Congress may have just opened more doors for energy firms looking to develop their green hydrogen sectors by passing a bill that makes renewable energy more attractive. Tax credits for hydrogen production could see the U.S. develop this part of its energy industry, which is currently falling behind Europe and Asia, by encouraging greater investment in the future of US-produced green hydrogen.
Green hydrogen is made through electrolysis. Renewable sources such as wind or solar power are used in the process that splits water into two hydrogen atoms and one oxygen atom to deliver the clean fuel. Green hydrogen production currently accounts for around 1 percent of the world’s total hydrogen production, mostly because it is more expensive than other forms of renewable energy to produce.
This differs from grey or blue hydrogen which is derived from fossil fuels. Grey hydrogen currently accounts for around 95 percent of the world’s total hydrogen production. To produce this form of hydrogen, methane or natural gas is reformed using steam, leaving behind fewer carbon emissions than black or brown hydrogen – which come from coal – but still hindering government aims to achieve net-zero carbon emissions by 2050. In fact, around 1kg of grey hydrogen production can generate around 9.3kg of CO2.
Energy companies around the globe have been pumping more funding into green hydrogen research and development over the last year, thanks to its growing popularity. In the future, green hydrogen may be an alternative to natural gas, being used to power home cooking and heating equipment and is transported through traditional gas pipelines, rather than through entirely new infrastructure. In addition, interest in hydrogen fuel cells for vehicles (FCEV) is steadily increasing. FCEVs could eventually compete with traditional battery EVs thanks to their longer range and fast refueling time, which is more similar to internal combustion engine (ICE) vehicles.
The Inflation Reduction Act (IRA), which was recently passed in Congress, could make it that much easier and more attractive for US companies to develop their green hydrogen capabilities. The IRA marks a big step in the area of clean energy for the country, seeking to reduce US greenhouse gas emissions. The government believes the Act will see $369 billion invested in renewable energy and climate change programs, and reduce the potential cumulative greenhouse gas emissions by 6.3 billion tonnes by 2030.
The IRA extends investment tax credits (ITCs) and production tax credits (PTCs) for solar and wind power generation until 2024, making the development of renewable energy projects more attractive. Following 2024, producers of green energy projects will have to choose between being awarded either an ICT or PTC.
One green hydrogen producer, Plug Power, believes the IRA is the step forward the US needed to boost interest in the sector. The CEO of the firm, Andy Marsh, stated this month that tax credits from the Act will provide “a major inflection for the world to achieve net zero by 2050 and for hydrogen, especially green hydrogen, to provide 20% of the world’s energy.” Marsh explained, “with the passage of the act, we expect a boom for our electrolyzer and green hydrogen business.” He added that industries looking to switch from natural gas to green hydrogen will “have a path to dramatically reduce their carbon footprint cost competitively. Everyone wants green hydrogen. Now there is a path that makes it competitive.” The firm is now increasing its revenue goal, hoping to achieve $3 billion in 2025, compared to $925 million in 2022.
The US has been gradually developing its green hydrogen sector with the establishment of the Hydrogen and Fuel Cell Technologies Office (HFTO), under the Department of Energy (DoE). The HFTO carries out research and development in hydrogen production, delivery, infrastructure, storage, fuel cells, and multiple end uses across transportation, industrial, and stationary power applications.
Another recent scheme from the DoE, its Energy Earthshots Initiative, aims to speed up research and development to help cut the cost of green hydrogen production by 80 percent, to $1 per kilogram in one decade (111). The Hydrogen Shot is included in the American Jobs Plan and is being promoted across industries such as steel and manufacturing. The DoE believes that reducing the cost of green hydrogen production will massively encourage industries to shift away from natural gas to clean hydrogen for their operations.
Earlier this year, one significant step was taken in green hydrogen development with the announcement of the world’s largest green hydrogen project unveiled in Texas. Green Hydrogen International announced a 60GW Hydrogen City project in March, to be powered by wind and solar power. The firm hopes to produce 2.5 million tonnes of the fuel annually, upon completion of the facility in Duval County and will provide clean rocket fuel to Elon Musk’s SpaceX’s Starbase in Corpus Christi and Brownsville.
With the recent announcement of new incentives for green hydrogen projects, the existing research and development framework under the DoE, and the launch of a major new facility in Texas, America’s green hydrogen industry is likely to grow significantly over the next decade to compete with other major hydrogen-producing regions.
Felicity Bradstock is a freelance writer specializing in Energy and Industry. She has a Master’s in International Development from the University of Birmingham, UK, and is now based in Mexico City.
If you would like to contact our staff writers, you can reach them at [email protected]
