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Hydrogen energy gets ready for its close-up as US funds flow

Clean energy source is 'kind of in that hype cycle right now'

A technician prepares a Toyota Mirai hydrogen-fuel cell car for a customer in El Monte, Calif.
A technician prepares a Toyota Mirai hydrogen-fuel cell car for a customer in El Monte, Calif. (MediaNews Group via Getty Images)

The hydrogen rush is on.

After Congress provided $9.5 billion in funding through the 2021 public works legislation and tax credits through a 2022 climate law, politicians in Washington and U.S. states are jockeying to land federal funding for hydrogen technology demonstration projects.

Together, these pillars have triggered broad interest in hydrogen, a ubiquitous element long held out, much like nuclear fusion technology, as a potential energy Shangri-La, providing stable power with scant environmental downside.

“There’s a whole bunch of talk,” Laura Feinstein of the Sightline Institute, a nonprofit research organization headquartered in Seattle, said by phone. “It’s kind of in that hype cycle right now.”

But how the hydrogen build-out occurs in the U.S. could vary greatly, ranging from elevating a pragmatic tool to cut planet-heating gases from heavy industry, planes and ships to government-backed miscalculation that extends the lifespan of fossil energy and diverts attention from electrification.

“It’s either going to be a breakthrough or a massive distraction,” Seth Monteith, a strategist at ClimateWorks, said in an interview. 

To disperse $8 billion of funding from the infrastructure law, the Energy Department is sifting through bids it has received from coalitions of states, businesses, universities and research institutions to build a network of so-called “hydrogen hubs” — facilities to demonstrate the budding technology is useful. 

The department said it will fund six to 10 hubs, with announcements expected this year. DOE received 79 proposals and stopped accepting new submissions in early April. 

Separately, the IRS is writing rules to implement the tax credits — provisions that expire in 2032 — from the 2022 budget reconciliation law for the production of hydrogen made from renewable electricity. 

Unlike fuel sources like wind, solar, oil, natural gas or nuclear, hydrogen needs to be made, and the vast majority — about 98 percent — is made today with fossil fuels, meaning an uptick in hydrogen production and use won’t make climate sense if it’s still made with fossil energy.

To make hydrogen, it must be separated from other elements that surround it, and that process typically occurs through one of two common methods: from methane through a high-intensity heating process or through a technique called electrolysis that splits water molecules with electricity.

The process that uses methane to make hydrogen generates about 3 percent of annual emissions from American industry, according to Rhodium Group, an independent climate research and modeling firm.

Hydrogen could be used to cut emissions from emissions-heavy sectors and tasks, like maritime shipping, aviation, steelmaking and metallurgical plating. It also could be used in vehicle transportation, though the battery-electric vehicle market has far outpaced the fuel-cell car market, which counts Toyota as the lone automaker that has shown significant interest in hydrogen.

There are 62 hydrogen fueling stations for cars in the U.S. and Canada open to the public, according to a federal database. By comparison, it shows 61,487 electric-vehicle charging stations.

Fertilizer companies also use hydrogen now to make ammonia and petroleum refineries use it in their operations, Feinstein said. 

“That’s the bulk of the current hydrogen,” she said. “That’s the majority of it.” 

‘Prove it’

Meant to discern how hydrogen can be made with at least half the emissions of natural gas-fueled hydrogen, the hubs are a test for developers to show if hydrogen can cut carbon pollution, Monteith said.

“The onus is on them to prove it,” he said. “That will be the long-term testing ground.”

The Midwest Alliance for Clean Hydrogen, a network of companies, states, nonprofits and colleges, universities and laboratories, submitted a bid to erect one of the hubs.

Colleen Wright, vice president of corporate strategy at Constellation Energy Co., an electric utility and one of the corporate partners, said hydrogen has potential in the American Midwest, home to significant fleets of nuclear power and renewable electricity, potential boons to her group’s bid.

The project would be concentrated in Illinois, Indiana and Michigan, Wright said, adding that hydrogen could help slash emissions from airplanes by creating biofuels and sustainable aviation fuel.

The Midwest is also a transportation hotspot, Wright said, potentially ripe for zero-emission hydrogen.

“The challenge really is the chicken and the egg,” she said. “How do you develop all these pieces at the same time?”

Angling for hubs

In Congress, hydrogen technology is drawing focus, with members pressing DOE to pick their home states for hydrogen hubs.

A bipartisan group of senators from the South wrote Energy Secretary Jennifer Granholm Feb. 27, saying their states are “home to many of the nation’s leading transportation, logistics, energy, manufacturing, and research assets.”

Both West Virginia senators, Democrat Joe Manchin III and Republican Shelley Moore Capito, have repeatedly made the case that their state deserves a hub. As has a swath of politicians from the Northeast. Ditto for lawmakers like Sen. Chris Coons, D-Del., who in February said his home state and southern Pennsylvania and New Jersey would make an ideal spot for hydrogen investment. 

“From our unparalleled innovation ecosystem and skilled union workforce, to our strong manufacturing base and existing infrastructure along the I-95 corridor, there’s no better place for a hydrogen hub than Delaware and the broader mid-Atlantic region,” Coons said.

The Biden administration set a goal last year to produce 10 million metric tons of clean hydrogen, also known as “green hydrogen,” meaning material made from renewables, by 2030.

The country makes about 10 million metric tons of hydrogen now and all but a fraction of that is is from fossil fuels.


Hydrogen could be linked to as many as 700,000 new jobs in the U.S. by 2030, Sunita Satyalpal, director of the hydrogen and fuel cell technologies office at DOE, told senators in February.

But the U.S. lags Europe and some Asian nations in hydrogen adoption, Satyalpal said.

To carry hydrogen at higher volumes, more hydrogen-specific pipelines will be needed, Satyalpal said. “We have about 1,600 miles of hydrogen pipeline, but we’ll need significantly more.”

Leakage could undermine gains from the use of hydrogen, a recent Environmental Defense Fund study, published in Atmospheric Chemistry and Physics, found.

Hydrogen made with renewables could cut warming compared to fossil fuels by more than 95 percent, and making it with gas and carbon capture technology — a method of trapping emissions — could cut warming by 70 percent over the same time period, EDF found.

But if hydrogen leaks at a significant rate — 10 percent is seen as a plausible outcome — hydrogen made with gas and carbon capture would actually be worse for the atmosphere than doing nothing.

Plus, hydrogen itself is a warming gas, though it has a minimal punch versus other greenhouse gases.

“Hydrogen itself poses a greater warming risk than decision-makers realize. For ‘clean’ hydrogen to provide the hoped-for climate benefits, leakage has to be kept extremely low,” Ilissa Ocko, lead author and EDF climate scientist, said. “This is not a place to rush blindly.”

Natasha Vidangos, senior director for climate innovation and technology at EDF, said the conversation about hydrogen has shifted from hype to more nuanced scrutiny in the past year.

“I think we’re now evolving to a place that’s a bit more, not circumspect, but a little bit more rigorous in terms of how we’re approaching what needs to happen next,” Vidangos said in an interview.

But using renewable energy to split hydrogen from oxygen using electrolysis is an electricity-intensive process, meaning creating hydrogen could draw more power than it saves in the long run, said Morgan Rote, director of U.S. climate at EDF.

To balance out power-hungry sources, like electrolyzers, “often the cheapest way to do that is through natural gas turbines,” Rote said in an interview.

In writing its tax rule, the IRS should take into consideration methane emissions due to hydrogen production, Rote said.

To be eligible for the credits, companies have to use or sell hydrogen, Rote said. “That means you can’t just vent it.”

Julia McNamara, deputy policy director with the climate and energy program at the Union of Concerned Scientists, said the IRS should consider a broad scale of climate impacts from hydrogen production and use in writing its new tax rule.

A “loose standard” could lock in a new industry that increases emissions, aids fossil fuel plants and subverts climate goals, she said. 

“We run the risk of building out an industry,” she said, “that is just entirely misaligned from the overall climate transition of the economy.”

Hydrogen has myriad fans because it could be created with a range of fuels, she said. “Hydrogen can be anything to anybody.”

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