Hydrogen

Biden’s $7bn ‘hydrogen hubs’ – extending the life of fossil fuels or a vital clean energy source?

What’s happening? The US Department of Energy has chosen seven projects for a $7bn program aimed at advancing hydrogen fuel development and production, as announced by the White House. The Biden administration views this initiative as a major boost to the country’s emerging clean hydrogen industry, seen as key to promoting its climate goals. However, many climate advocates express scepticism about its ability to effectively reduce emissions. Hydrogen, when produced without fossil fuels, is emission-free, but most of the current supply is derived from fossil fuels. Critics argue that alternative technologies like heat pumps and electric vehicles may be more efficient for various applications, and the programme could serve as greenwashing for the fossil fuel industry. (The Guardian 

Why does this matter? The funding announcement is a significant development for the global hydrogen economy. The fuel source holds great promise for net-zero pathways with zero-emission combustion and the ability to decarbonise various sectors. According to the US government, the funding will catalyse more than $40bn of private investment, a public-private stimulus package known as blended finance.  

Biden’s green vision – A stable domestic supply of clean fuel sources forms the cornerstone of Biden’s vision of a strong, green energy economy in the US. The funding, provided by the Bipartisan Infrastructure Law and the Inflation Reduction Act, seeks to develop supply-side infrastructure, whilst a further $1bn has been set aside to improve domestic hydrogen demand. The US commitment to hydrogen is likely to invigorate the hydrogen market beyond the country’s borders, providing a significant financial opportunity for this burgeoning industry.

Blue vs Green – Once operational, the seven hubs will produce 3 million tonnes of hydrogen per annum, eliminating 25 million tonnes of CO2 from end uses per year. Although two-thirds of this investment is going towards the development of green hydrogen infrastructure – whereby electrolysers powered by renewable energy are used for production – there has been backlash from environmental groups for the development of “blue hydrogen”. Here, hydrogen is extracted from natural gas, releasing carbon dioxide emissions. The hubs plan to mitigate emissions by utilising carbon capture technology, but this technology is unproven and prone to methane leaks. Adding to environmentalists’ concerns, some hubs are partnering with fossil fuel firms and have been accused of “extending the life of the fossil fuel industry”. For example, the HyVelocity Gulf Coast Hydrogen Hub, which will receive $1.2bn, has partnered with Chevron and ExxonMobil.   

The UK outlook – For several years, politicians and industry players have advocated for hydrogen to replace natural gas as a fuel source for domestic heating. In the UK, 88% of households rely on a gas boiler for heating. This will soon change – a policy banning gas boilers in new homes was announced in 2019, although it is not yet signed into law. Further, British Gas has committed to introducing a 20% hydrogen blend by 2028. 

However, a report released by the UK’s National Infrastructure Commission (NIC) struck a blow to future hydrogen demand. The report recommends the UK focus entirely on electrification as “there is no public policy case for hydrogen to be used to heat individual buildings.” Despite this finding, the UK government made it clear that it will continue to back hydrogen as a domestic heating fuel source, while Mike Foster, the chief executive of the Energy and Utilities Alliance, dismissed the NIC’s claims as “outdated”.  

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