IEEE Spectrum
August 17, 2022
By
Glenn Zorpette
The Inflation Reduction Act and the
war in Ukraine pump billions into clean hydrogen R&D
![](images/images_08_26_2022/pic2.jpg)
A technician at Plug Power in
Concord, Mass., secures a connector before a test of a hydrogen
electrolyzer on 5 July 2022. Adam Glanzman/Bloomberg/Getty Images
Among the technological visions that seem
perpetually futuristic (think commercial nuclear fusion and maglev
trains), the
hydrogen economy has always been tantalizing. Hydrogen produced
from renewable energy or nuclear power, with minimal greenhouse-gas
emissions, could be piped or transported pretty much anywhere, using
mostly existing infrastructure. It could power trucks, cars, planes,
and ships and generate electricity, either in fuel cells or combustion
turbines. In short, it could do anything fossil fuels do now, but with
substantially reduced climate impact.
Now, after decades of false starts and
overly optimistic projections, several factors are giving an
unprecedented lift to clean hydrogen. In the United States, sweeping
legislation capped a series of moves by the country’s Department of
Energy (DOE) over the past year to drive down the cost of low-carbon
hydrogen and stimulate demand for the fuel. And in Europe, a looming
fossil-fuel crisis has sent officials
scrambling to find alternatives to the 155 billion cubic meters of
Russian natural gas that EU countries imported in 2021.
“You’re rapidly getting the cost of
hydrogen down to where it is very competitive—and in many cases
cheaper—than the fossil alternative. So that’s why the community is so
excited.”
—Keith Wipke, NREL
“I’ve been working in hydrogen for 20
years, and this is absolutely the most exciting time, the busiest
time,” says
Keith Wipke, manager of the Fuel Cell and Hydrogen Technologies
Program at the
National Renewable Energy Laboratory (NREL) in Golden, Colo.
“There’s just so much activity.”
The U.S. legislation, known as the
Inflation Reduction Act, was signed into law by President Joe Biden on
16 August, after being passed in Congress along party lines earlier in
the month. It prescribes new spending of US
$437 billion over 10 years, of which some
$370 billion is directed toward a sprawling range of
renewable-energy, electric-vehicle, and other greenhouse-gas reduction
measures. But it was the low-carbon-hydrogen provisions that raised
eyebrows, for a couple of reasons. One is that they are more generous
than many analysts were expecting. The other is that the hydrogen
provisions are technology-neutral, meaning that there is no
distinction between hydrogen produced by electrolysis with electricity
from, for example, a wind farm or a nuclear power plant.
The bill provides tax credits to
producers of low-carbon hydrogen at a rate that depends on how much
carbon is emitted during production, among other factors. At the
lowest emission rate—0.45 kilograms of carbon dioxide emitted per
kilogram of hydrogen produced—producers are eligible for a credit of
up to $3 per kilogram of hydrogen, making the cost cheaper, in
some instances, than that of ordinary “gray” hydrogen, which is
derived from natural gas through a process called steam reforming.
Production of gray hydrogen creates from
8 to 12 kilograms of CO2 per kilogram of hydrogen
produced. Costs of gray hydrogen vary but are roughly $2/kg in the
United States.
Nearly all of the hydrogen made in the
United States, some
10 million tonnes last year, is produced this way. China, the
world’s largest producer of hydrogen at upwards of 25 million tonnes a
year, derives 62 percent of its total from coal, which creates
18 to 20 kg of CO2 per kilogram of hydrogen. In both
the United States and China, production of “green” hydrogen, created
by electrolysis using a renewable energy source, makes up less than 1
percent of total output.
![](images/images_08_26_2022/pic3%20copy.jpg)
A massive substation at the coal-fired Intermountain Power Plant in
Utah links the facility to transmission lines that deliver power to
Southern California. A $2.65 billion project, just getting underway,
will install facilities there to generate electricity from cleanly
produced hydrogen.Rick
Bowmer/AP
The DOE has established goals of getting the
cost of low-carbon hydrogen, without incentives, down to $2/kg by
2026, and to
$1/kg by 2031. Says Wipke, referring to the top $3/kg credit in
the Inflation Reduction Act, “if today’s hydrogen is about $5 a
kilogram through electrolysis, clean electrolysis, and you’re able to
take $3 off of that, and go from $5 down to $2, well, essentially, you
have met, with the incentives, our 2026 goal of $2 a kilogram. Now,
technically, you’ve done it through incentives, but the impact is the
same. You’re rapidly getting the cost of hydrogen down to where it is
very competitive—and in many cases cheaper—than the fossil
alternative. So that’s why the community is so excited.”
As compelling as the production credit
may prove to be, the provisions are just the most recent of a series
of government moves aimed at bolstering clean hydrogen. A year ago,
for example, the
Infrastructure Investment and Jobs Act (IIJA) pledged $8 billion
to establish up to eight regional “hydrogen hubs” in the country.
These would be facilities where low-carbon hydrogen would be produced,
stored, used, and transported elsewhere.
“In the medium- and
long-term we see more momentum for hydrogen use. It will come faster
because conventional energy such as oil and gas will become scarcer
and more expensive.”
—Bernd Heid, McKinsey & Co.
“I think the combination, the one-two
punch of the IIJA hydrogen hubs and the IRA's production tax credit,
can help build the full value chain,” says
Alex Kizer, senior vice president of research and analysis at the
Energy Futures Initiative. “And I wouldn't underestimate the other
hydrogen-adjacent funding opportunities in the IRA, because hydrogen
is going to need manufacturing, it's going to need fueling, it's going
to need distribution…. There’s opportunity up and down the hydrogen
value chain. That, in addition to the PTC [production tax credit], is
what has me most excited.”
In mid-August there were already some
22 prospective hubs being touted around the country, though a
formal announcement of a “funding opportunity” from the DOE wasn’t
expected until September or October. Around that time, site
preparation is expected to begin on a
$2.65 billion project in Delta, Utah, where a consortium of
companies led by
Mitsubishi Power Americas and
Magnum Development will install turbines capable of generating 840
megawatts by burning a mix of hydrogen and natural gas. Backed by a
half billion dollars in loan guarantees from the DOE, the
Intermountain Power Project, as it’s known, will also have
solar-photovoltaic generators and a
220-megawatt electrolysis system to produce hydrogen on site,
along with facilities to store up to 300 gigawatt-hours of the gas in
underground salt domes.
In Europe, too,
a hydrogen-hub plan was hurriedly approved by the European
Commission in late July. It sets aside €5.4 billion to fund 41
projects to develop technologies ranging from basic R&D to industrial
deployment. A
small hub near Hamburg, Germany, is already under construction,
and
a larger hub is being built at the Port of Rotterdam in the
Netherlands. “Rotterdam is basically showing the world how to become a
hydrogen port,” says
Robert Hebner, an IEEE Fellow and director of the Center for
Electromechanics at the University of Texas at Austin, where he helps
coordinate R&D on hydrogen. “They have signed agreements with
companies to operate hydrogen terminals there,” he notes. “They’re
working out
agreements with Portugal, [under which] Portugal will make
hydrogen from wind power and transport it into the Port of Rotterdam.
They’ve announced that they’ll use hydrogen-powered trucks to
distribute this through Central Europe. They’re thinking holistically
about how to get hydrogen to the port and then how to get it
redistributed to where it’s needed.”
But any notion that clean-hydrogen
production could be ramped up quickly enough to help mitigate the
looming loss of Russian natural gas on the continent is quickly
dispelled by analysts. According to Bernd Heid, a senior partner in
the Cologne office of McKinsey & Co., “hydrogen is not helping Europe
in the current energy crisis.”
Speaking at the World Economic Forum in Davos, Switzerland, in
May, he added, “but in the medium- and long-term we see more momentum
for hydrogen use. It will come faster because conventional energy such
as oil and gas will become scarcer and more expensive.”
So are we finally witnessing the
beginnings of an actual hydrogen economy? “I think, yes, it’s going to
happen,” says Hebner. “The Hydrogen Council has over 100 multinational
corporations investing billions of dollars a year into making the
hydrogen economy real, and they’re making those investments where
governments will help them, but this is not government-led. This is
industry-led. It’s industries that see a way that they can make money.
When I saw that, I said, this one may be real.”
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