A source of renewable and storable energy, hydrogen is experiencing a breakthrough in the United States after years of sluggish growth as Biden administration climate policies spark major investments.
“America came from nowhere and now they’re in the lead,” Mark Hutchinson, CEO of Fortescue Future Industries, said of America’s ascent in renewable energy in general and hydrogen more specifically, at last week’s CERAWeek energy conference in Houston, Texas.
U.S. hydrogen production already amounts to around ten million tons per year, about 10 percent of world volumes. But that output mostly consists of so-called “grey” hydrogen, which is produced from natural gas without capturing carbon dioxide emissions.
Thanks especially to the 2021 infrastructure bill and the Inflation Reduction Act (IRA), signed into law last year, U.S. President Joe Biden has pledged to increase production capacity for low- and zero-carbon emission sources, which are known as “blue” and “green” hydrogen.
Blue hydrogen is produced from natural gas in which the carbon dioxide from the manufacturing process is captured. Green hydrogen is produced through renewable sources.
The new U.S. funding pots are massive, including $8 billion dedicated to building a network of “clean” hydrogen hubs around the country.
The IRA also provides tax credits of up to three dollars per kilogram of green hydrogen, a big share for a fuel that normally costs between $4 and $5 to produce.
“The IRA has fundamentally changed the economics of hydrogen from renewable power,” said Catherine Robinson, Executive Director, Gas, Power and Energy Futures at S&P Global Commodity Insights. It “allows it to compete with other forms of hydrogen.”
Blue and green types should first go to “hard to decarbonize sectors,” which are currently using most of the U.S. grey hydrogen production, said Sunita Satyapal, Director for the U.S. Department of Energy’s Hydrogen and Fuel Cell Technologies Office.
This includes petroleum refining, steel milling and the production of ammonia, which is used in fertilizers.