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In its newly finalized National Clean Hydrogen Strategy and Roadmap, the U.S. Department of Energy sets out ambitious goals to use clean hydrogen to decarbonize some of our most difficult-to-abate industries — such as ammonia production, refining, and e-fuels for aviation, long-range trucking and maritime shipping.

The roadmap sets targets for the U.S. to produce 10 million metric tons a year of clean hydrogen by 2030, 20 MMT annually by 2040, and 50 MMT annually by 2050. The Hydrogen Energy Earthshot was launched in 2021 with an additional “1-1-1” goal: a $1 cost for 1 kilogram of clean hydrogen within 1 decade.

We have 7 years to reach the goal of 10 MMT of clean hydrogen, and a lot still needs to happen to get us there. Here are 7 key challenges the U.S. needs to address during that time, to maximize the benefits of green hydrogen:

1. Spurring demand for clean hydrogen

Industries can reduce emissions by switching to clean hydrogen from “gray” hydrogen. Clean hydrogen is used for ammonia and other chemical feedstocks, petroleum desulfurization, and renewable fuels. However, unlike the state Renewable Portfolio Standards, which spurred utilities to buy more renewable energy in about 30 states, there are hardly any such demand drivers that compel the industries in the above chart to make the switch. What added requirements for decarbonization will make these companies accountable for switching?

2. Increasing the supply of renewable electricity

Developers announce more wind and solar projects each year. However, the interconnection queue has gotten longer and longer. Currently over 2 TW of wind, solar and storage projects are waiting to connect! A significant portion of announced projects never cross the finish line because they must wait too long to connect to the grid. To maximize the impact of green hydrogen, we must address this bottleneck by rapidly scaling up our transmission infrastructure to carry clean electricity to the sites where hydrogen will be used.

3. Creating a “made-in-America” manufacturing sector and supply chain

Making green hydrogen widely available across the country will require even larger-scale U.S. production of solar panels, wind turbines, and electrolyzers to split water molecules into hydrogen and oxygen. The Inflation Reduction Act has many provisions to help kick-start an American production ecosystem, from mining and refining critical minerals to advanced manufacturing.

Fifteen years ago, tax incentives rapidly expanded the pipeline of new project announcements and manufacturers responded by setting up production plants in areas with concentrated wind power development.

The Inflation Reduction Act is having a similar effect on green hydrogen. Electrolyzer manufacturing plants are announced across the U.S. President Biden recently visited the new Cummins factory in Fridley, Minnesota. Workers formerly manufacturing diesel engines will now produce 500 MW per year of electrolyzer capacity. Electric Hydrogen also recently announced they are scaling up electrolyzer production in Devens, Massachusetts to reach 1.2 GW of capacity by the beginning of next year.

4. Further technological development to keep cutting costs

To ensure that green hydrogen costs keep dropping over time, we will need more than direct financial incentives. We must support research and development to make electrolyzers even more efficient. Future technologies under development include solid oxide electrolysis cells and anion exchange membrane electrolysis. Both have the potential to increase the efficiency of electrolyzers by 40% or more. As electrolyzers become more efficient, hydrogen can be produced with less electricity, improving the economics and making hydrogen attractive to a wider range of industries.

5. Expanding pipelines and power lines

One way to make clean hydrogen accessible is to build a network of pipelines to transport it around the country. Small amounts of hydrogen can be blended into existing natural gas pipelines. At higher percentages, large overhauls would be required or new pipelines would need to be developed to carry larger volumes. Green hydrogen can be produced at the point of use, cutting down on the need for pipeline development. Upgrades to electrical grids can ensure that enough renewable electricity is accessible.

6. Developing common international standards

As countries around the world develop their own standards, coalescing around common definitions will enable clean hydrogen to be exported around the world. In some countries, electrolyzers must be plugged in directly to renewable electricity. However, given the high costs of transporting hydrogen to where it will be used, a better approach would allow green hydrogen producers to enter into virtual power purchase agreements to “transport” clean electricity over the electrical grids. New IRS requirements will be issued later this summer, laying out the criteria a project will need to follow to qualify for the production tax credit created by the Inflation Reduction Act.

7. Keeping risks low and bankability high

The final step is to ensure that green hydrogen developers, electrolyzer manufacturers and other key stakeholders have access to capital at the scale required. Governments can reduce uncertainty and risk by ensuring clear guidance on incentives, standards and well-communicated goals, making clean hydrogen projects more attractive to investors.

As large corporations focus their attention on reducing Scope 3 carbon emissions, airline travel faces an existential threat. Green hydrogen can be part of the solution.

Airlines are beginning to see their carbon footprints as an existential threat to their industry, as their customers become more conscious of the impact of flying on our climate. Increasingly, large companies are accounting for their #Scope3 emissions, which include purchased goods and services — the supply chain — and also business travel, employee commuting, and other transportation and distribution.

If airplane travel were a country, it would be the world’s sixth-largest emitter; researchers reported last year that burning jet fuel causes 4% of global warming, including impacts from carbon dioxide, nitrogen oxides, soot, water vapor, and sulfate aerosols.

Sustainable aviation fuels are seen as the primary solution, and both private and government goals are driving airlines to seek to rapidly scale up procurement. The United States has set a target of utilization of 3 billion gallons per year by 2030, and 100% of aviation demand by 2050. The European Union just implemented a target of 2% use by 2025 and 6% by 2030.

Investments are already coming from a variety of commercial stakeholders, including the airlines themselves as well as their corporate customers. Carbon transformation company Twelve, Alaska Airlines, and Microsoft have signed a Memorandum of Understanding (MOU) to collaborate on advancing the market for sustainable aviation fuels to include fuels derived from recaptured CO2 and renewable energy, and working toward the first commercial demonstration flight in the United States powered by Twelve’s E-Jet fuel.

The Sustainable Aviation Buyers Alliance, which represents companies including Bank of America, JPMorgan Chase, Meta, and Boston Consulting Group, recently announced a combined purchase of 850,000 gallons of sustainable fuel which will be used by JetBlue flights this year. 

Current airplanes are able to run on a 50/50 blend of sustainable aviation fuel and traditional jet fuel. Boeing has announced that by 2030, all of their new planes will be certified to run on 100% sustainable fuel.

Currently, these fuels are primarily made from soybeans, algae, plant oils, or animal fats. But availability is limited, large amounts of land are used, and the processing required to remove impurities and contaminants makes biofuels expensive to produce.

New production methods are needed to enable the significant deployment required for sustainable aviation fuel to have a significant impact on carbon emissions. One critical method that is being commercialized leverages technologies that are vital to production of the key building blocks for “e-fuels” — green hydrogen and carbon monoxide — which can be combined to produce synthesis gas (also known as “syngas”).

The synthesis gas can be utilized in a Fischer Tropsch reactor and converted into a wide variety of synthetic hydrocarbon fuels, including jet fuel. Alternatively, the Fischer Tropsch process can also be fed with synthesis gas produced from biomass or waste gasification and green hydrogen production. 

The applicability of these processes extends beyond aviation. Synthesis gas can be utilized in other reaction processes to produce fuels required to decarbonize marine and chemical industries. These synthetic electrofuels (commonly called “e-fuels”) have several advantages. The carbon can be sourced from industrial emitters or the atmosphere using new “direct air capture” technologies, still in their infancy but likely to reach commercial scale and adoption in the near future.

By pairing this captured carbon with green hydrogen, made from water with electrolyzers powered by renewable electricity, airlines would be able to fly with no net emissions: the carbon released when the aircraft burns the fuel will be offset by the carbon captured from an industrial process or extracted from the atmosphere during the fuel’s production.

Additional promising technologies are being developed and deployed to support rapid scale-up of sustainable aviation fuel, including ethanol to jet fuel and methanol to jet fuel pathways. Scaling these new industries will require large investments in infrastructure and commitment from stakeholders across the value chain to reduce production costs.

Incentives in the Inflation Reduction Act for green hydrogen and direct air capture are helping to bring down costs in the near term to enable the industry to scale. While the industry still faces several challenges, the pieces are coming together to allow it to “take off.”

Jacob Susman is a clean economy business builder, investor, and thought leader who has been developing and originating renewable energy projects for over 20 years. He is CEO and co-founder of Ambient Fuels, a green hydrogen developer guiding heavy industry through the great green upgrade. 

Our worldwide food supply depends on ammonia-based fertilizers to increase the nitrogen content in soil. Nitrogen is by far the most plentiful element in air (making up more than 80% of earth’s atmosphere), but needs to be converted to a form plants can use. For over 100 years, ammonia has served this vital purpose.

The Haber-Bosch process allows us to utilize nitrogen extracted from the air and bond it with hydrogen to produce ammonia. This process itself involves no carbon and its use does not produce greenhouse gases. The hydrogen used in the process, on the other hand, currently comes almost exclusively from steam methane reforming — producing pure hydrogen from natural gas. This hydrogen use in producing ammonia alone accounts for over 1% of global greenhouse gas emissions.

How can we decarbonize this crucial but hard-to-abate sector? We need green hydrogen, produced from renewable electricity and water. Like the Haber-Bosch process itself, green hydrogen has no carbon as either an input or output and produces no harmful byproducts.

The main problem with green hydrogen historically is that it has been significantly more expensive than the gray hydrogen made from natural gas. Now the cost of renewable electricity from solar and wind have achieved cost parity with natural gas electrical generation, and in many areas is actually cheaper. The electrolyzers used to separate water into hydrogen and oxygen have become more energy efficient, and the equipment itself is dropping in price. As more electrolyzers are installed, learning rates will keep lowering the capital expenditures needed to set up green hydrogen production.

Recently green hydrogen has also received a game-changing boost in the U.S. from the Inflation Reduction Act, which created Production Tax Credits for hydrogen produced with low-carbon emissions. Europe hasn’t yet matched these incentives, but soaring natural gas prices due to Russian sanctions have helped green hydrogen to achieve parity there as well. Natural gas prices in Europe remain 20% higher than pre-pandemic levels, and the wild price volatility has made it less attractive.

To ensure price stability, ammonia producers have a compelling opportunity to diversify their hydrogen supply away from gray hydrogen and toward green. Luckily, this can be done incrementally over time. In the Haber-Bosch process, hydrogen is hydrogen: it makes no difference how the hydrogen is produced. As green hydrogen becomes more widely available, ammonia manufacturers can start small, blending green hydrogen in with gray without needing any new equipment or process changes.

As you incrementally increase the percentage of renewable hydrogen, you see a corresponding drop in Scope 1 (inside the plant) and Scope 2 (power supply) carbon emissions: by replacing 10% of your gray hydrogen with green, you will see an immediate 10% decrease in your total emissions.

That’s why we believe that ammonia will be among the first industries to adopt green hydrogen on a large scale, and why we’re now working with industry leaders to make that happen. 

Jacob Susman is a clean economy business builder, investor, and thought leader who has been developing and originating renewable energy projects for over 20 years. He is CEO and co-founder of Ambient Fuels, a green hydrogen developer guiding heavy industry through the great green upgrade. 

Now that Democrats have reached agreement on the “Inflation Reduction Act” (IRA), it should fast-track through the Senate and could become law by the end of the month.  Based on initial study of the bill text, it looks like a huge win for renewable energy that will jumpstart a green hydrogen revolution.

Two studies project the bill would significantly boost U.S. efforts to cut greenhouse gas (GHG) emissions and meet our obligations under the Paris climate agreement.

Comparing projections of greenhouse emissions in 2030 with and without the new provisions in the IRA, Rhodium Group finds the bill would reduce GHG emissions by an extra 27.4%. Energy Innovation’s data suggest the boost could be as high as 34.4%. This won’t be enough on its own for the U.S. to reach our 2030 goal, but it will move us significantly closer.

The solar and wind industries have been flagging recently — down 53% and 78% respectively in the second quarter compared to last year — not because of lack of demand, but over policy uncertainty and supply chain issues. Developers and manufacturers in those sectors are eagerly awaiting the restart that this bill could provide.

What about green hydrogen, another way to put renewable energy to work to lower carbon emissions for industries that need a green molecule? It has already drawn a lot of attention this year for use cases as varied as trucking, shipping, and decarbonizing heavy industry.

The law would allow hydrogen producers to access a production tax credit for the first time.  The credit uses a tiered system so that producers of “green” hydrogen, which generates the lowest kilograms of CO2 per kilogram of hydrogen produced get a larger amount. The lower tiers are intended to incentivize existing “gray” hydrogen producers (which use fossil fuels and generate significant emissions) to add carbon capture technology to their facilities, producing what’s known in the industry as “blue” hydrogen.

Ambient Fuels and other green hydrogen producers replace fossil fuels in the production process with electricity generated from renewable sources such as solar and wind, ensuring that hydrogen can be produced in large quantities without fossil fuels as an input. For green hydrogen producers with CO2 emissions less than 450g for each kilogram of hydrogen, the tax credit will increase to $3/kg of hydrogen. This credit will ensure that green hydrogen will be more affordable than gray hydrogen in the near future.

Industry leaders have generally responded favorably to the new legislation. Jeff Bechdel, a spokesperson for Hydrogen Forward, said the bill “will encourage further growth of clean hydrogen, which will play a critical role in addressing hard-to-decarbonize sectors like transportation, heavy industry, agriculture, and power generation.”

Ryan Breen, the Head of Corporate Strategy at Jericho Energy Ventures, said “the Hydrogen Production Tax Credit (PTC), if passed, will become the most consequential piece of legislation for the adoption of clean hydrogen.”

Jericho is a venture capital firm that seeks opportunities in the “hydrogen value chain.” Breen said in the search for economic ways to decarbonise hard-to-abate sectors like power generation and heavy industry, “the maximum $3/kg Hydrogen PTC will immediately put hydrogen into cost parity with carbon-emitting fuels like coal and natural gas. 

“Much like the solar tax credits of the mid-2000’s,” he said, “we expect to see tremendous growth for the utilization of clean hydrogen across the U.S. economy over the next decade.”

Some critics say the bill does too much to transition gray to blue hydrogen, but not enough for green hydrogen — the truly environmental option. Under the bill, you’d still get incentives even if you produced 4 kg of CO2 per kilogram of hydrogen. That’s half as much as a gray hydrogen facility, but it’s still at least eight times more than green hydrogen, which is produced with hardly any carbon footprint, far under the lowest tier of 450 grams per kilo. 

As Abbe Ramanan, project director at the nonprofit Clean Energy States Alliance and Clean Energy Group, said, “although the bill provides a higher incentive for less-carbon intensive hydrogen, there is no other incentive for producers to pursue cleaner forms of hydrogen production.” That’s where transparency comes in, carbon accounting, and holding governments and major brands to their net-zero commitments.

The bill still has several obstacles to overcome before final passage. First, it must be approved by the non-partisan Senate Parliamentarian as a budget reconciliation bill, allowing it to pass the Senate with 51 votes instead of a 60 vote supermajority. 

Once the bill is certified, the Democrats need every single member of their caucus to return to Washington D.C. during August recess to vote in person. That could be a challenge, not just because of vacation plans but the nationwide spike in new COVID infections. 

It’s worth it, for the climate, for the economy, and to spare us from heavy industrial carbon pollution when we now have an alternative.