The US Department of Energy (DOE) will “give preference” to hydrogen hub projects with the lowest lifecycle greenhouse gas (GHG) emissions as it lines up winners for its $8bn Regional Clean Hydrogen Hubs (H2Hubs) initiative — but it won’t enforce its strict emissions limit of 2kg of carbon dioxide equivalent (CO2e) per kilo of hydrogen across the whole lifecycle, according to draft proposals released by the DOE on Monday.
Expected to launch in September-October this year, H2Hubs is President Joe Biden’s flagship plan to provide funding for a minimum of four regional hub in the US, with at least one from green hydrogen from renewable energy, one from blue hydrogen made from fossil gas and carbon capture and storage (CCS) and one pink hydrogen from nuclear power.
In a Notice of Intent (NOI), in which officials outlined high-level parameters for potential applicants to the fund, the federal department warned that it is only looking to fund large projects that can produce 50-100 tonnes of H2 per day, equivalent to a minimum of 18,250 tonnes of hydrogen per year (based on 365 days of production per year).
By way of comparison, the world’s largest operational green hydrogen project to date, in Kuqa, China, is expected to produce 20,000 tonnes of H2 per year from 2023, and the UK’s HyNet hub is targeting 126,000 tonnes of blue hydrogen per year from 2026.
Supply and demand will ideally be closely matched, the DOE said, noting that it will prioritise hub applications that promise to deliver local production to areas with equivalent hydrogen demand.
But the document appears to indicate that the government has upped its ambition, saying it expects to fund six to ten hubs to the tune of $6-7bn, leaving some of the pot available for further funding rounds.
Each successful applicant could expect federal funding of up to $1.25bn per hub over eight to 12 years, with applicants finding at least 50% of the project cost from third-party and other non-federal sources. State and regional governments are also allowed to contribute to the 50%.
Not all the hubs are guaranteed to make it to completion, however, as the DOE plans to implement staged funding in which projects could lose support if they fail to meet regular project development targets.
Finally, the projects must be commercially viable without government support once the final funding tranche has ended, the DOE added.
The 2kgCO2e/kgH2 limit will apply only to emissions produced on-site, the DOE said, affirming the principle first outlined in the Bipartisan Infrastructure Law (BIL), passed by Congress in November.
But the department has since given some ground, adding in the NOI that lifecycle emissions would be considered for each application.
“While all projects will be required to meet the minimum clean hydrogen production standard, DOE intends to also evaluate full lifecycle emissions for each application and will give preference to applications that reduce GHG emissions across the full project lifecycle, inclusive of hydrogen production, compared to current industry standards,” the DOE said.
This vague commitment will disappoint green hydrogen and climate advocates who argue that blue hydrogen is little more than a greenwashing method for Big Oil to continue exploiting fossil fuels, and will result in huge amounts of methane emissions, which 86 times more powerful a greenhouse gas than CO2 over a 20-year period.
In fact, the US is the third-largest producer of methane emissions in the world, leaking 17 million tonnes of it in 2021 — of which natural gas and oil systems are responsible for nearly a third, according to the US Energy Information Administration (EIA). In fact, the Permian oil & gas basin, which straddles Texas and New Mexico, accounts for 1.4 million tonnes of methane emissions each year on its own.
The DoE’s “preference” for low emissions could still set back plans for regional hubs focused on blue H2, such as one planned by Arkansas, Oklahoma and Louisiana (which sources some of its fossil gas from the Permian); another in West Virginia based around coal and natural gas, headed by controversial Democrat senator Joe Manchin; and a planned green/blue hub involving New Mexico, Colorado, Utah and Wyoming.
The US carbon intensity limits are far more lax than those proposed by the EU, which has basically ruled out any financial support for blue H2, and by the private sector-led Green Hydrogen Standard, which caps emissions intensity at 1kgCO2e/1kgH2 across the whole lifecycle.