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Catalytic Regional Investments: Demystifying DAC and Hydrogen Hubs

The recent report by the Intergovernmental Panel on Climate Change (IPCC) reaffirms the importance of making major investments in innovative energy and climate solutions like hydrogen and direct air capture (DAC) to achieve a net-zero economy by mid-century. These two technologies offer distinct opportunities and challenges but are related in their potential to provide solutions for hard-to-decarbonize sectors of our economy. To unlock these technology sets and reach our climate goals, significant policy support for deployment and demonstration activities at-scale is needed over the coming decade to drive down costs and establish the requisite supply chains and workforce for long-term operational success. Taking stock of this, last year a bipartisan Congress provided $11.5 billion to the Department of Energy to deploy four Regional Clean Hydrogen Hubs and four Regional DAC Hubs as part of the Infrastructure Investment and Jobs Act (IIJA).

What are Hubs and why are they important?

“Hubs” are targeted investments in a region to deploy a technology (or set of technologies) through shared infrastructure and resources. These new IIJA programs offer a once-in-a-generation opportunity to innovate and deploy clean hydrogen and DAC technologies through a multi-decade, multi-sectoral network of projects, suppliers, and end-users that can leverage their collective infrastructure and institutional knowledge within a region. Hubs can multiply the impact of federal investment and provide a range of benefits. Hubs can integrate the power, transportation, manufacturing and infrastructure sectors together, de-risking clean energy innovation and building a low carbon supply chain simultaneously. Hubs can also strengthen the public-private partnerships necessary for establishing a net-zero carbon economy in the United States that some early movers in the private sector have already begun to invest in. In creating the Regional Clean Hydrogen Hubs and the Regional DAC Hubs programs, Congress provided critical investments in technology innovation, emission reduction, and workforce development as summarized in Table 1.

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Table 1: Summary of IIJA Statute for Regional Clean Hydrogen Hub and Regional DAC Hub Programs and their potential technical, scale, climate and workforce impact. 

By leveraging this unique regionally focused effort for deployment, the Hubs programs can learn from similar deployment efforts around the world, such as the Teesside Collective industrial hub in the United Kingdom. These place-based investments are also a way to create renewed momentum for regional development efforts and to make use of unique attributes that a given region has to offer. In the United States, many regions have been evaluated as promising candidates for creating net-zero hubs and now it is time to move from theory to practice. 

What actions have been taken so far by DOE, the private sector, and local and state actors? 

Figure 1 shows a high-level timeline of DOE activities surrounding implementation of the Hubs programs. Since the passage of the IIJA, a flurry of activity from DOE and a wide variety of industries and regional governments has occurred, showing a strong desire to support the rapid deployment of these hubs. Examples of such recent activities include analysis by the Great Plains Institute in identifying 14 key regions ripe for investment and the formation of regional coalitions with a desire to develop hydrogen hubs. These announcements reflect the promise of such a monumental investment and the readiness of the nation to deploy these two technological solutions at-scale in the United States. 

Figure 1: Timeline of Legislative, DOE, private-sector, and NGO action on Hubs Implementation. (Hover mouse over icons for more information) 

Looking forward: big questions facing Hubs deployment 

DOE will continue to make important decisions to refine program implementation as feedback is received from stakeholders. Exploring the following complex issues will be critical to ensuring the long-term success of these programs:  

  • Scale today vs. innovation tomorrow – Given that DAC and hydrogen production technologies are still in the early stages of the innovation pipeline, the cost of a DAC facility or clean hydrogen hub project is likely to be high. When selecting and prioritizing Hub proposals, DOE will need to make explicit decisions about balancing investments in projects that lead to immediate scale-up to achieve near-term emissions reductions, with the need to support early-stage technologies that will result in long-term emissions reductions and cost-declines. 
  • Enabling shared resources without creating bureaucratic hurdles – A Hub model for technology development can lower barriers for producers and end-users through an array of shared resources and infrastructure. DOE will need to support Hubs that enable early infrastructure deployment while maximizing the opportunity for open access to Hub resources for emerging projects and companies. Supporting these early partnerships without creating additional hurdles for project development will be an initial challenge for deployment. 
  • Effective community engagement and benefit – Deploying projects at regional Hubs will require mutually-beneficial relationships between relevant communities and project leads. DOE’s approach to engaging with communities on Hubs projects can take a “top-down” (through resources and relationships where DOE itself plays a direct role) or “bottom-up” (through grants or other support that empower community organizations and actors) approach. Ensuring that local benefits and desired workforce transition outcomes are met at the Hubs will require a strategic balance of both approaches. 
  • Ensuring long-term success of Hubs – The IIJA provides the funding to stand up these Hubs through 2026, but long-term success and development of a net-zero economy will require complementary and continued operational, financial, and policy support. DOE and Congress will need to work in tandem with the private sector to ensure that conditions for long-term success of each regional Hub are ensured beyond 2026. 

These questions will continue to emerge as thematic challenges to Hubs implementation. The solution and path forward is likely to strike an appropriate balance of technological and business model innovation with continual program refinement. By strategically addressing these big questions over time, the Hubs programs have the potential to position the United States as a global leader in hydrogen and DAC technologies in the decades ahead. 

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