The US Department of Energy (DOE) has announced the much-anticipated selection of seven hydrogen hub projects across the country that are eligible for $7 billion in federal investment. The selectees will now undergo an award negotiation process to obtain a commitment from DOE. This funding aims to accelerate the commercial-scale deployment of low-cost, clean hydrogen as an alternative source of energy and the creation of networks of clean hydrogen producers, consumers, and infrastructure.
Background
Hydrogen is a source of energy that produces only water when burned and can be produced through several processes including electrolysis and steam methane reforming. Hydrogen can be used in a wide variety of sectors, including hard-to-decarbonize sectors such as heavy-duty transportation, steel, and chemicals manufacturing.
Clean hydrogen refers to hydrogen produced through electrolysis using renewable or low-carbon emissions energy sources or using thermal conversion processes with carbon capture and permanent storage technologies. A regional clean hydrogen hub is envisioned to be a network of clean hydrogen producers, consumers, and connective infrastructure that will help accelerate the commercial-scale production and use of clean hydrogen.
In 2022, Morgan Lewis discussed DOE’s solicitation for applications for funding to establish regional clean hydrogen hubs across the United States to improve clean hydrogen production, processing, delivery, storage, and end use.
The Infrastructure Investment and Jobs Act appropriated $8 billion to support hydrogen hub development and required DOE to consider factors such as feedstock diversity, end-use diversity, geographic diversity (including locations near natural gas resources), and employment opportunities for long-term and skilled labor. The hubs aim to produce collectively a third of the 2030 US production target and lower emissions from hard-to-decarbonize industrial sectors.
Selected Projects
Following merit reviews of the funding applications, DOE selected the below seven projects for further negotiation, which have collectively committed approximately $40 billion as part of this cost-share program:
- Appalachian Hydrogen Hub (West Virginia, Ohio, Pennsylvania): Up to $925 million will be available in a region with access to abundant low-cost natural gas and carbon dioxide sequestration options.
- California Hydrogen Hub: Up to $1.2 billion will be available to produce hydrogen from renewable sources or biomass.
- Gulf Coast Hydrogen Hub (Texas): Up to $1.2 billion will be available for large-scale hydrogen production using both natural gas with carbon capture and renewables-powered electrolysis in a region with abundant renewable energy and natural gas.
- Heartland Hydrogen Hub (Minnesota, North Dakota, South Dakota): Up to $925 million will be available to leverage the region’s abundant energy resources to help decarbonize the agricultural sector’s production of fertilizer, decrease the regional cost of clean hydrogen, and use clean hydrogen for power generation.
- Mid-Atlantic Hydrogen Hub (Pennsylvania, Delaware, New Jersey): Up to $750 million will be available to repurpose historic oil infrastructure and use existing rights-of-way to support development of hydrogen production facilities using renewable and nuclear electricity.
- Midwest Hydrogen Hub (Illinois, Indiana, Michigan): Up to $1 billion will be available to produce hydrogen by leveraging the region’s diverse and abundant energy sources, including renewable energy, natural gas, and low-cost nuclear energy. The region aims to use hydrogen for steel and glass production, power generation, refining, heavy-duty transportation, and sustainable aviation fuel.
- Pacific Northwest Hydrogen Hub (Washington, Oregon, Montana): Up to $1 billion will be available to produce clean hydrogen exclusively via electrolysis using the region’s abundant renewable resources.
DOE’s Office of Clean Energy Demonstrations (OCED) recently hosted community briefings for each of the selected hubs to discuss opportunities for local and stakeholder engagement on hub development.
Selection for award negotiation does not commit DOE to funding. Instead, DOE’s Office of Clean Energy Demonstrations (OCED) and each selected hub applicant will enter into negotiations through which DOE OCED and the selected hub applicant will develop a shared understanding of the scope of the project and proposed activities, the budget for the project, and the requirements of the award agreement. If negotiations are successful, the selected hub applicant will enter into a cooperative agreement with OCED, and detailed project planning will commence.
Morgan Lewis advises on all matters related to the energy sector, including hydrogen production and transportation infrastructure.