Congress and the Biden Administration recognize hydrogen’s potential to address the clean energy imperative. This past year, The Infrastructure Investment and Jobs Act appropriated $8B of spending to build out clean hydrogen hubs in order to demonstrate the potential of the fuel, $1 billion for a Clean Hydrogen Electrolysis Program to reduce costs of hydrogen produced from clean electricity; and $500 million for Clean Hydrogen Manufacturing and Recycling Initiatives to support equipment manufacturing and strong domestic supply chains. In February, the DOE published a request for information from key stakeholders to inform a strategy to generate green hydrogen for $2/kg by 2026. Later this year, DOE is expected to select at least four geographically diverse regions, two of which must be in regions with abundant natural gas reserves to test different ways to produce and use hydrogen, demonstrate its viability as an alternative fuel source and assist in garnering public support. These sorts of initiatives have been a focus for many countries for several years. If anything, the US is behind in its efforts. In a recent podcast, the head of Womble Bond Dickinson’s UK energy practice, Richard Cockburn, suggests: “We need to get demand going. The way we are doing that in the UK is focusing primarily on clusters. That’s building clusters, carbon capture clusters, regular industrial commercial areas where there is existing demand, and where hydrogen is either being produced or could be produced to serve those customers.” There are numerous industrial applications for hydrogen that will drive the economies of scale needed to make hydrogen cost competitive.
From Point A to Point B
The infrastructure required to enable hydrogen ubiquity is expensive and is still in need of considerable innovation as the fuel presents unique “last mile” challenges regardless of whether that last mile is reached via hubs or centralized manufacturing.
Natural gas is 8.5x denser than hydrogen. As such, hydrogen simply needs more room. For that reason, it must be stored as a compressed gas, cryogenic liquid or via some material based storage such as metal-hydrides. There are, as always, cost and benefit implications to each with the latter two being more expensive.
Further, hydrogen flows 3x faster than natural gas and our existing natural gas pipelines can technically handle only up to about 15% hydrogen when blended with natural gas, and the US currently has only 1,600 miles of dedicated hydrogen pipeline – not nearly enough. As far as storage goes, the element’s low density is a key factor. Pressurized containers will always be limited in volume, cryogenics are expensive, and storing hydrogen in ammonia is relatively cheap, but requires processing for deployment in downstream infrastructure.
Bloomberg NEF has estimated that if hydrogen replaced natural gas, $600Bn of storage investment will be required by 2050. In a February 2022 report from Goldman Sachs, analyst Zoe Clark estimates that “$5 trillion of (global) investment is needed in the clean hydrogen supply chain to achieve net zero, as policy, scalability, and affordability come together.”
Even as we begin to address investment, we have the question of regulation. Who is in charge? The main agencies with the ability to influence the development of hydrogen industry and infrastructure include: the DOE, the Federal Energy Regulatory Commission (“FERC”), the Pipeline and Hazardous Materials Safety Administration (“PHMSA”), and the Environmental Protection Agency (“EPA”). Each of these agencies have some form of authority over hydrogen development, deployment, and use, but there is no comprehensive regulatory regime and existing regulations dedicated to hydrogen tend to address hydrogen issues only incidentally. For example, most environmental regulations on hydrogen deal with hydrogen’s properties, such as flammability or explosiveness (which often requires it to be regulated as a hazardous substance). These regulations are scattered throughout the Code of Federal Regulations, and are not organized in a cohesive manner to specifically address hydrogen.
Currently, the federal agencies with the most developed regulations addressing hydrogen are the Occupational Safety and Health Administration (“OSHA”), EPA, and PHMSA. But, hydrogen regulations to date have not been central to any of these agencies’ missions.
What Will the Neighbors Say?
As is the case with all forms of what can broadly be termed “economic development,” hydrogen projects will also need to overcome NIMBY (“Not in My Backyard”) objections. The natural gas industry in particular is a frequent target of NIMBY opposition. For example, the development of the Permian Highway Pipeline in central Texas has led to fierce opposition from residents who say they support the planned 430-mile natural gas pipeline project – just not near their property. And, when there is public objection to an infrastructure project, development can be tied up in litigation and stymied for decades under the National Environmental Policy Act or NEPA. The proposed hydrogen hubs and other infrastructure and hydrogen projects that must be built for broad based hydrogen deployment may well be wholly or partially financed by federal agencies and will require a federal permit or other regulatory decision, which will subject them to NEPA. So, it is imperative that the public understand and get comfortable with hydrogen technology if we are going to have the hydrogen economy develop.
Drivers Wanted
Hydrocarbons displaced coal as the dominant fuel (in the US and Western Europe) between 1940-1970. It is perhaps surprising and instructive to note that what seems so common today actually took 30 years to implement. Yet we now handle natural gas in our homes with relative ease, and it is a widely used source of heating and cooking fuel because it is cheap and burns efficiently. The same is true for the gas we use in our cars, the fuel we use in our planes, and the diesel that powers our engines. The issue at hand is, of course, the GHG emissions that result from their use.
Similarly, the public has been relatively slow to adopt battery electric vehicles (BEVs). GM launched the EV1 in the late 1990s. It has taken thirty years for BEV sales in the US to reach 608,000 units in 2021, a 100% increase from 2020. Globally that growth has increased on average 50%/year since 2015. Realistically, US consumers are drawn to electric vehicles not just because of their environmental benefits, but also because they like the convenience of being able to charge while they sleep. They like the performance aspects too; the Tesla Plaid, amazingly, can accelerate from 0-60 mph in 2.07 seconds. Or they are drawn to the luxury features of some models. The EV industry and other clean energy advocates have worked hard to communicate these benefits, even as they struggle with the limited – albeit increasing - driving range of EVs and the lack of charging station infrastructure.
Approximately 2.2 pounds of hydrogen in a fuel cell EV (FCEV) can produce energy equivalent to one gallon of gasoline. A hydrogen-powered car can be refueled in around five minutes and tanks can be located at traditional gas stations and convenience stores. These will be key selling features to consumers, as the experience of refueling a hydrogen-powered vehicle is largely the same as refilling a standard gas tank, whereas EVs still require longer “refueling” times that are somewhat less than practical. The US DOE estimates that there are around 50 hydrogen refueling stations in the U.S. Even as that network and as hydrogen costs decline, the industry needs to communicate the benefits of FCEVs as loudly they have done with BEVs. FCEV sales reached just about 13,000 units at the end of 2021. The auto industry has done a terrific job with its EV advertising message, and the fact that EVs are powered by a grid using mostly GHG-emitting natural gas to generate power tends to fade into the background. It is tempting to believe that as costs decline, demand for FCEVs will skyrocket, as those vehicles powered with green hydrogen will truly be GHG emission-free.
Destination Everywhere
For broad adoption of hydrogen across industrial and consumer applications, it is clear the concerted effort of all stakeholders including government, developers, and the energy industry as a whole need to build consensus for clean hydrogen as a potentially transformative energy solution. This will involve engaging with naturalists and environmentalists, as well as residents and community leaders. There is no doubt that this is a global movement. Over 40 countries have adopted a “hydrogen strategy” and demonstration projects number in the hundreds. As climate change concerns have heightened in the collective consciousness, certainly public acceptance will grow, especially as those consumer products obviously powered by hydrogen (BEVs) become increasingly available. Much progress on hydrogen energy development has been made, but time and significant additional investment (public and private) will ultimately solve the technological and infrastructure barriers, especially as the end use becomes clear. The benefits on the other side of these challenges including energy security and a cleaner and more protected environment are well worth it.
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