US President Joe Biden recently made headlines with the announcement of a $7 billion program aimed at boosting the domestic hydrogen market. The program will focus on establishing seven regional hydrogen hubs, which have the potential to produce around 3 million metric tons of hydrogen per year. This would result in the elimination of approximately 25 million metric tons of carbon emissions annually, equivalent to the pollution produced by 5.5 million gas-powered cars.
However, environmentalists have raised concerns about the initiative, accusing the Biden administration of ignoring the environmental impact of hydrogen production. Hydrogen is often derived from natural gas, which releases significant amounts of carbon dioxide. These environmental advocates argue that the government’s hydrogen initiative simply provides more support to companies that contribute to global warming. Sarah Lutz, a spokesperson for Friends of the Earth, stated, “We need a bold shift away from dirty energy, not another taxpayer subsidy that allows Big Oil to package fossil fuels as clean energy.”
Similarly, Susan Thomas of Just Transition Northwest Indiana criticized the hydrogen hub announcements, calling them “carbon schemes from corporate polluters.”
Despite the criticism, Biden’s program is expected to attract substantial private investment. The President claimed that the $7 billion initiative will attract over $40 billion in private capital to the hydrogen hubs, emphasizing that federal investments have a significant impact on private sector investments.
The seven hubs will span across 16 states and will financially support proposed hydrogen projects led by local utilities and private companies. Some of the companies involved in these projects, such as Amazon, ExxonMobil Corp., and Air Products and Chemicals, have raised eyebrows among critics. Meanwhile, startups in the hydrogen industry are gaining attention from investors. Private equity firms have already committed $6.9 billion to hydrogen startups this year, while venture capitalists have invested $2.5 billion.
Furthermore, Biden’s hydrogen program has already seen the emergence of its first green hydrogen startup unicorn, Electric Hydrogen. This company has recently completed a series C fundraising round, raising $380 million and attracting investments from BP, Microsoft Corp., and United Airlines. Hydrogen storage, a crucial process for hydrogen production, has also received significant capital, amounting to $3 billion over the past five years.
One of the key concerns for environmentalists is the type of hydrogen production used in the hubs. Green hydrogen, produced through electrolysis powered by renewable energy, is considered more environmentally friendly, as it does not produce any greenhouse gases during production. The White House press release stated that two-thirds of the total project investment will be associated with green production within the hubs.
However, the proposed hubs in steelmaking counties, particularly in the Appalachians and the Midwest, are expected to use blue hydrogen production methods. Critics argue that Biden’s program does not go far enough in transitioning the steel industry away from blast furnaces, which rely on coal for steel production. The costs associated with updating blast furnaces to use hydrogen would be significant.
Ben Hunkler of the Ohio River Valley Institute expressed doubts about the economic viability of methane-derived blue hydrogen, stating that it only makes sense for a few specific industries. He warned that investing in these expensive technologies could lead to a gas-based economy in the region.
Green hydrogen, on the other hand, uses an extraction method that splits water into hydrogen and oxygen through electrolysis powered by renewable energy. This method results in zero carbon emissions, as only oxygen is released into the atmosphere. However, the high costs associated with green hydrogen production are expected to decrease by 30% by 2030, according to the International Energy Association (IEA), thanks to cheaper renewable energy sources and economies of scale.
In conclusion, while Biden’s $7 billion program to grow the domestic hydrogen market has received both praise and criticism, the focus remains on the environmental impact of hydrogen production methods. The program aims to attract private investment and establish regional hydrogen hubs, but concerns persist regarding the use of green and blue hydrogen and the need for a more comprehensive transition away from fossil fuels in industries like steelmaking.
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