Why the US Fossil Fuel Industry Wants to Participate in the Hydrogen Act

In the months leading up to America’s landmark climate bill, Jim Justice, the billionaire coal magnate and governor of West Virginia who believes in divine intervention as the solution to climate change, became a champion of climate change. hydrogen.

The unlikely support for what might be a cleaner form of energy wasn’t the only one. The U.S. oil and gas majors joined him in pushing for the divisive fuel source, collectively spending millions on lobbying campaigns in Washington to ensure hydrogen projects would benefit from federal dollars.

For decades, hydrogen has been touted as a potentially revolutionary alternative to fossil fuels, with the promise of powering dirty heavy industry, replacing fuel in cars and planes, and acting as an energy reserve. .

Last year, President Joe Biden earmarked $8 billion to establish regional hydrogen centers across the United States as part of his infrastructure bill, and already this year the Department of Energy provided $1.5 billion in low-cost loans to two hydrogen projects.

Now, Biden’s new flagship tax and climate package identifies hydrogen as one of the nascent clean energy industries eligible for lucrative tax credits, worth around $5.3 billion. over 10 years, with the aim of developing the American green sector.

While hydrogen is a clean fuel when burned and produces only water, the process of creation by electrolysis powered by coal or gas is not.

“Green” hydrogen uses renewable energy, such as the wind or the sun, to power the splitting of the water atom into its hydrogen and oxygen components.

But the production of “blue” hydrogen, promoted by oil and gas companies, from fossil fuels, is energy-intensive and emits relatively high levels of greenhouse gases.

Scientists and experts warn that differences in how hydrogen is produced cause carbon emissions to vary significantly. Some consider that hydrogen should only be used where electrification is impossible.

Scientists at Cornell and Stanford University estimate that the carbon footprint of “blue” hydrogen is 20% greater than that of directly burning gas for heat.

“Blue hydrogen is something that was born out of the oil and gas industry,” said Robert Howarth, a professor at Cornell University and one of the paper’s authors.

“As an energy source, if you make it from natural gas, you lose some of that energy when you convert it, the emissions are going to be higher, it’s more expensive than natural gas – that’s not It’s just not better than natural gas,” Howarth said.

But for fossil fuel company executives, the prospect of using oil and gas for hydrogen production represents a significant opportunity.

Shell, BP and Chevron have all backed Washington’s push for hydrogen. The three oil majors sit on the board of the Clean Hydrogen Future Coalition, which says it aims to catalyze a clean hydrogen industry in the United States. Its website demonstrates the use of fossil fuels to produce “clean” hydrogen, with carbon capture technology involved to trap polluting emissions.

Shell, BP, ExxonMobil and Chevron have also individually held discussions about legislation affecting hydrogen with lawmakers, according to documents that disclose combined lobbying expenditures of $13 million on multiple issues in the first half of 2022 alone.

Two major trade bodies representing the US gas industry have spent nearly $1 million to encourage hydrogen investment and the inclusion of gas in US clean energy plans.

BP has previously said it is looking at green hydrogen alongside blue hydrogen. Exxon said “all types of low-carbon hydrogen will require additional policy support.” The group said it was “important to see that the policy discussion is evolving from an exclusive focus on wind, solar and electric vehicles, to carbon capture and storage, biofuels and hydrogen” .

Just as Democratic Sen. Joe Manchin pushed the climate bill over the line with his vote, for national energy security reasons, his state of West Virginia made a broad pitch that outlines its history in as a mining powerhouse and lists the state’s coal. oil and gas association as potential proponents of a new hydrogen hub.

West Virginia isn’t the only state looking to take advantage of infrastructure bill funding – New York, Massachusetts, New Jersey and Connecticut have joined forces to propose a green hydrogen hub that would use offshore solar and wind energy to power the creation of hydrogen. Arkansas, Louisiana and Oklahoma have a pitch that would involve producing hydrogen with gas and using carbon capture to reduce emissions.

A stack of electrolyzers, the key to hydrogen production. in research and development at the Plug Power facility in Massachusetts © Bloomberg

The Department of Energy defines “clean” hydrogen by the amount of carbon dioxide equivalent produced during its manufacture. The new climate bill rewards developers on a scale, with the lowest emissions getting a maximum credit of five times that of the most polluting process.

Rachel Fakhry, head of hydrogen at the Natural Resources Defense Council, said there were similarities between gas companies’ business models and a potential hydrogen industry that led to companies backing the prospect.

“You produce a gas, transport it, store it, reuse it,” she said. “There is an interest in the gas industry to use the hydrogen economy to maintain and protect its business model.”

But Fakhry said hydrogen was a much less efficient energy source than electrification and should be used in a targeted way. “We have to think about where hydrogen will play a big role because we don’t have better alternatives, and where it’s presented as a solution where we already have better proven solutions – in those cases, the hydrogen is used to derail the solutions.”

Cornell’s Howarth highlighted recent scientific papers that suggest hydrogen may interact with greenhouse gases such as methane to extend their life in the atmosphere. The small molecular size of hydrogen would mean relatively high levels of leaks from pipelines, he said.

His paper criticizing the carbon intensity of blue hydrogen prompted a fierce response from the oil and gas industry. A rebuttal was published in a scientific journal, involving authors who included a member of a BP advisory board and advisers from ExxonMobil and Total Energies, although they said there was no conflict of interest.

The Environmental and Energy Study Institute, an independent, bipartisan, nonprofit policy research group, said Capitol Hill lawmakers misunderstand the different carbon profiles of hydrogen creation methods. “There is a lot of interest in the subject,” said Daniel Bresette, director of EESI. “But not much understanding of what makes it blue, gray or green.”

But Adria Wilson, head of policy and advocacy at Breakthrough Energy, the clean energy investment fund backed by Bill Gates, said she was pleased to see the hydrogen tax credits structured to favor low-carbon production methods.

“When we talk about hydrogen, we’re not talking about a specific technology but a whole process,” Wilson said. “I think most people see green hydrogen as the winner.”

The colors of the hydrogen rainbow

green hydrogen Made using clean electricity from renewable energy technologies to electrolyze water (H2O), splitting the hydrogen atom it contains from its molecular twin, oxygen. Currently expensive.

blue hydrogen Produced from natural gas but with carbon emissions captured and stored or reused. Negligible quantities in production due to a lack of carbon capture projects.

gray hydrogen It is the most common form of hydrogen production. It comes from natural gas via steam methane reforming but without capturing emissions.

brown hydrogen The cheapest way to make hydrogen but also the most damaging to the environment due to the use of thermal coal in the production process.

Pink/Purple Hydrogen Manufactured using nuclear energy to power electrolysis.

turquoise hydrogen Uses a process called methane pyrolysis to produce hydrogen and solid carbon. Not proven on a large scale. Concerns about methane leaks.