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Hydrogen hubs reveal brings more questions than answers for environmental groups


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Hydrogen hubs reveal brings more questions than answers for environmental groups

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US President Joe Biden announces the winners of up to $7 billion in hydrogen infrastructure grants at the Tioga Marine Terminal in Philadelphia on Oct. 13.
Source: Mark Makela/Stringer/Getty Images News via Getty Images North America

The Biden administration's announcement of up to $7 billion in hydrogen hub grants was a long time coming for the dozens of contenders hoping to get their foot in the door of the nascent industry. But the jury is still out on the climate impact of the federal funding, according to environmental groups eager for more information on how that money will be spent.

Speaking to union workers at Philadelphia's Tioga Marine Terminal, US President Joe Biden said Oct. 13 that the administration will spend about $1 billion each on seven hydrogen hub projects across the US, including one in Pennsylvania, Delaware and New Jersey.

Not everyone welcomed the federal funds coming to their region. "President Biden's commitment to advancing hydrogen hubs nationwide is misplaced, ill-advised and will have devastating consequences for our environment" and is "a misuse of government dollars," Maya van Rossum, head of the Delaware Riverkeeper Network, said in a statement that day.

Sean O'Leary, senior researcher with the Ohio River Valley Institute, had a similar reaction to the US Energy Department's commitment of up to $925 million in funding for another hydrogen hub in West Virginia, Ohio and Pennsylvania.

At best, the Appalachian project will "yield a small affair with disappointingly little economic and climate benefit," O'Leary said. At worst, the project will force hydrogen and carbon capture technology into uneconomic applications, "resulting in higher prices, utility bills, and taxes," O'Leary continued in a statement.

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US lawmakers from both parties are pushing for the adoption of "clean" hydrogen, a zero-emission gas, in place of fossil fuels in diverse industries. The bipartisan infrastructure law of 2021 authorized up to $8 billion for regional hydrogen hubs in hopes of spurring a national market for the alternative energy source.

"These hubs are about people coming together across state lines, across industries, across political parties, to build a stronger, more sustainable economy and to rebuild our communities," Biden said in Philadelphia on Oct. 13.

Producing hydrogen requires a lot of energy, meaning that a ramp-up in hydrogen production even when that energy comes from renewable electricity could still have a net negative impact on the climate, environmentalists said.

"We welcome the information that was provided today, but we still need a lot more information," Erik Kamrath, a hydrogen advocate with the Natural Resources Defense Council (NRDC), said in an Oct. 13 interview.

The NRDC has urged the Biden administration to be selective in its spending, prioritizing hydrogen funds for end-uses that are hard to electrify. The environmental group has also called for strict guardrails for federally subsidized clean hydrogen plants to prevent the industry from driving an increase in power sector emissions.

Kamrath and Rachel Fakhry, a policy director with the NRDC, applauded the allocation of funding to end-uses like fertilizer production, steelmaking and sustainable aviation fuels. But the success of the program will depend on the volumes of hydrogen produced and the share that goes toward to such hard-to-abate sectors, both added.

"There's just not much clarity right now," Kamrath said. "And that's been kind of par for the course up until this point."

The DOE has not released copies of the winning hydrogen hub applications. Administration officials told reporters the DOE would release more detailed information after the announcement.

Tax credit guidance is key

Other aspects of the funding announcement are "giving us pause," Fakhry said. For one, many of the projects rely on "blue" or gas-derived hydrogen production, which uses carbon capture technology to abate emissions. While the bipartisan infrastructure law required that the DOE support at least one hub involving the use of fossil fuels, some industry watchers warn that blue hydrogen projects could become stranded assets due to other policies that favor renewable-powered hydrogen.

Fakhry also questioned some of the hubs' proposals to use hydrogen in the power sector and in public transportation, where there are cheaper ways to decarbonize.

Before passing judgment on the climate impact of the DOE's hydrogen hub investments, environmental groups are waiting for clarity on how the Biden administration defines "clean" hydrogen. The US Treasury Department was due to release the emissions standards in August that would determine which hydrogen projects are eligible for clean energy tax credits. Senior administration officials have since indicated the 45V tax credit guidance will be released by year-end.

"If those ensure we have the guardrails around hydrogen production that we need, then I think we'll all feel much better about the prospect of the hubs actually delivering a climate benefit," Fakhry said.

From a taxpayer's standpoint, the sequencing of the DOE's hydrogen hubs decision ahead of the Treasury Department announcement was not ideal. "We were hoping the hubs would be better informed by where the economics actually worked best," Fakhry said. "That is the best use of taxpayer dollars."

That said, none of the regional projects "jump out" as being unsuited for clean hydrogen production, Fakhry added. Regions such as Texas and the Great Plains, both of which won funding, are well positioned to become first-movers due to their complement of wind and solar resources.

"We start with the areas that are most poised and have better resources, and then the market can expand," Fakhry said.

Other regional contenders that were passed up for federal funding, including one multistate coalition in New England, may be better off as second movers. "The Northeast can and will be able to participate in a hydrogen market in this country," Fakhry said. "Maybe not between now and 2030."

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