electrolyzers themselves — is lacking.

The Hubs

The Appalachian Hydrogen Hub, located in West Virginia, Ohio, and Pennsylvania, is expected to receive $925 million, and will “leverage the region’s ample access to low-cost natural gas.”

The California Hydrogen Hub will receive up to $1.2 billion for a proposal submitted by the state’s Alliance for Renewable Clean Hydrogen Energy Systems. The project will use exclusively renewable energy and biomass, and look to provide a “blueprint” others can follow for decarbonizing public transportation, trucking, and port operations.

The Gulf Coast Hydrogen Hub centered in Houston, Texas, is also expected to receive up to $1.2 billion, and plans to use a combination of natural gas with carbon capture, as well as renewables-powered electrolysis.

The Heartland Hydrogen Hub, in Minnesota, North Dakota, and South Dakota, is eligible for up to $925 million, and will in part focus on decarbonizing fertilizer for the agricultural sector.

The Mid-Atlantic Hydrogen Hub will also be located in Pennsylvania, as well as in Delaware and New Jersey. With its up to $750 million, the hub plans to repurpose “historic oil infrastructure” and develop production facilities using both renewable and nuclear energy.

The Midwest Hydrogen Hub in Illinois, Indiana, and Michigan will produce hydrogen for uses such as steel and gas production, heavy-duty transportation, and aviation fuel. The hub will receive up to $1 billion, and will leverage renewables, natural gas, and nuclear.

The Pacific Northwest Hub, including Washington, Oregon, and Montana, will receive up to $1 billion to produce hydrogen exclusively through electrolysis. The hub is in part focused on driving down the cost of electrolyzers and helping to bring the technology into the mainstream.

But the funding won’t be delivered all at once. The seven hubs will first undergo a “negotiation process” with DOE, and submit “detailed risk assessment and risk management plans” as well as community benefits plans. They’ll also need to develop an “environmental information volume,” obtain permits, and submit safety plans.

In the meantime, clean hydrogen stakeholders — including producers celebrating hub awards — await the Department of the Treasury’s guidance on who will be eligible for the Inflation Reduction Act’s clean hydrogen production tax credit. The rules, which were expected in August but have yet to be released, will essentially define who can call their hydrogen “clean.”