The Biden Administration has chosen seven proposals to split $7 billion in federal funding to accelerate the expected multi-year development of a national network of clean hydrogen producers, consumers and massive infrastructure needed to connect them.
Those chosen as so-called “hydrogen hubs” now will negotiate final funding details with the U.S. Energy Dept., which will propel another $43 billion in private investment, President Joe Biden said Oct. 13 in announcing the selections at a Philadelphia industrial site. “Hydrogen can power industries like steel and aluminum production … and it’s going to end up changing our transportation systems," he said, and could cut 25 million metric tons of carbon dioxide emissions annually,
Terming hub development "one of the largest advanced manufacturing investments in the history of this nation,” he said it would generate “good-paying jobs, U.S. economic competitiveness, a stronger energy-secure economy and combat the existent threat of climate change.”
Regional hubs have proposed a total of about 338,500 new jobs, including 220,617 for construction, according to DOE figures.
Nearly 80 teams of public, private and academic partners that submitted concept papers, later shortlisted to 33, as part of DOE’s first-phase review to ensure hub proposals are technologically able to “deploy infrastructure and produce at least 50 metric tons to 100 metric tons of clean hydrogen per day and reduce greenhouse gas emissions,” the agency said.
In addition, financial viability, hub partner and management team strength and project execution plans factored into selections. Workforce deployment also was key, with three of the seven selected proposals requiring project labor agreements. Those chosen had submitted detailed community benefits plans “including how project performers will transparently communicate, eliminate, mitigate and minimize risks," said the White House.
The United Association of Union Plumbers and Pipefitters said its members “stand ready to help build” the new hydrogen economy. “The future of hydrogen in the U.S. is now,” said Sean McGarvey, building trades’ president.
Final hubs, which could take from eight to 12 years to complete, must provide at least 50% of total project cost, said the agency, which also noted it can still cancel selections or negotiations.
Second-phase funding review under way will finalize engineering design, site access, labor agreements, permitting, off-take agreements and community engagement, said DOE. Phase three will assess steps to begin installation and construction, and phase four will focus on hub operations, performance and financial viability.
Infrastructure Funding Boosts Hubs
Except for California, selected hubs are multistate efforts located in the Gulf Coast area, two Midwest regions, the Mid-Atlantic, Appalachia and the Pacific Northwest. Three states—Pennsylvania, Montana and Wisconsin—are involved in two hubs, according to DOE and state officials.
Some media reports speculate the three states are seen as political swing states in the 2024 election.
Said Biden: “Those hubs are about people coming together across state lines, across industries [and] across political parties to build a stronger, more sustainable economy and to rebuild our communities.”
Hub funding is part of $8 billion earmarked under the 2021 Infrastructure Investment and Jobs Act, with $1 billion set to develop demand-side support and new end-uses for clean hydrogen, said DOE.
Almost all current hydrogen is fossil fuel-based and generates carbon dioxide emissions. Growing use of carbon-capture and storage technology has pushed more "blue" hydrogen with lower emissions, but not enough to satisfy greenhouse gas reduction goals or critics. Electrolyzing hydrogen from water using renewable power such as wind, solar and nuclear enables it to be classified as *green."
Billions in added funding also could come through clean hydrogen tax credits spelled out in the 2022 Inflation Reduction Act that could provide up to $3 per kilogram of cleaner hydrogen produced, depending on emissions level. But regulatory specifics are still unclear on how clean hydrogen projects will qualify for the "45V" tax credits under the Inflation Reduction Act. One recent think tank analysis found a “cost gap” between what industrial users that are 90% of current hydrogen buyers now pay and what their future cost for clean hydrogen will be.
Hydrogen sector participants and environmental advocates and how are battling over how—or whether—the credit should address so-called "additionality," a potential provision that would require hydrogen producers to use a clean energy source to power electrolyzers that has been added to the grid. The issue has spurred a fierce lobbying battle, which includes recent letters sent to the White House by the electrical workers union and other building trades that claim the cost of additionality rules could stifle sector growth.
Environmental advocates voiced cautious support for the federal funding boost. “This provides an exciting stimulus for green hydrogen but also includes a concerning focus on blue hydrogen and diverting clean energy sources that are currently powering our homes, which will make it a steeper path to align hydrogen to U.S. climate goals,” says Erik Kamrath, federal hydrogen advocate for the Natural Resources Defense Council. “We need strong guardrails to ensure that U.S. hydrogen does not create an emissions mess, and that we are not subsidizing hydrogen that is clean in name only.”
The White House said “to reduce the cost of clean hydrogen by 80% to $1 per one kilogram in one decade,”DOE also is earmarking about $2.25 billion in other funding to boost R&D and develop networks of production, storage and transportation infrastructure.
Regional Hubs Close Up
Among the selected proposals, the California ARCHES program will produce hydrogen from renewable energy and biomass “to address intensive industries,” including aviation, shipping and agriculture, as well as large power plants and cement and steel production, to meet ambitious state climate goals, Gov. Gavin Newsom said. Led by the University of California’s Lawrence Berkeley National Laboratory, it could receive up to $1.2 billion, said DOE.
The state estimates 220,000 new jobs created, including 130,000 in construction, with project labor agreements required. Hub participants also include industry design firms GHD, Arup, Stantec, STV, AECOM, Veolia and Wood.
Los Angeles expects “a large sum" for its hydrogen efforts, said Mayor Karen Bass.
These include utility Southern California Gas Co.’s Angeles Link project that could help it deliver renewable hydrogen “equivalent to almost 25% of the natural gas SoCalGas delivers today,” says President Maryam Brown. “This could displace one billion gallons of diesel fuel burned annually … and allow conversion of natural gas plants.” The Ports of Los Angeles and Long Beach also expect to gain major funding support to test hydrogen as fuel to power trucking and terminal equipment.
But Chirag Bhakta, director of Food & Water Watch California, notes that hydrogen is water intensive—consuming at least 5,000 liters of water for each megawatt hour. “California’s water supply is already at risk,” he says.
The Heartland Hydrogen Hub will focus on decarbonizing production of fertilizer electric generation in North Dakota, South Dakota, Montana, Minnesota and Wisconsin, said its website and an Oct. 15 statement from Wisconsin Gov. Tony Evers (D) announcing an agreement to join the group.
The University of North Dakota Energy & Environmental Research Center, Marathon Petroleum Corp., TC Energy and Xcel Energy lead its development, with three Tribal Nations also involved, said DOE. The hub could receive up to $925 million in federal funding and aims for 3,880 direct jobs—3,067 in construction.
DOE said the Midwest Hydrogen hub includes partners and projects in Illinois, Indiana, Michigan and Wisconsin, and is set to gain up to $1 billion that could create as many as 12,100 construction jobs.
Listed partners include hydrogen producer Air Liquide, utility Ameren Illinois, steel producer and mining firm ArcelorMittal, BP, the Illinois Alliance for Clean Transportation, Nalco Water, clean energy developer Invenergy and hydrogen cell fuel producer Plug Power—and contractors Boldt Co. and Michels Corp.
The hub marks "the beginning of a new era in steel producing," said Lourenco Goncalves, CEO of Ohio-based steelmaker Cleveland-Cliffs, North America's largest flat-rolled steel producer. He said the effort could cut carbon emissions at its two largest steel plants, both in Indiana. The firm now is building a pipeline to transport hydrogen directly to the blast furnace of one.
The manufacturer's "willingness and ability to offtake a significant portion of the entire production of the hub eliminates the chicken-and-egg dilemma associated with clean hydrogen development and ... makes hydrogen viable for other industries, including the automotive sector," he said.
Montana also is a member of Pacific Northwest Hub, which includes public and private entities from Washington and Oregon, to produce hydrogen only with electrolysis "to leverage the region’s abundant renewable resources" said DOE, and to "play a key role in driving down electrolyzer costs."
In line to receive up to $1 billion, the hub has committed to negotiating project labor agreements for all projects over $1 million and to investing in state-registered apprenticeship programs, said DOE. The effort expects to create more than 10,000 direct jobs, including 8,050 in construction. Hub officials said Oct. 13 they will begin negotiating final funding and scope for development, with 17 projects proposed by members that include Amazon.com, Mitsubishi Power Americas, Puget Sound Energy and Twin Transit.
Hubs Develop Resources
The Mid-Atlantic Clean Hydrogen Hub that includes southeastern Pennsylvania, Delaware and southern New Jersey, will repurpose legacy oil infrastructure and use both renewable and nuclear power with electrolyzer technologies and expanded hydrogen storage and distribution infrastructure. Ranked among the most pro-labor and "greenest" selected hubs, it committed to “negotiate" project labor agreements for all work and to invest $14 million for regional workforce apprentice training. PSEG, which owns New Jersey’s largest electric utility, is part of its development group set to receive $750 million and that promises 14,400 construction jobs.
Delaware’s congressional delegation noted on Oct. 13 total project investment of nearly $3 billion that includes nonfederal funding, pointing to the region’s “highly trained, unionized workforce combined with a strong manufacturing, chemical and bioscience presence and existing infrastructure that can transport and store hydrogen.”
Appalachian regional hub ARCH 2 is also host to Pennsylvania partners and projects, as well as those in West Virginia, Ohio and Kentucky that will use natural gas for hydrogen production, with emissions stored in underground caverns. It will be eligible for up to $925 million in federal funding and could create up to 18,000 construction jobs and 3,000 permanent ones at full buildout, DOE said.
Battelle is the program manager leading a team that includes the Chemours Co., Marathon Oil, KeyState Energy, TC Energy, Babcox & Wilcox and Dominion.
Team members also include Longridge Energy Partners, which built a gas-fired power plant in Ohio that now burns up to 15% hydrogen and is set to eventually transition to 100% hydrogen fuel. “This is a big, big deal for ... Appalachia in particular, because these facilities are all based in areas where coal was king,’' says Perry Babb, president of KeyState, which is building an estimated $2-billion facility in northern Pennsylvania, said to be the state’s first carbon capture project, which could operate by 2028. Black & Veatch is providing engineering support.
The Pleasants Power Plant in West Virginia also is being shifted from coal to clean hydrogen in a recently federally-approved ownership transfer. The new owner has plans to produce graphite for batteries at an adjacent site to generate hydrogen as a byproduct to be used as power plant fuel.
“Hydrogen hubs are an important step in advancing the use of hydrogen as a cost-effective and clean fuel,” says Denise Brinley, vice president and hydrogen market leader at engineer TRC Cos., a hub member.
But in a statement, advocacy group Appalachian Voices urges DOE “to work with selected projects to advance zero-emission hydrogen technologies—and not further our reliance on methane gas” to produce it, contending that carbon capture at these facilities is “an unproven technology at this scale.”
The Gulf Coast HyVelocity hub, located in Texas and southwest Louisiana and set to receive $1.2 billion, will use regional natural gas and carbon capture for blue hydrogen, and renewable power to produce green, according to DOE. It is expected to be the largest of the hubs in terms of clean hydrogen production, with 45,000 direct jobs estimated—35,000 in construction.
The hub is led by GTI Energy with partners that include major fossil fuel energy firms Chevron, Sempra Infrastructure and ExxonMobil—the latter just announcing a $60-billion plan to buy Pioneer Natural Resources, set to double its production volume in the Permian Basin to 1.3-million barrels per day at deal closing in mid-2024. Exxon is developing hydrogen fueling stations for long-haul trucking along Interstate 10 from Houston to Los Angeles and building "the world’s largest low-carbon hydrogen plant" in Baytown, according to its website. Also listed as team members are Industry firms McDermott International, Quantas and Orsted.
According to the hub, the Gulf Coast already has most existing U.S. hydrogen infrastructure, with 48 production and gas conversion facilities used in oil refining and more than 1,000 miles of hydrogen pipeline. It also says it has multiple end-use applications in its proposed portfolio.
In August, consultant McKinsey said a clean-hydrogen hub could possibly generate around $100 billion in additional Texas GDP by 2050. “Blue ammonia may be more attractive than green for importing countries, prioritizing price over carbon-intensity level, while clean ammonia may replace grey ammonia in fertilizers as agricultural sectors move toward decarbonization,” its report said.
Meanwhile, hubs not selected were optimistic that hydrogen development would continue. In a statement, Duke Energy, part of the Southeast Hydrogen Hub, said DOE's decisions would have "no impact on our plans for new hydrogen-capable natural gas plants."
In response to Colorado's proposed hub with Utah, New Mexico and Wyoming not chosen, Gov. Jared Polis said "we look forward to making more progress on renewable energy and jobs," terming the state "a national leader in renewable energy. But in a June letter, a coalition of Indigenous, climate and environmental justice groups had urged DOE officials to reject the Western Interstate Hydrogen Hub plan, citing pollution impacts to low-income communities and overuse of scarce water resources. It was not immediately clear if the letter was a factor in the non-selection.
Also bypassed was the Northeast Hydrogen Hub proposal from New York, New Jersey, Massachusetts, Maine, Rhode Island, Connecticut and Vermont, which planned regional hydrogen production projects. “While I am disappointed ... the Northeast’s hydrogen and fuel cell network remains a critical cluster for development of American-made clean energy,” said U.S. Rep. John Larson, D-Conn., a long time advocate for the state's fuel cell industry.
“It simply may be that the Northeast hub will be positioned for a later round of projects," added Joel Rinebold, director of energy initiatives at the Connecticut Center for Advanced Technology. "I don’t think this is the end of it.”