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Unfunded clean hydrogen hubs double down on planned projects

Despite market uncertainty, hydrogen hopefuls across the country pledge to push on.

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Published
December 19, 2023
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An electrolyzer

Photo credit: Alex Halada / AFP via Getty Images

An electrolyzer

Photo credit: Alex Halada / AFP via Getty Images

There was no shortage of fanfare when the United States took one of its biggest steps yet toward making clean hydrogen available to the masses. In October — at long last — the Department of Energy picked the seven “hubs” across the country that will receive a combined $7 billion to start building a national clean hydrogen supply chain. 

But as the winners celebrated, at least 13 passed-over applicants looked on with little to show for the months of work that had gone into their own proposals.

It had been a long road for everyone involved. Nearly two years had gone by since the passage of the $1.2 trillion infrastructure law committed $8 billion to the creation of a network of clean hydrogen manufacturers and users across the country. Andover a year and a half had passed since DOE formalized the program, spurring the formation of many of the coalitions that would seek a share of the funding.

In November of 2022 days before the law’s first birthday, 79 interested groups submitted summaries of their ideas. DOE encouraged 33 of them to develop full proposals — generally dozens of pages long and accompanied by hundreds of pages of supporting information — by early April of this year. Most of that process happened in private, but at least 20 groups have since confirmed that they applied.

The Western Inter-States Hydrogen Hub is one of the proposals that was encouraged by DOE but not ultimately awarded funding. It was launched by Colorado, New Mexico, Utah, and Wyoming in February 2022, eight days after the agency outlined how it would select the winning hubs. From then on, state officials met weekly to come up with a vision and work through the details. Companies and researchers interested in clean hydrogen became increasingly involved as the proposal advanced.

“I can't put a dollar figure or hour number behind all of the work,” Anja Richmond, who leads Wyoming’s work on commercializing clean hydrogen and served as program director for the bipartisan WISHH coalition, told Latitude Media. “But suffice to say that it was an important project for our states.”

The U.S. clean hydrogen market is still in its infancy. The fuel remains expensive to produce without significant carbon emissions, and while costs are expected to fall as technologies improve and demand rises, there’s no telling how widespread hydrogen use will ultimately become. Particularly for the hydrogen hubs that weren’t funded, questions are many and answers are few. But after investing years of effort into the proposals, they don’t want to let their projects disappear.

Lessons learned

Since DOE published its list of chosen hubs two months ago, the people behind WISHH and many other unfunded hubs have made clear that they plan to pursue clean hydrogen regardless.

“A lot of work went into putting these applications together,” said Yuqi Zhu of the nonprofit research institution Resources for the Future. “They kind of got the ball rolling with these applications, and committed quite a bit of time and resources.”

Ellen Stechel, the executive director of Arizona State University’s Center for an Arizona Carbon-Neutral Economy, told the Arizona Republic that the effort to establish a hydrogen industry in the Southwest is “very far from dead.” Ken McQueen, Oklahoma’s energy and environment secretary, told the Oklahoma Voice that the state’s partnership with Louisiana and Arkansas is “certainly not throwing in the towel at this point.”

The proposals identified specific projects that the hubs would have prioritized in the early years. Some of them predate the launch of the Regional Clean Hydrogen Hub program, such as the planned expansion of clean hydrogen and carbon black producer Monolith’s Nebraska plant, which received a conditional commitment for a roughly $1 billion loan from DOE in 2021. The company has said the additional federal funding could have accelerated its timeline, but it still plans to go forward with the expansion.

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And despite their disappointment, the groups that lost out say the process wasn’t futile, because it motivated them to lay significantly more of the groundwork for clean hydrogen than they would have otherwise: “The collaborative process of developing this application is priceless,” Dan Levy, a Monolith spokesperson, told the Nebraska Examiner

Richmond expects many of the partnerships Wyoming established with neighboring states, researchers, and the private sector to outlast WISHH. She also believes the immense coordination that went into the proposal will pay dividends later on. 

“It’s changed our mindset,” Richmond said. “We were achieving much more through that collaboration rather than just trying to be protectionist and staying within our boundaries.”

Still in the running

But even companies that have been vocal about soldiering on — especially those that can’t fall back on preexisting federal support for their projects — have been hesitant to go into detail about their plans for hydrogen moving forward when there are still so many unknowns.

Many clean hydrogen hopefuls across the country issued vague statements in the wake of the DOE announcement, reiterating their commitment to growing the industry without giving too much away. For instance, the utility major Duke Energy was involved in the unsuccessful Southeast Hydrogen Hub, and said it “will continue to seek opportunities to partner with DOE, peer utilities, and other stakeholders to advance clean hydrogen in ways that will benefit our customers and our communities,” the News & Observer reported.

It’s changed our mindset. We were achieving much more through that collaboration rather than just trying to be protectionist.
Anja Richmond, lead on Wyoming’s work on commercializing clean hydrogen, and former program director for the bipartisan WISHH coalition

If the seven proposals that were chosen succeed, DOE anticipates that the new infrastructure and economic activity will eventually expand beyond the hubs’ current borders. In the meantime, a handful of unchosen applicants are trying to make sure they’re included in nearby hubs from the start.

For instance, the winning Appalachian Regional Clean Hydrogen Hub, headquartered in West Virginia, is expected to bring at least some jobs to western Pennsylvania, where a nonprofit-led bid fell through. Louisiana could see a similar spillover from the HyVelocity Hydrogen Hub in Texas.

Even the places far from the seven hubs aren’t necessarily out of the running for federal support, though. Sometime this week, the Treasury Department is expected to release guidelines for the tax credit on clean hydrogen, a leaked draft of which included requirements that would only award the $3-per-kilogram credit to projects that use newly built clean energy resources to produce the fuel. If they mirror the leaked version, the rules could be a win for “green” projects — and limit the viability of “blue” hydrogen projects planning to use natural gas as a feedstock and capture the resulting carbon emissions.

With at least some of the outside projects buoyed by these new credits and free from the administrative constraints of the DOE hubs, experts say it’s possible they even could end up progressing more quickly than their “chosen” hydrogen hub counterparts.

“It’ll be interesting to see what those projects look like without the guardrails that DOE has,” Zhu said. “Whether they still have any sort of prioritization of environmental justice or community benefits without the DOE funding.”

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