Concerns over $77 billion in DOE funds for mostly blue hydrogen
Groups have raised concerns about the allocation of $77 billion in funds by the U.S. Department of Energy (DOE) for hydrogen hubs that predominantly produce blue hydrogen. These concerns were expressed during a Clean Energy Group webinar, where issues related to emissions, safety, lack of community input, and wasted funds were discussed.
According to Abbe Ramanan, a project director with Clean Energy Group, the concerns surrounding federally funded hydrogen hubs signify a lot of bad news. During the webinar, Ramanan highlighted that most of the hydrogen hubs to be funded by the DOE would produce blue hydrogen, which involves fossil fuel combustion and is considered neither clean nor low-carbon. Anika Juhn, an analyst with research group IEEFA, supported this argument, stating that blue hydrogen will be very dirty in terms of emissions.
On the other hand, green hydrogen, produced through electrolysis of water powered by renewable energy, has been recognized as a viable option for long-term storage of renewable energy. Energy Innovation, a research group, projected that green hydrogen production could be profitable in large areas of the United States, particularly in the central region.
Although the DOE committed to considering community benefit plans and engagement during the negotiation process for the selected hydrogen hubs, concerns have been raised about the lack of transparency and community involvement. Clean Energy Group has received feedback from numerous community groups that feel they have not been adequately informed about how to engage with the hydrogen hubs, the specific hydrogen projects involved, or the potential impacts and benefits for their communities.
Furthermore, transporting hydrogen through pipelines presents risks, as highlighted by Amanda McKay, policy manager with the Pipeline Safety Trust. McKay explained that due to the interaction between small hydrogen molecules and certain types of pipes, such as steel and polyethylene, hydrogen pipelines are more prone to embrittlement and cracking compared to methane pipelines. McKay also shared a tragic incident involving a gasoline pipeline leak and fireball in Washington State that resulted in the loss of three lives.
While proposals to blend a small amount of hydrogen with methane to reduce CO2 emissions have been suggested, McKay argued that the reduction is minimal. Mixing 10% hydrogen with 90% methane only leads to a 3% reduction in combustion CO2 emissions. Additionally, hydrogen itself is an indirect greenhouse gas.
The seven hydrogen hubs selected for federal support by the DOE, set to receive $7 billion in awards, will also benefit from additional federal tax incentives estimated at $70 billion over ten years. These incentives entail hydrogen production incentives for all projects and carbon capture incentives for blue hydrogen production. However, Anika Juhn from IEEFA highlighted that even with the aid of these incentives, the rate of carbon capture is not expected to be significant. Juhn cited a project in Louisiana that will receive $425 million per year in carbon capture credits but is projected to capture only 64% of the associated lifetime CO2-equivalent emissions.
David Schlissel, an analyst at IEEFA, raised concerns about the demand for hydrogen produced by the funded projects, stating that there is currently insufficient demand for transportation or home heating purposes. He did mention potential markets for hydrogen, such as ammonia production and iron production. Schlissel’s views align with an op-ed written by himself and Suzanne Mattei, another IEEFA analyst, which emphasizes that full funding for these projects is not yet guaranteed.
In conclusion, concerns about allocating $77 billion in DOE funds to mostly blue hydrogen projects have been voiced by various groups. These concerns encompass emissions, safety, lack of community input, and the potential waste of funds. The federal support for hydrogen hubs involves hydrogen production incentives and carbon capture incentives. However, questions remain about the cleanliness and carbon capture effectiveness of blue hydrogen. Additionally, community engagement, pipeline safety, and demand for hydrogen in various sectors raise uncertainties about the viability and impact of these projects.
