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Carbon 'negativeness' of biohydrogen not rewarded by US policy framework: researchers

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No premium for carbon-negative production

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The biohydrogen production process produces a clean fuel with negative carbon emissions, but that carbon negative co-benefit is not incentivized to the same extent green hydrogen is, researchers said March 15, making it harder for biohydrogen projects to reach commercialization.

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Hydrogen tax credits within the US Inflation Reduction Act subsidizes clean hydrogen with carbon intensity levels between zero and 0.45 kg of CO2e per kilogram of hydrogen produced – a tax credit regime that rewards green hydrogen produced with renewable energy and blue hydrogen produced with natural gas and carbon capture.

But biohydrogen – an emerging hydrogen production pathway with a net-negative emissions impact – receives no special attention in the legislation despite its stronger climate benefits, said Anne-Sophie Corbeau, a researcher at the Columbia Center on Global Energy Policy in New York.

"I'm so thankful to the IRA for basing [subsidies] on carbon intensity, but the negativeness of the emissions is absent," Corbeau said during an online presentation of new research on biohydrogen. "You are not valued more if you are going into negative emissions," she said. "I think this is something that is missing in all the policy frameworks. There should be even more reward for something that is actually reducing your emissions."

From biomass to biogas to clean fuel

The biohydrogen production process begins with biomass feedstock, such as organic agricultural waste, municipal landfill waste, woodchips and, among other possibilities, debris cleared from forests during wildfire mitigation operations. These materials are used in a gasification process that converts them to biogas, then that biogas can be split into hydrogen and carbon in an autothermal reformation process wherein carbon will be removed using carbon capture and sequestration technology.

Because this process intercepts organic materials before they are allowed to naturally decompose – a process that releases greenhouse gasses into the atmosphere – the end-to-end process has a net effect of reducing CO2 emissions while producing hydrogen as a by-product.

"For biohydrogen, the key is how negative emissions are valued, because that's the thing that's going to drive adoption the most," said Doris Fujii, head of hydrogen and CCS analysis at BP. "The value is more in the negative emissions than it is in the hydrogen."

Green hydrogen produced with zero emissions will receive the maximum $3/kg tax credit under the IRA. But green hydrogen producers can also combine green hydrogen tax credits with the new clean electricity tax credits, wherein projects that produce green hydrogen with renewable power can receive $3/kg of hydrogen plus 1.5 cents/kWh. Combining those subsidies could stack up to around $4.50/kg, analysts have said.

Blue hydrogen, on the other hand, would receive tax credits valued between 60 cents/kg and $1/kg, depending on the production process' carbon intensity level. However, the IRA disallows hydrogen producers from stacking hydrogen tax credits with carbon capture tax credits, which awards $85/mt of CO2 captured and permanently stored. This means that even biohydrogen producers would have to choose between the hydrogen tax credits or the CCS tax credits.

Under this framework, zero emissions green hydrogen could be more competitive than negative emissions biohydrogen.

"There's no incentive for now to achieve those negative emissions at the high [capex] cost," said Emanuele Bianco, program officer at the International Renewable Energy Agency. "That's a missed opportunity."

Greener-than-green hydrogen in California

Biohydrogen is slightly more favored by California's Low Carbon Fuel Standard, which subsidizes clean hydrogen used to power vehicles. And companies are already experimenting with these carbon negative production pathways.

In January, Chevron said it was partnering with Hyzon and Raven SR to build a biomass-to-hydrogen plant in Northern California that will divert waste from a landfill in the San Francisco Bay Area. One month later, SGH2 Energy announced a project in Lancaster, California, that would generate about 4.5 million kg/year of hydrogen using 42,000 mt/year of paper waste diverted from municipal landfills.

And most recently, Gunvor USA agreed to purchase biohydrogen from Yosemite Clean Energy's three California-based plants once they come online beginning in 2025.

"Overall, biohydrogen is not going to be as widely accessible as green or blue hydrogen," said Yushan Lou, research associate at Columbia's Center on Global Energy Policy. "It will be a niche product in small quantities, targeting a specific group of customers that have run out of options to decarbonize their production."

"It's important that we understand that we're not really competing the use of biohydrogen against other sources of hydrogen," she said. "It's unique and it will have its own market."