Proposed hubs hope to show hydrogen energy economy is more than just hype

It is the kind of news that governors gush over.

A consortium covering Minnesota and three neighboring states was one of seven Regional Clean Hydrogen Hubs to be awarded around $1 billion each to research and develop different ways of harnessing hydrogen as a clean energy source. The program, funded by the 2021 federal infrastructure law, seeks ways to create hydrogen from water and use it for hard-to-electrify energy uses like fertilizer production, steel and cement manufacturing, trucking and aviation.

It is a key plank in the Biden administration’s climate change policy.

“This is a major investment in Minnesota and the region’s economy and a vote of confidence in our ability to innovate,” Minnesota Gov. Tim Walz said in the press release.

But while the news was welcomed, especially in the seven regions that scored money, there were plenty of warnings, the loudest being that shifting some U.S. energy needs from fossil fuels to hydrogen could actually increase greenhouse gas emissions. 

“We’re building an industry from basically nothing,” said Patrick Drupp, director of climate policy for the Sierra Club. “We need to make sure we do it in the right way now rather than try to fix it later because we rushed it.”

“Essentially you can use renewable energy to hydrolyze water, produce hydrogen and then store the hydrogen,” he said. “It is a way of storing renewable energy. Then you can combust it or use it in a fuel cell to produce electricity. These are the aspects that make hydrogen a topic of interest.

“The challenge is to do it at a scale large enough that matters. There are many, many challenges in that respect.”

Ian Champ, the regional hubs manager for the Midwest for the environmental group Clean Air Task Force, said hydrogen is not new, it just seems that way to people who haven’t been following issues around clean energy.

“It’s new in the public discourse,” he said, “and there’s always going to be hype, that it’s going to be the miracle cure for everything from your toothpaste to your car next week.” 

The awards do not yet trigger the flow of federal dollars. Each “winner” must now enter into negotiations on the terms of an agreement. If those fail, the Department of Energy can reconsider any of the 15 Hub proposals that did not make the list of finalists.

The Heartland Hydrogen Hub states are Minnesota, North Dakota and Wisconsin and perhaps South Dakota and Montana. That group, which was promised $925 million, is led by the Energy & Environmental Research Center at the University of North Dakota. Its proposal is to use renewable energy, nuclear energy, natural gas with carbon capture technology and perhaps biomass to produce hydrogen for fertilizer production as well as power generation and heating.

According to the Heartland partners, the proposal also calls for blending of hydrogen with natural gas for power generation, a strategy that reduces carbon emissions but doesn’t eliminate them.

The other partners in the Heartland Hub are oil and gas companies Marathon Petroleum Corp., headquartered in Findlay, Ohio, and pipeline company TC Energy from Calgary as well as Xcel Energy and the Sumitomo Corporation of Americas.

Walz said he thinks many of the estimated 3,800 jobs generated by Heartland will be in Minnesota. But the effort is centered on Grand Forks and North Dakota. The tribal entities being brought in are the Mandan, Hidatsa and Arikara nations that comprise the MHA Nation in North Dakota.  

“It was a year-long project we worked on together,” Walz said. “North Dakota did a lot of lift on this, especially the University of North Dakota. That benefits Minnesota too.

“One reason to believe a lot of those jobs are going to be here is because a lead partner is Xcel Energy, and that bodes well for us.”

According to the DOE summary of the Heartland proposal, the partners commit to form an education consortium for career development, workforce training and K-12 STEM education programs. It has goals to include women-owned businesses as well as minorities, disabled veterans, disadvantaged communities and LGBTQ people. It predicts 3,000 construction jobs and 700 permanent jobs.

“We’ll be looking to see how community advisory boards take shape, how are they soliciting feedback from impacted communities and what opportunities to influence decision making there are,” Menke said.

(The federal Department of Energy’s Office of Clean Energy Demonstration is sponsoring a virtual public meeting on the Heartland Hub proposal Wednesday at 7 p.m. Register here.)

Charles Gorecki is CEO of the Energy and Environmental Research Center at the  University of North Dakota, which is also home to the National Center for Hydrogen Technology. He said the public session is meant to lay out the vision for the hub, describe how it will affect the states in the region and describe the potential benefits to the host communities, labor and tribal nations.

“The big picture is that the DOE vision is: create a series of connected hubs to enable a hydrogen economy,” Gorecki said. “Hydrogen is very useful, but it is produced in very few places and those who want to create something that uses it don’t have a source.”

“Our vision is to produce clean hydrogen using a diverse set of technologies,” he said. “We sit in the U.S. as that bridge between eastern and western markets. A lot of energy is produced in this region and transported through this region so we want to be that connector to help spur this hydrogen economy.”

Gorecki said he hopes negotiations with the federal government can be completed by mid-2024, which will be followed by a 12-to-18-month period for creating detailed plans. If the DOE and the partners decide to move ahead, final development and construction will follow, with facilities operating by the end of a 10-year period.

He envisions at least a three-to-one, private-public cost sharing.

The science

Understanding hydrogen, its potential and its limitations, requires a refresher course in high school chemistry and science. It is the first element on the Periodic Table of Elements with an atomic weight of 1 (one proton). It is odorless, colorless but with very high energy content by weight. It produces none of the climate change gasses when burned.

It is also plentiful, the most abundant element in the universe. But it is found on Earth mostly in compounds with other elements — with oxygen in water, with carbons in fossil fuels. The trick to using it for energy and other chemical processes is to separate it from those other elements and to do it in large quantities.

The two most-common methods are called steam-methane reforming and electrolysis. Steam-methane reforming uses high-temperature steam that reacts with methane to produce hydrogen. It also produces carbon monoxide and small amounts of carbon dioxide.  Electrolysis uses an electric current to separate hydrogen from water with the byproduct being oxygen. But it hasn’t been produced in the quantities needed for the end uses of steel making and fertilizer production that advocates envision.

How hydrogen is produced makes a difference in how clean it is and whether it does as much harm as good. Colors are used to distinguish the different methods, with the most common being:

• Green hydrogen is made by using electricity from renewable sources to electrolyse water
• Blue Hydrogen is made from natural gas and is often coupled, in theory, with carbon capture and storage technology 
• Pink Hydrogen is made via electrolysis using nuclear power
• Gray Hydrogen is how most hydrogen is now produced, using natural gas without any attempt to sequester carbon

The seven hubs all take different approaches, a diversity required by the federal infrastructure law.

For example, while the Heartland Hub aims to use a variety of methods, the Appalachian Hub will use only natural gas and carbon capture. California proposes using only electricity from renewable sources and biomass. The Mid-Atlantic Hub would use renewable and nuclear energy sources. The Pacific Northwest Hub would use renewable energy only.

Each hub also comes with different end uses. Primary among them is to use hydrogen to convert — decarbonize — so-called hard-to-convert industries to non-fossil-fuel energy. Fertilizer production, for example, relies on ammonia, which needs lots of power to produce. The same is true for steel and cement.

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But other hubs are aiming to replace fossil fuel generated electricity to fuel trucks and aviation as well as general power generation. The federal Department of Energy, in accounting the successful hubs, said the goal is to reduce by 25 million tons of carbon dioxide emissions each year. That would be the equivalent of taking 5.5 million gas-powered cars off the road. 

But this is a long-term solution. An analysis by Resources Magazine noted that “a long path winds from the initial grant to seeing any steel in the ground (and any associated construction jobs promised by the hubs.)” How long? The contracts that will be negotiated between DOE and the hubs will last for about 10 years with construction beginning around year five and full operations after eight years.

Too much blue, not enough green?

You might think that any program designed to reduce carbon emissions and fight climate change would be welcomed by environmentalists. And you’d be right. But environmental organizations involved in the initiative are also cautious, mainly because there are as many ways to screw up implementation as there are to do it right.

The hubs, along with tax credits for production of so-called clean hydrogen that is produced with renewable electricity, are worth billions and they note that there are reasons oil and gas companies are so interested, not all of them benign. 

“Hydrogen is being touted as the solution for all of our climate problems, a solution for almost every sector — electricity, buildings, transportation and heavy industry,” Drupp of the Sierra Club said. “And it’s got potential, for sure, for certain sectors.” But while heavy industry is a good target, home heating is not.

“There are alternatives that are far-more cheaper and far-more efficient and readily available, like heat pumps,” he said. Transporting hydrogen to fueling stations would also be expensive and result in transmission loss through leaks, Drupp said. That’s why they favor the end use to be as close to the production as possible. That is, producing clean hydrogen adjacent to the fertilizer plant or the steel mill.

Daoutidis agrees that moving hydrogen great distances might not make sense. 

“It is a very small molecule that can find its way through small cracks and also it can cause explosions,” he said. So locating production near end uses — such as near a facility that makes ammonia and nitrogen for fertilizer—- makes more sense. Xcel is partnering for a clean-hydrogen fertilizer plant in Morris.

“It is very promising for the state of Minnesota,” Daoutidis said. “In the Midwest these seem to be aligned because there is a lot of wind in the Dakotas and Minnesota and Iowa and close to high-agricultural activity.”

Daoutidis would go a step further. His research looks at how ammonia itself might be a better end product than hydrogen because it is easier and cheaper to store and transport.

“That makes it a more appealing molecule if you are thinking of a hydrogen economy or an energy transition because you can store it more easily and use it as a fuel as well,” Daoutidis said.

Producing hydrogen using electricity from renewable sources can also be a way to smooth out supply. Stored hydrogen can be burned in gas turbines to generate electricity when wind and sunlight aren’t available, negating the need for battery storage of electricity.

Just converting the existing hydrogen production from steam methane reforming to electrolysis would itself be helpful because most hydrogen is now produced using methane without carbon capture.

“It emits a lot of carbon dioxide, it’s dirty, and the vast majority is used in chemical manufacturing and oil refining and fertilizer,” Drupp said of the steam-methane method. Shifting to electrolysis using renewable electricity in ways that don’t require simply diverting it from its current end uses is the goal.

Yet there remains a fear for how new tax credits will be used if there are not strict rules from the U.S. Treasury. Those credits from the 2022 Inflation Reduction Act reward new production of clean hydrogen. But if power companies divert renewable power to hydrogen production to claim the credits and replace that electricity with fossil fuels, the net emissions reduction can disappear.

“It must be additional electricity and clean electricity,” said Menke of the Clean Air Task Force. “That means new or additional clean generation to what is already on the grid.” The tax credit rules, which Treasury is in the process of writing, must assure that.

Daoutidis of the University of Minnesota said the tax credits are vital to making the production of clean hydrogen cost effective. It now costs more to produce hydrogen from water than the energy it produces is worth. The credit changes the economics, he said. Some math: It now costs more than $5 to produce one kilogram of hydrogen using cleaner methods. Meanwhile, making it with less clean methods — from natural gas without carbon capture — costs $1.50 per kilogram. The tax credit is equal to $3 per kilogram.

“It is a game changer,” he said. “It immediately makes these technologies competitive financially, which is a big issue. These pieces together bring you an economically viable forward path.”

Some environmentalists are also worried that even if carbon capture and storage is possible at significant levels — something that isn’t clearly achievable — how natural gas and methane are extracted from the ground must also be low-emission.

According to an analysis by the Atlantic Council, meeting the federal definition of clean hydrogen, the end product would have to come from natural gas extracted with near-zero emissions of methane followed by carbon capture of 90% or greater during processing.

“Extracting natural gas is always going to be dirty,” Drupp said. “You still need to frack for it, you still need to transport the methane, which is a leaky process. It is by no means a clean thing even if the processing of the methane doesn’t emit carbon.”

Many environmental groups oppose finding new uses for methane anyway. Therefore, they oppose “blue hydrogen” and think the interest in hydrogen by the oil and gas industry is a way to keep fossil fuel extraction alive.

“Oil and gas sees hydrogen as a lifeline for their products,” Drupp said. “There’s a good idea in a ton of this and then there’s a lot of greenwashing and chasing profits that is surrounding all of it.”

But not all organizations concerned with climate change are as negative toward blue hydrogen.

“Installing carbon capture on those systems is a technically feasible option to convert them to blue and it would lower the cost to make this expansion more realistic over the near term,” Champ said. If it restricts methane escape when it is extracted and comes with efficient and permanent carbon capture, “we don’t see it as extending the life of fossil fuels, we see it as a way to bring hydrogen into hard-to-abate sectors.

“If  that’s the way certain hubs want to move, we’d be OK with that going forward,” Champ said.

Menke said there will need to be a lot more production of hydrogen to make its viability as a carbon-reducing technology possible.

“We’re going to need a lot more production and if you only went the electrolytic route, that would likely divert renewables from the grid today unless we have new renewables built,” she said. “We think blue — natural gas-based production — can be part of the solution.”