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Clean hydrogen – production, end-use and U.S. federal investment

Hydrogen can be an important tool for reducing greenhouse gas emissions from various sectors and reaching net-zero by 2050. Hydrogen can serve as a low- or zero-carbon fuel for transportation and industrial end uses, feedstock for industrial chemical and critical products, and in power production and energy storage, all while producing no emissions. To reap these decarbonizing benefits and enable a new clean economy, current production of hydrogen has to shift to cleaner pathways at an affordable price tag. See BPC’s factsheet to understand the available hydrogen production pathways and end-uses.

Over the past two years, the federal government has been busy delivering key policies to accelerate the scale-up and deployment of clean hydrogen. More specifically:

Scaling-up clean hydrogen economy through regional federal investments. The bipartisan Infrastructure Investment and Jobs Act (IIJA) made a catalytic regional investment of $8 billion to demonstrate and deploy clean hydrogen production at scale by connecting suppliers and end-users with connective infrastructure. The funding announcement for the Regional Clean Hydrogen Hubs program was released last year, and the Department of Energy recently provided encouragement to 33 potential applicants who submitted concept papers to proceed to full applications due on April 7, 2023.

Accelerating key clean hydrogen production technologies through federal incentives. In 2022, the Inflation Reduction Act (IRA) created the first-ever incentive for clean hydrogen production, providing up to $3 of credit for every kilogram of hydrogen produced meeting a carbon intensity threshold. The IRA also contained other complementary incentives for clean electricity production, carbon capture and storage, and clean vehicle tax credits. The Treasury Department guidance to implement these tax credits is expected by August 2023.

Supporting clean hydrogen research and innovation through federal appropriation. The recently passed bipartisan 2023 Omnibus Appropriations Bill provided DOE’s multi-office crosscutting hydrogen research efforts a total of $316 million for fiscal year 2023. This includes R&D projects and activities covering hydrogen production, delivery, and end-use performed by universities, national laboratories, and industry. A bipartisan Congress also supported innovation in hydrogen production and end use pathways by providing R&D funding for:

  • Low-carbon and low-cost hydrogen research including:
    • $100 million for the H2@Scale initiative which advances R&D efforts to bring down the emission and cost of hydrogen production.
    • $121 million for solid oxide fuel cell hydrogen production, transportation, storage, and end-use.
    • $30 million for fuel cell technologies for different end-uses.
  • Transportation via hydrogen including:
    • $10 million to produce hydrogen and other fuels using sunlight energy.
    • $10 million to demonstrate carbon-neutral methanol production using direct air capture and hydrogen production technologies.
    • $60 million for innovative technologies in hard-to-electrify transportation like heavy-duty transportation including trains, shipping, and aviation.
    • $25 million for low-emission off-road application vehicles and technologies that can be applied at ports, warehouses, and railyards.
    • $35 million to continue to demonstrate high-efficiency, heavy-duty truck freight applications that use hydrogen and batteries.
  • Power production via hydrogen including:
    • $80 million for near-zero-emission and high-efficiency hydrogen turbine research, development, and demonstration.
    • $10 million for novel engine designs that enable high-efficiency hydrogen combustion.
    • $50 million for noxious gas (NOx) emission reduction solutions in direct combustion of hydrogen in natural gas plants.
  • Hydrogen transport and safety including:
    • $10 million for demonstrating hydrogen transport using existing infrastructure.
    • $10 million for hydrogen carrier catalyst research for hydrogen transport.
    • $10 million to impact research & planning of hydrogen blending into existing natural gas pipelines.
    • $15 million for hydrogen infrastructure technical needs.
  • Industrial applications such as:
    • R&D efforts in industrial decarbonization totaling $685 million including industrial application of hydrogen, carbon capture, energy and material efficiency, and electrification.
    • Support for DOE’s new Center for Sustainable Fuels and Chemicals at the National Energy Technology Lab to holistically tackle the transition of the chemicals industry to hydrogen and other low-carbon fuels.

These federal investments in regional clean hydrogen hubs, clean hydrogen production incentives, and support for research and innovation will help ready clean hydrogen to play a role in America’s path to reach net-zero emissions by 2050.

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