The green hydrogen industry is gaining traction in the U.S., as governments look to decarbonize hard-to-abate industries using alternative clean fuels to power operations. Industries such as shipping, aviation, and heavy manufacturing are some of the worst offenders when it comes to carbon emissions, as it is extremely difficult to reduce reliance on fossil fuels and continue running day-to-day activities. However, alternative fuels, such as green hydrogen, could provide the solution, as greater investment in the sector is spurring increased production of the fuel and driving down costs.
Green hydrogen is produced through the electrolysis of water using renewable energy sources. It offers great promise for the decarbonization of hard-to-abate industries as it can be used as a fuel for a wide range of applications, unlike several other renewable energy sources that are limited to generating clean electricity. At present, the demand for green hydrogen stands at around 0.7% of the total global demand for hydrogen, showing there is space for the sector to grow significantly in line with climate aims. The U.S. government is investing heavily in the development of the green hydrogen industry and a shift away from gray and blue hydrogen, which are produced using natural gas.
The U.S. Roadmap
In June 2023, the Biden administration approved the National Clean Hydrogen Strategy and Roadmap, aimed at creating green hydrogen production hubs and establishing the U.S. as a world leader in clean hydrogen. The roadmap assesses the potential for hydrogen production, transport, storage, and use across the country and provides a strategic framework for the development of widescale production.
It highlights the importance of collaboration between federal government agencies, industry, academia, national laboratories, state, local, and Tribal communities, environmental and justice communities, labor unions, and a multitude of stakeholder groups to accelerate sectoral development. The Hydrogen Interagency Task Force is tasked with advancing the implementation of the roadmap and encouraging government-wide participation in the industry.
The development of the green hydrogen industry aligns with the Biden administration’s aims of making the U.S. more competitive both economically and in clean energy. Sectoral growth will support job creation, as well as help decarbonize hard-to-abate industries.
Federal Funding for Green Hydrogen
In March this year, the Department of Energy (DoE) announced an investment of $750 million in 52 projects across 24 states aimed at decreasing the cost of producing clean hydrogen. Financing comes from the Bipartisan Infrastructure Law (BIL). One of the biggest barriers to the widescale deployment of green hydrogen is the cost involved with production. While gray and blue hydrogen costs around $12/ Megawatt Hour (MWh) to produce in the U.S. and $32/MWh in Europe, green hydrogen costs around $44/MWh to produce in the U.S. and $100/MWh in Europe.
Investing in improving production techniques is expected to help advance electrolysis and improve manufacturing and recycling capabilities for clean hydrogen systems and components. It will also support the creation of over 1,500 new jobs. The projects are expected to boost the U.S. manufacturing capacity to produce 14 GW of fuel cells per year, which would be enough to power 15% of the medium- and heavy-duty trucks sold each year, and 10 GW of electrolyzers per year, enough to produce an additional 1.3 million tons of clean hydrogen per year.
In August, the DoE announced it had plans to invest almost $62 million in 20 projects across 15 states to accelerate the research, development, demonstration, and deployment of next-generation clean hydrogen technologies. The projects are expected to advance hydrogen fueling infrastructure, develop and demonstrate hydrogen-powered container-handling equipment for use at ports, and improve processes essential to the efficient, timely, and equitable deployment of hydrogen technologies, according to the DoE. The projects aim to also enhance community engagement with the industry to increase awareness about the potential for green hydrogen in the U.S.
Secretary of Energy Jennifer M. Granholm stated, “Under President Biden and Vice President Harris, America is leading the world in the development and deployment of clean hydrogen—a versatile fuel critical to reducing emissions from the most energy-intensive and polluting sectors of our economy.” Granholm added, “Today’s announcement builds on the historic clean hydrogen investments made possible by the Investing in America agenda and will help deliver new economic opportunities across the nation while also reinforcing America’s global leadership in clean energy technologies for generations to come.”
This initiative supports other DoE projects, including the Regional Clean Hydrogen Hubs Program (H2Hubs). In 2023, DoE earmarked $7 billion in funding from the BIL for the establishment of regional clean hydrogen hubs across the U.S. In October last year, the Office of Clean Energy Demonstrations completed a Merit Review process of applicants and has since provided funding for H2Hubs to begin work on Phase One of projects to solidify planning, development, and design activities around site selection, technology deployment, community benefits and engagement, labor partnerships, and workforce training.
The Biden administration has introduced a wide range of funding opportunities in the green hydrogen sector over the last few years. This is expected to support the rapid development of the sector across the country, as well as attract high levels of private investment in clean hydrogen. Based on the current project pipeline, the U.S. could become a major green hydrogen hub in the Americas, making it competitive at the international level and supporting a green transition.
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