Biden administration unveils $7bn in funding for first seven US hydrogen hubs

The administration of US President Joe Biden has announced $7bn in funding for America’s first seven clean hydrogen hubs.

The Regional Clean Hydrogen Hubs (H2Hubs) will accelerate the commercial-scale deployment of low-cost, clean hydrogen – which the US Department of Energy (DOE) describes as a valuable energy product that can be produced with zero or near-zero carbon emissions.

The hubs will be funded by the Bipartisan Infrastructure Law, and will “kick-start” a national network of clean hydrogen producers, consumers and connective infrastructure while supporting the production, storage, delivery and end-use of clean hydrogen.

The hubs are in the Gulf Coast region, California, the Pacific Northwest, the Heartland, Appalachia, Midwest and Mid-Atlantic. They draw together parties such as private companies including oil and gas majors, renewable energy companies and states.

Companies in the winning hubs – which must still negotiate with DOE to secure the final funding – include AES Corp., Air Liquide, Chevron, Dupont, Enbridge, ExxonMobil, Mitsubishi Power Americas, Ørsted and Sempra Infrastructure.

The seven hubs are expected collectively to produce 3mn tonnes per year (tpy) of hydrogen, reaching nearly a third of the 2030 US’s production target and lowering emissions from hard-to-decarbonise industrial sectors. The sectors are being targeted because they represent 30% of total US carbon emissions.

They are backing the government funding with almost $43bn in private funding, said the DOE.

Together, the H2Hubs will reduce 25mn tonnes of CO2 emissions from end-uses each year – an amount roughly equivalent to combined annual emissions of 5.5mn gasoline-powered cars.

Critics have lambasted the awards, saying they focus too much on ‘blue hydrogen’, which is made from natural gas backed with carbon capture and storage (CCS). Methane leaks can occur while it is being made.

Methane is a highly potent greenhouse gas (GHG) that has more than 80 times the warming power of CO2 dioxide over the first two decades after it reaches the atmosphere, according to the UN Environment Programme. For its part, CCS has yet to be built as a commercial scale economically.

Energy Secretary Jennifer Granholm described the awards as “the dawn of a new manufacturing sector right here in the United States”. She added: “Clean hydrogen is the ‘Swiss Army Knife’ of zero-carbon solutions because it can do just about everything.”

Granholm cited hydrogen as crucial for powering trucks, buses and aeroplanes, heating homes and fertilising crops, revolutionising shipping and cleaning up America’s manufacturing industry.

The Alliance for Renewable Clean Hydrogen Energy Systems (ARCHES) will receive up to $1.2bn. It is backed by California. The hub will create hydrogen from renewable energy – so-called green hydrogen – and biomass.

The Appalachian Regional Clean Hydrogen Hub (ARCH2) will get up to $925mn and is backed by Ohio, Pennsylvania and West Virginia. It is based near the Marcellus shale gas play and will make hydrogen from natural gas.

Heartland Hydrogen Hub has been awarded up to $925mn and includes Minnesota, North Dakota and South Dakota. It hopes to decarbonise the agricultural sector’s production of fertiliser, decrease the regional cost of clean hydrogen, and advance the use of clean hydrogen in electric generation and for cold climate space heating.

The Gulf Coast Hydrogen Hub or HyVelocity is backed by Texas and Louisiana and will be awarded up to $1.2bn. The area already contains the world’s largest concentration of hydrogen production, but almost all of it does not yet meet the DOE’s definition of ‘clean hydrogen’ – it is grey, and made from natural gas. It will produce hydrogen at a large scale using both natural gas with carbon CCS and renewables-powered electrolysis.

The Mid-Atlantic Clean Hydrogen Hub (MACH2) will get up to $750mn and includes Pennsylvania, Delaware and New Jersey. The hub plans to make green and pink hydrogen – the latter with nuclear power – while repurposing old oil infrastructure and using existing rights-of-way.

Midwest Alliance for Clean Hydrogen (MachH2), backed by Illinois, Indiana and Michigan, will get up to $1bn for green, blue and pink hydrogen. Strategic hydrogen uses will include steel and glass production, power generation, refining, heavy-duty transport and sustainable aviation fuel.

And the Pacific Northwest Hydrogen Hub (PNW H2), which includes Washington, Oregon and Montana, will also get up to $1bn. It will exclusively produce green hydrogen from electrolysis, hoping to help bring down the cost of electrolysers.

The DOE is also including some $1bn in incentives to encourage industrial buyers to purchase hydrogen. 

“Clean hydrogen produced with resources like wind and solar, that lets us get us to this place where we’re not putting more carbon in the atmosphere,” said President Biden. “All across the country, from coast to coast, in the heartland, we’re going to build a clean energy future here in America, not somewhere else.” 

The DOE says that two-thirds of the investments will eventually be for hydrogen made by renewable electricity, even though that is currently three to four times as expensive as grey hydrogen. But some critics are sceptical.

“We need strong guardrails to ensure that US hydrogen does not create an emissions mess, and that we are not subsidising hydrogen that is clean in name only,” Erik Kamrath, who works on hydrogen at the Natural Resources Defence Council, said to the New York Times.

Also especially important is a tax credit under the Inflation Reduction Act (IRA), known as 45V, guidance for which will be released later this year. An award could be as much $3 per kilogram of produced hydrogen.

Given that the seven hubs are expected to produce 3mn tpy of hydrogen, that could be worth up to $9bn a year.

“The hydrogen hub money pales in comparison to that tax credit,” said Bryan Fisher, a managing director at RMI, a non-profit think-tank, told the New York Times. “Everyone’s waiting to see how [the tax credit] gets resolved.”