July 2024 saw the first “hydrogen hub” (H2Hub) officially launched in the United States [
1]. Centered in the state of California, the hub is one of a group of seven such H
2-focused infrastructure projects across the country (
Table 1) selected to share 7 billion USD in funding allocated by the Biden-Harris Administration in October 2023 [
2]. The aim for the investment is to accelerate the country’s production and use of H
2 as a fuel and feedstock chemical; H
2 combustion releases only water, and many believe that the gas could help to reduce climate-changing CO
2 emissions by replacing fossil fuels in transportation, the chemicals industry, and other economic sectors.
The new hub, called the Alliance for Renewable Clean Hydrogen Energy Systems (ARCHES), announced that its 1.2 billion USD share of the government’s funding had leveraged an additional 11.4 billion USD in public and private financing to start building H
2 infrastructure [
1]. ARCHES plans to build at least ten H
2 production sites and more than 60 fuelling stations for trucks and buses (
Fig. 1) fitted with fuel cells, the devices that use H
2 to power the vehicles with electricity [
3]. The Scripps Institution of Oceanography at the University of California, San Diego, will also get a new research vessel propelled by fuel cells, as a demonstration that H
2 could be a viable fuel for shipping [
4].
There are many different ways of producing H
2, which are commonly distinguished by assigning them a color code (
Fig. 2) [
5]. Most of the world’s H
2 is currently made from fossil fuels in energy-intensive industrial processes such as coal gasification and steam methane reforming [
6], which produce “brown” and “grey” H
2, respectively. These methods release huge amounts of CO
2 into the atmosphere, together accounting for an estimated 3% of global emissions [
7].
In contrast, some of the H2Hubs will make “green” H
2 by electrolyzing water using renewable electricity. Others will produce H
2 from natural gas while capturing and storing CO
2 released during the process, generating “blue” H
2. The seven H2Hubs are expected to collectively produce more than 3 × 10
6 t of these and other forms of clean H
2 per year, a small but important step towards meeting the US Department of Energy’s goal of producing 5 × 10
7 t of clean H
2 by 2050 [
8].
But the H2Hubs face some big challenges. First, they must stimulate more demand for the gas. “There is absolutely no question that there is a lot of interest from the supply point of view,” said Anne-Sophie Corbeau, an energy policy researcher at the Columbia University Center on Global Energy Policy in New York City, NY, USA. “The struggle is: Who wants to buy the hydrogen?”
Cost is another major barrier. Grey H2 is cheaper than cleaner alternatives, costing about 1-3 USD·kg−1, said Adithya Bhashyam, a senior analyst who tracks the hydrogen industry at market research provider BloombergNEF in London, UK. In contrast, blue H2 costs 2-5 USD·kg−1, while green H2 is 5-15 USD·kg−1, depending on electricity costs. “Green hydrogen is very expensive, which is why it is progressing very slowly,” said Corbeau. The high price of green H2 is partly due to the expensive equipment needed to split water, along with the electricity needed to run them, said Bhashyam. “The electrolyzer systems cost a lot more than many would have expected a couple of years ago.”
That cost barrier is just one reason why the market for H
2-fuelled cars is still tiny compared with battery electric vehicles [
9]. In recent years, some automakers and heavy transport manufacturers have shown increasing interest in developing H
2-powered trucks, buses, and trains [
3], [
10], mainly because, compared to cars, their refuelling needs are more easily anticipated and met. But the greatest benefits of cleaner H
2 may actually come not from the transportation sector but from reducing the carbon footprint of heavy industries.
For example, iron- and steelmakers use vast amounts of coke to smelt iron ore, and the industry is responsible for an estimated 7%-9% of all global CO
2 emissions from fossil fuels. Some steelmakers have begun to use H
2-based smelting processes to make “green” steel instead [
11]. Clean hydrogen could also dramatically reduce the emissions released by producing ammonia, the main feedstock for fertilizer [
12]. It could even be used to convert CO
2 captured from industrial processes into fuels and commodity chemicals like methanol [
13].
Yet despite global efforts to stimulate a cleaner hydrogen economy [
5], progress has been slow. Potential clean H
2 producers are unwilling to invest in large-scale manufacturing plants until there are sufficient customers for the gas. But customers are wary of committing to H
2 until cheap and reliable supplies are well established [
14].
The H2Hubs aim to resolve that market conundrum by bringing clean H2 suppliers and consumers together. One of the obvious benefits is that the gas will not necessarily have to be transported over large distances. “Co-locating your hydrogen production with an industrial cluster potentially opens up the opportunity to minimize transport, and transport costs, but also to have multiple potential buyers in one location. There is a huge benefit to that,” said Bhashyam.
Having multiple producers and consumers at the same site reduces business risks on both sides, said Nabil Bennouna, a principal with the Climate-Aligned Industries Program at the Basalt, CO, USA-based Rocky Mountain Institute (RMI), a think tank focused on energy sustainability that has worked as a pro bono advisor to several of the planned US H2Hubs. For example, if there is an interruption in supply from one producer, customers can be confident of getting their H
2 from another. Companies can also share expertise, infrastructure, and even workforce training, said Bennouna. All this could make it easier to raise investments in new H
2-related business ventures. And, as the hub grows, it should drive down costs because producers will benefit from economies of scale [
15]. “Ultimately, each hub is almost like a microcosm of a hydrogen economy as a whole,” Bennouna said.
The Pacific Northwest H2Hub will be the only one to focus exclusively on producing green H
2, taking advantage of the region’s plentiful hydropower renewable energy. Two more hubs plan to produce “pink” H
2, using electricity from nuclear power stations to run their electrolyzers. Overall, though, “most of the hubs are focused on producing blue hydrogen, not green”, said Bhashyam. Supplying the natural gas needed for that process means more fossil fuel extraction, which has raised concerns among some local communities and environmental organizations like the Oakland, CA-based Sierra Club [
16].
The CO
2 capture step inherent to blue H
2 means that it should produce fewer emissions than grey H
2, although the true scale of the environmental benefit is contested. Various estimates suggest that anywhere from 5% to 75% of the greenhouse gas emissions could be captured, relative to grey hydrogen [
17]. Part of that variation lies in uncertainties about the leakage of methane, a much more potent greenhouse gas than CO
2, during natural gas extraction and handling [
18]. “Blue hydrogen can play a role, as long as there are strict standards around how it is produced,” said Bhashyam. BloombergNEF expects that blue H
2 will make up almost 80% of US H
2 production by 2030, helping to make the United States the world’s largest clean H
2 producer [
19].
Despite blue H
2’s obvious cost advantage, scaling up electrolyzer manufacturing could soon reduce equipment costs and cut the price of green H
2 [
20]. The US Department of Energy is targeting a direct cost of 1 USD·kg
−1 of green H
2 by 2031 [
21].
But green H2 faces another disadvantage compared with blue—it must compete with other uses of renewable electricity. “The best use of renewable electricity is to decarbonize your power system,” said Corbeau. To increase green H2 production, countries will need to even further accelerate the roll out of wind and solar power, she said.
Some green H2 advocates argue that electrolyzers could operate only at times of plentiful renewable energy, taking advantage of dips in demand or an excess of supply on particularly sunny or windy days. But Corbeau said that strategy leaves electrolyzers standing idle for part of the time, making the systems less profitable—and their H2 more expensive.
The US is not alone in making big public investments to spur an H
2 economy [
5], [
22]. Some 58 countries have produced national H
2 strategies and roadmaps, and H
2 hubs like the US ones are also being developed in Australia, India, the United Kingdom, and other countries [
23]. Meanwhile, the European Union is building a pipeline network called the European Hydrogen Backbone, which will distribute H
2 across the bloc [
24]. Hydrogen experts contend that a similar network will be required in the United States, to distribute the gas beyond the H2Hubs and around the country [
25].
Infrastructure aside, it will be economic factors that ultimately determine whether the H2Hubs are successful. To stimulate supply, the United States is deploying a tax credit known as 45V that offers a subsidy to clean H
2 producers—those using production processes with lower CO
2 emissions will be awarded higher-value credits. Blue hydrogen producers can instead choose to claim the 45Q tax credit, which is awarded for CO
2 capture and sequestration [
26]. The precise details of these tax credits are still being worked out [
27], and Bennouna said that the final format will have major implications for clean H
2 producers. “Folks are eagerly awaiting the rule making so they even know what facilities to design.”
Meanwhile, the United States has allocated an additional 1 billion USD to a Hydrogen Demand Initiative to develop economic levers intended to promote H
2 adoption [
28]. “Figuring out the demand side is probably the biggest question in the United States,” Bhashyam said. The seven US H2Hubs will not be enough to solve that particular problem, he added. “But it is a start, and definitely an encouraging development.”
PDF
(749KB)
