Power & Pipes

FERC, CFTC, and State Energy Law Developments

Hydrogen will play a key role in addressing the climate crisis, supporting a transition to net zero, and achieving a sustainable clean energy future. As a versatile energy carrier and chemical feedstock, hydrogen offers many advantages and an ability to leverage renewables, nuclear, and fossil fuels with carbon capture and storage. It can also be used as a fuel or feedstock for applications that do not have competitive and efficient clean alternatives.

In September 2022, the US Department of Energy (DOE) released a draft report providing an overview of hydrogen production, transport, storage, and use in the United States and the opportunities for clean hydrogen to help decarbonize and reduce emissions. Under the Bipartisan Infrastructure Law, DOE was required to develop and release a technologically and economically feasible national clean hydrogen strategy and roadmap to facilitate widescale production, processing, delivery, storage, and use of clean hydrogen. DOE is required to update this strategy and roadmap every three years.

The draft report identifies several opportunities for clean hydrogen to support the transition to net zero. Sectors that are more difficult to decarbonize with traditional approaches are expected to be priority markets for clean hydrogen. These sectors include steel and chemicals manufacturing, heavy-duty transportation, and production of liquid fuels for marine and aviation applications. The development and increasing use of fuel cell forklifts have paved the way for fuel cells in the trucking sector, particularly for fleets with heavy-duty vehicles, long distance (>500 mile) routes, and multi-shift operations that require rapid refueling, as well as for buses.

Hydrogen is also expected to be an essential feedstock for producing liquid fuels for the aviation, rail, and marine sectors and for producing biofuels from biomass (e.g., sustainable aviation fuels). In addition, hydrogen is expected to play a key role in decarbonizing the steel and chemical markets. However, challenges including the lack of hydrogen infrastructure and manufacturing at scale, cost, durability, reliability, and availability will need to be addressed.

The draft report identifies the following key strategies that DOE will implement to ensure that clean hydrogen is developed as an effective decarbonization tool and achieves maximum benefits for the United States:

  1. Target strategic, high-impact uses for clean hydrogen to ensure that clean hydrogen will be used in the highest value applications and achieve 10 million metric tons per year of clean hydrogen by 2030.
  2. Reduce the cost of clean hydrogen and enable $2 per kilogram by electrolysis by 2026 and $1 per kilogram by 2031.
  3. Focus on regional networks, including deploying four or more regional hydrogen hubs to enable large clean hydrogen production and end-use in close proximity to each other and ramp up scale.

To support these key strategies, DOE will continue to advance research, development, demonstration, and large-scale deployment (RDD&D) efforts to drive costs toward the Hydrogen Shot target of reducing the cost of clean hydrogen to $1 per kilogram in one decade. It has focused on fostering partnerships across industry, academia, and national laboratories to investigate and advance technologies and innovation. Examples of DOE’s consortia and initiatives include the H2NEW consortium on electrolyzer technologies, the M2FCT consortium to advance fuel cells for heavy-duty trucks, the Hydrogen Materials Compatibility Consortium (H-Mat), and other R&D projects and demonstrations funded through previous solicitations.

The near-term action items that DOE seeks to achieve by 2025 include:

  • Laying the regulatory groundwork for large-scale clean hydrogen deployments across production, processing, delivery, storage, and end-use
  • Developing streamlined guidance on hydrogen pipeline and large-scale project permitting with stakeholder engagement and addressing environmental, energy, and equity priorities
  • Assessing compatibility of pipeline and component materials with hydrogen and hydrogen blends with natural gas
  • Establishing a clean hydrogen standard
  • Demonstrating clean hydrogen production technologies from multiple pathways, including pyrolysis, waste, renewables, and nuclear
  • Initiating the transition to clean hydrogen for hard-to-decarbonize industrial applications and identify specific locations for potential scale up (e.g., ammonia, refineries, steel)
  • Supporting demonstrations and infrastructure in markets, including forklifts and other material-handling equipment, refineries, transit buses, long-haul heavy-duty trucks, heavy machinery in mining, construction, and agriculture, and ammonia production
  • Reducing the cost of electrolyzers at scale through RDD&D on manufacturing, stacks, and Balance of Plant components and the cost of thermal conversion technologies through RDD&D on modular designs and process intensification
  • Developing technologies for high throughput dispensing of hydrogen for heavy-duty vehicles
  • Advancing efficient end-use technologies (fuel cells/other power conversion with low/zero emissions) and down-selecting for scale up

DOE stated that its funding has already resulted in more than 1,100 hydrogen and fuel cell patents, 30 commercial technologies, and more than 65 technologies that could be commercial in the next several years. With respect to currently available funding, the Bipartisan Infrastructure Law allocated $8 billion for the development of regional clean hydrogen hubs, which we discussed in a prior blog post, and $1 billion for the Clean Hydrogen Electrolysis Program, which will improve the efficiency and cost-effectiveness of electrolysis technologies by supporting research, development, and demonstration to commercialization and deployment to enable $2 per kilogram clean hydrogen from electrolysis by 2026.

It also allocated $500 million for clean hydrogen manufacturing and recycling RDD&D activities to support manufacturing of clean hydrogen equipment. These funding opportunities will continue to spur investments in clean hydrogen production, storage, transportation, and end uses.

DOE is soliciting comments on the draft report, which are due by December 1, 2022.