First-mover problem delays US progress

Thus far, US climate efforts have largely focused on electrification and adding renewable energy to power grids; solar and wind power are expanding even in states that traditionally promote and produce fossil fuels. At a consumer level, electric vehicle production, sales, and use have drawn the lion’s share of coverage. Only recently has much attention turned to the thorny problem of decarbonising so-called hard-to-abate industries, collectively responsible for the majority of greenhouse gas emissions: aviation, chemicals, steel, heavy transport, and food. And that has contributed to making hydrogen a major part of the conversation about how to move forward.

US industry currently uses hydrogen extensively, primarily in oil refining and ammonia production. But production is predominantly grey – dirty and energy-intensive, powered by fossil fuels – rather than blue, green, pink, turquoise, or other types of lower-emissions production. While many see green hydrogen (producing the element by electrolysis using renewable energy) as the ideal, the ultimate goal is, simply, producing affordable low-carbon hydrogen at scale, no matter the method or colour.

A US hydrogen market

The US has lagged behind Europe and India in initiating low- and zero-carbon projects, and that should change: to help slow further climate impacts, government and industry have roles to play in creating a functioning US hydrogen market as soon as possible. Deloitte anticipates that achieving global climate neutrality by 2050 requires a clean hydrogen market producing 170 million t of equivalent hydrogen in 2030 and 600 million t of equivalent hydrogen in 2050, with North America playing a major role as both exporter and user. Globally, Deloitte anticipates the clean hydrogen market growing rapidly and steadily, from US$642 billion in annual revenue in 2030 to US$1.4 trillion in 2050.

But creating a market in the US, with its extensive industrial and heavy transportation industries built on fossil fuel infrastructure, requires overcoming more challenges than in some other nations. So, in an effort to help catch up or even leapfrog other regions, the US government has put forth various decarbonisation incentives: for consumers considering solar panels or electric vehicles, for companies willing to invest in reducing their production’s carbon footprint, and for public and private organisations looking to be the foundation of a clean hydrogen market.

Toward a national network

In October 2023, the US Department of Energy (DOE) advanced its Regional Clean Hydrogen Hubs Program by announcing that seven regional hubs – out of 79 original applicants – had been selected to work toward creating functional markets and, eventually, form a nationwide network. The hubs, authorised by the 2021 Federal Infrastructure Investment and Jobs Act, each use a unique blend of energy sources – from renewables to natural gas with carbon capture – along with existing and new infrastructure; they will cover 17 states. The goal: to catalyse US$40 billion in private investment and kickstart ‘a national hydrogen economy’, eliminating 25 million tpy of CO2 emissions from end uses.

But in the months since the announcement, it has become clear the extent to which these regional hubs are very much works in progress. Project developers are still ironing out the details of working with the DOE, much less with other hubs or even other companies in their hubs. Companies and investors are waiting for further Treasury Department guidance and clarification on 45V hydrogen tax credits. With community benefits and equity key elements of the proposals and planning, developers will need to earn a ‘social license to operate’, since the funding – up to US$1.2 billion per hub – is conditional on standards being met. (It is worth noting that some of the proposed hubs that the DOE programme did not select for funding are moving forward regardless, albeit subject to the same delays and hesitancy.)

This article was originally published in the Summer 2024 issue of Global Hydrogen Review magazine. To read the full article, simply follow this link.

Read the article online at: https://www.globalhydrogenreview.com/hydrogen/28062024/first-mover-problem-delays-us-progress/