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Felicity Bradstock

Felicity Bradstock

Felicity Bradstock is a freelance writer specialising in Energy and Finance. She has a Master’s in International Development from the University of Birmingham, UK.

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Is Green Hydrogen An Opportunity Or Distraction For The U.S.?

  • Green hydrogen production is gaining momentum in the U.S., driven by substantial funding and ambitious goals.
  • Some experts argue that green hydrogen projects should prioritize new renewable energy sources rather than relying on existing grids, while others see it as a distraction from direct electrification.
  • The U.S. is facing regulatory challenges and differing viewpoints on the role of green hydrogen in achieving clean energy and climate objectives.
Green Hydrogen

There has been great enthusiasm in the energy world around the increased production of hydrogen, which can be used in a range of ways as a cleaner alternative to fossil fuels. However, an increase in green hydrogen capacity would require a significant amount of clean electricity from renewable resources. Many energy experts in the U.S. are now asking whether the production of hydrogen is the best use of solar, wind and other clean energy sources or whether they could be better used directly. 

Green hydrogen is produced using renewable energy sources to power an electrolysis process, which separates the hydrogen and oxygen in water. The process emits no carbon dioxide, making it much cleaner than grey hydrogen, which is derived from fossil fuels. There has been increasing interest in green hydrogen as, in contrast to many other clean energy sources, it is suitable for a wide range of applications. The International Energy Agency calls hydrogen a versatile energy carrier, which can help to decarbonise a range of sectors, including long-haul transport, chemicals, and iron and steel, where it has proven difficult to reduce emissions. 

In the U.S., the 2022 Inflation Reduction Act (IRA), the country’s most comprehensive climate policy to date, provides huge amounts of funding to the hydrogen industry. Before the introduction of the policy, the U.S. was lagging behind in the green hydrogen industry, as Europe took the lead, with the Middle East and other parts of Asia following closely behind. The IRA authorised a tax credit for hydrogen producers through the 45V programme, with a value of up to $3 per kilogramme, depending on the carbon footprint of operations. This financial incentive was aimed at encouraging innovation in the sector to help lower the price of green hydrogen, which is much more expensive to produce than fossil fuel-derived hydrogen. 

This month, President Biden and Secretary of the U.S. Department of Energy Jennifer Granholm announced the seven regional hydrogen hubs – H2Hubs – chosen to be awarded $7 billion in federal funding. Financing comes from the 2021 Bipartisan Infrastructure Law. The H2Hubs are expected to produce 3 million metric tonnes of hydrogen a year, or around one-third of the country’s 2030 production target, aimed at reducing emissions in industries that are hard to decarbonise. These hubs are expected to reduce carbon emissions by around 25 million metric tonnes a year, equivalent to taking 5.5 million cars off the roads. They are also expected to boost the local economies of the regions and create thousands of jobs.

Granholm stated: “Unlocking the full potential of hydrogen – a versatile fuel that can be made from almost any energy resource in virtually every part of the country – is crucial to achieving President Biden’s goal of American industry powered by American clean energy, ensuring less volatility and more affordable energy options for American families and businesses… With this historic investment, the Biden-Harris Administration is laying the foundation for a new, American-led industry that will propel the global clean energy transition while creating high-quality jobs and delivering healthier communities in every pocket of the nation.”

However, not everyone is so supportive of the widescale development of U.S. hydrogen capacity. At present, green hydrogen production accounts for just one percent of total U.S. hydrogen production, with most projects continuing power production with fossil fuels. The 45V programme is aimed at accelerating low-carbon hydrogen production, whether it is green or grey – using carbon capture and storage systems to reduce carbon emissions. But now the Treasury must put rules and regulations in place to ensure that hydrogen is produced using clean methods. 

Jesse Jenkins, a professor of macro-scale energy systems at Princeton University, stated, “The IRA’s section 45V production tax credit is the most generous clean hydrogen subsidy in the world.” She added, “But without proper implementation, 45V could backfire, wasting a tremendous opportunity for the United States to become a global leader in new clean industries and causing a significant increase in domestic emissions that imperil U.S. climate goals.”

Some climate experts believe that green hydrogen can only be considered green if new renewable energy sources are developed to power production operations, rather than using the existing grid and questionable carbon accounting schemes. However, BP America disagrees with this view, stating “Strict additionality rules requiring electrolytic hydrogen to be powered by new renewable energy is not practical, especially in the early years, and will severely limit the development of hydrogen projects.” 

Other energy experts believe that green hydrogen production detracts from the direct use of renewable energy sources. Robert Howarth, a professor of ecology and environmental biology at Cornell University, explained, “Renewable electricity is a scarce resource. Direct electrification and batteries offer so much more, and much more quickly. It’s a huge distraction and waste of resources to even be talking about heating homes and passenger vehicles with hydrogen.”

While there is significant optimism about the expansion of U.S. clean hydrogen capacity, and there are high levels of funding backing the sector, the widescale development of truly green hydrogen projects is not so simple. There are several hurdles that the U.S. must overcome to build a low-carbon hydrogen industry, with many energy experts demanding better regulations to manage sectoral development and others questioning whether this is the best use of the country’s renewable energy sources.  

By Felicity Bradstock for Oilprice.com 

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