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:
- 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?
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.