Blog | Green Hydrogen Poised for Primetime in 2023
Green Hydrogen Poised for Primetime in 2023
By Janice Lin, Founder and President of the Green Hydrogen Coalition
Last year was a momentous year for green hydrogen (GH2) in the U.S. and beyond. Federally, we saw the passage of legislation such as the Inflation Reduction Act (IRA), which contains tax credits that will drive GH2 to become even less expensive than fossil fuels. In my home state of California, we saw the Public Utilities Commission give a green light to consider the feasibility of the first mass-scale GH2 pipeline transportation project. These represent just two examples of progress towards a GH2 economy that can support deep decarbonization, reduce local pollution, and create diversely skilled clean energy jobs.
Turning the page to a new year, I am excited to see what 2023 has in store for the advancement of GH2. The Green Hydrogen Coalition has been incredibly busy, most recently with our programmatic expansion into the Carolinas through our HyBuild™ Carolinas initiative, which is architecting a scaled, GH2 economy for North and South Carolina. After nearly 3 years of analysis and stakeholder engagement to architect a vision for a GH2 hub in Los Angeles, we will soon be releasing a final report for our original GH2 hub initiative, HyBuild LA. This report will include insights into multi-sectoral demand in the LA Basin (including maritime shipping, aviation, heavy-duty transportation, and stationary sources), infrastructure scenarios, system costs, and potential synergies from connecting Southern California with scaled demand in Northern California. It will also include a summary of HyBuild LA’s first-of-its-kind water analysis with Pacific Northwest National Labs, which explored the potential to utilize wastewater or repurposed water to meet the region's electrolytic GH2 needs. Importantly, the study will detail the significant air quality and human health benefits of this vision, as well as the tens of thousands of jobs that will be created to support the development of a GH2 ecosystem.
Even as the GHC presses ahead on several priority workstreams, there are some exciting themes across the ecosystem that we are monitoring closely this year. These include:
Hub Development
In April, the Department of Energy (DOE) will accept applications for the first round of funding to establish a network of clean hydrogen hubs. This program seeks to allocate as much as $7 billion to establish six to 10 regional clean hydrogen hubs across the U.S., part of the $8 billion allocation for clean hydrogen development codified in the Bipartisan Infrastructure Law (BIL).[1] These unprecedented funding opportunities will incentivize the collaboration needed to jump-start the GH2 economy from a system-level perspective.
To best approach this task, California formed ARCHES (Alliance for Renewable Clean Hydrogen Energy Systems), a public-private entity to accelerate the development and deployment of clean, renewable H2 projects and infrastructure, including pursuing DOE Clean H2 hub funding. This strategic approach to hub development will set the stage for development of scalable, commercially viable GH2 projects. Several other regions are pursuing clean H2 hub developments as well.
Hydrogen Market Rules and Standards
Important actions at the federal level are helping to create necessary market mechanisms and standards. Most notably, the IRA’s hydrogen production tax credit helps ensure GH2 is rewarded for its lower carbon intensity relative to other low-carbon hydrogen production pathways.[2] Meanwhile, the DOE’s National Clean Hydrogen Strategy and Roadmap and its Clean Hydrogen Production Standard[3] both develop essential rules of the road that will help the nascent hydrogen economy evolve.
Policy Alignment
As the GH2 ecosystem emerges, alignment across the policy, regulatory, and commercial spaces will be critical. Alongside the federal incentives enshrined in the BIL and IRA, new policy incentives promise to help shape the GH2 market beginning this year. In California — already or soon to become the world’s 4th largest economy — the California Energy Commission (CEC) is introducing its new Clean Hydrogen Program in Q1/Q2 2023. This new program will fund in-state projects for the production, processing, delivery, storage, or end use of clean hydrogen.
In addition, the GHC’s Western Green Hydrogen Initiative (WGHI) held multiple convenings in 2022 related to reliability and associated modeling assessments and policy across the Western Interconnect. As part of these convenings, WGHI has organized panels and engaged stakeholders to review current modeling studies to understand regional GH2 resource needs and to evaluate the associated challenges of a deeply decarbonized grid. These modeling and policy matters and others identified by states and provinces will continue to be explored and analyzed through 2023 convenings. These new developments at the federal and state levels illustrate that alignment is beginning to take shape. While further alignment is required for a seamless and just energy transition, the beginning of continuity between state and national policies will help limit barriers to entry and lower the administrative burden at all levels.
Accelerated Commercial Projects
2022 was the most active year yet for GH2 project developments. The DOE Loan Program Office awarded more than $500 million in loan guarantees for the Advanced Clean Energy Storage (ACES) project, a partnership between Mitsubishi Power Americas and Magnum Development. ACES plans to produce GH2 in Utah, store it in underground salt caverns, and ultimately transport it by pipeline across Utah and to Southern California. Air Products and AES announced a $4 billion GH2 plant in Texas, expected to be the largest in the U.S. and one of the world’s top 10. Shell, TotalEnergies, and HyDeal Espana, among several others, also announced new projects. As previously mentioned, SoCalGas received approval from the California Public Utilities Commission last month to begin recording costs for phase one of its Application for Authority to Establish a Memorandum Account for the Angeles Link Project, which enables SoCalGas to move forward with the necessary stakeholder engagement and engineering, design, and environmental work necessary to develop this first-of-its kind 100% GH2 pipeline. This project is critical to achieve mass-scale, low delivered cost GH2 into the Los Angeles Basin, helping Los Angeles to achieve its critical greenhouse gas (GHG) reduction targets and climate goals.[4]
Looking ahead, we hope you share our excitement for the next iteration of our Catalyst™ H2 convening, which is planned for late 2023 in Charlotte! We were incredibly gratified to bring together more than 400 policy makers, industry leaders, utilities, and non-governmental organizations in 2022 to advance GH2 market and infrastructure development in the U.S. and beyond. Stay tuned as we announce further details on Catalyst H2 2023 in the coming weeks.
In the meantime, on behalf of all of us at the GHC, we hope you had a happy and relaxing holiday season and that you are starting 2023 feeling refreshed and ready to help make a difference for our planet. We have an exciting year ahead!