Federal Hydrogen Funding Program Lifts Off
A new federal program that will provide up to $8 billion to the clean hydrogen industry reached its first milestone last week, with at least a dozen groups applying to be selected as “regional clean hydrogen hubs.”
Each of the Hydrogen Hubs funded by US Department of Energy’s (DOE) program will bring together clean hydrogen producers, consumers, and infrastructure. Eventually, the Hydrogen Hubs are intended to form the foundation of a new, nationwide clean hydrogen network. This DOE funding program joins a number of state and federal initiatives that may help to jumpstart the US hydrogen industry in the coming years.
DOE’s Hydrogen Hub Program
The Bipartisan Infrastructure Law (BIL), passed in 2021, provides DOE up to $8 billion to fund “regional clean hydrogen hubs” across the country. These Hydrogen Hubs are intended to demonstrate the production, processing, delivery, storage, and end-use of clean hydrogen. Each Hydrogen Hub will consist of producers, consumers, and infrastructure to connect the two. The BIL requires DOE to support at least four Hydrogen Hubs, but DOE has announced that it intends to fund six to 10.
By law, DOE must approve a diverse set of Hydrogen Hub applications, to the maximum extent practicable. DOE is directed to approve at least one Hydrogen Hub with each of the following characteristics:
Source of the energy/feedstocks used to produce the hydrogen:
End-use of the hydrogen:
Electric power generation
Residential and commercial heating
The BIL also instructs DOE to approve Hydrogen Hubs in different regions of the country, but at least two of the hubs should be located in regions of the United States “with the greatest natural gas resources.”
Last week’s “Concept Paper” submission deadline was the first step in DOE’s Hydrogen Hub application process. Next, the agency will provide notices encouraging/discouraging specific applicants to continue participating in the process. Full applications are due by April 7, 2022, and DOE anticipates making its final selections in the fall of 2023.
Hydrogen Hubs that Have Announced DOE Applications
DOE will not publish a list of the entities that have begun the application process. However, our analysis of recent press releases and public statements shows that Concept Papers were submitted by at least 12 groups across the country – including at least three in the Midwest. The Midwest Alliance for Clean Hydrogen includes a broad coalition of utilities, hydrogen producers, potential hydrogen consumers, national labs, and universities. This group announced support from several elected leaders in the region. Another group – including Cummins, BP, and Purdue University – announced that it had submitted a Concept Paper for a Northwest Indiana hub. And the Great Lakes Hydrogen Partnership – which includes manufacturers like Cleveland-Cliffs, GE Aerospace, and Linde along with nuclear power producer Energy Harbor –announced the submission of a Concept Paper for a hub serving Ohio and Michigan.
Groups from other regions of the country also announced the submission of Concept Papers to DOE, including:
A coalition of public and private entities in Texas’s Permian oil and gas basin that would make use of existing natural gas resources in the area.
A group led by the states of Washington and Oregon that announced its submission of a 20-page Concept Paper.
The Southeast Hydrogen Hub, which consists of many large electric and gas utilities in the region.
Interaction with Other State and Federal Programs
Participants in DOE’s Hydrogen Hub funding will likely also seek to take advantage of – or be motivated by – a number of other new incentives and legal requirements. At the federal level, as we’ve previously written, the Inflation Reduction Act included many new and modified tax credits, including new credits for the production of clean hydrogen.
Hydrogen projects will also likely interact with new state requirements and incentives. For example, Illinois Governor J.B. Pritzker has described the Hydrogen Hub program as “building” on the major energy bill passed in Illinois in 2021, PA 102-0662, commonly known as the Climate and Equitable Jobs Act. That bill included a provision allowing electric generating units that might otherwise be required to cease operating under new greenhouse gas emissions limits to instead convert to “green hydrogen” or other technologies that achieve zero carbon emissions. As another example, Pennsylvania passed a law just this month that would provide a tax credit to facilities that purchase “clean hydrogen” from a DOE-designated regional clean hydrogen hub.