The US will develop a national clean hydrogen strategy and roadmap over the next few months following the passing of the administration’s infrastructure bill.

The $1.2tn bipartisan bill, soon to be signed into law by President Joe Biden, provides extensive support and funding for hydrogen.

It was passed by the House of Representatives on 5 November, having previously been passed by the Senate.

A hydrogen strategy and roadmap will be drafted by the Department of Energy within 180 days of the bill becoming law.

The legislation calls for $8bn in appropriation from fiscal years 2022 to 2026 for four clean hydrogen hubs. It also includes $1bn for research and development into and demonstration, commercialisation and deployment of clean hydrogen. The goal is to improve the efficiency of green hydrogen production, reducing costs to less than $2/kg by 2026.

$1.2tn – Size of US infrastructure bill

In June, the Biden administration issued a new goal of slashing the cost of clean hydrogen by 80pc, to $1/kg, within a decade.

The legislation puts the US into a group of about 20 countries that have launched national hydrogen strategies.

The bill seeks to establish standards, identify barriers to development, help job creation, improve transportation infrastructure and assess environmental risks, according to Emily Beagle, an associate with the Breakthrough Technologies Programme at thinktank the Rocky Mountain Institute (RMI).

“It is really significant for spurring the hydrogen industry and economy in the US,” she says.

The bill defines clean hydrogen as having a carbon intensity of less than or equal to 2kg CO₂e/kg of hydrogen produced at the source of production. This likely excludes upstream methane leaks for blue hydrogen facilities.

The four hydrogen hubs must be located in different US regions and mainly use locally generated energy, the bill says. At least two of the hubs must be in regions with large natural gas resources.

The bill aims to incentivise different production methods—including blue, green and pink hydrogen—as well as the processing, delivery and storage of the fuel. A range of demand-side uses are foreseen for the hubs, including electric power generation, industrial processes, residential and commercial heating, and transport.

Hydrogen is also a key element in the current version of the reconciliation budget bill, which the House may debate during the week of 15 November. The $2tn bill—also known as the ‘Build Back Better Act’—includes $600bn for climate measures.

Production tax credit

Significantly, the bill includes a clean hydrogen production tax credit (PTC). The size of the credit varies with hydrogen lifecycle emissions intensity. Production with lifecycle emissions of 0.45kg of CO₂e/kg of hydrogen produced receive 100pc of the credit, while only 8.4pc is available for production with lifecycle emissions of 2.5kg CO₂e/kg of hydrogen produced.

“It is really significant for spurring the hydrogen industry and economy in the US” Beagle, RMI

Producers generating less than 0.45kg CO₂e/kg of hydrogen could get $3/kg of credit under the PTC, according to current versions of the bill.

The bill also offers $200mn for hydrogen fuelling equipment to be deployed through state programmes and $3.5bn in grants for domestic manufacturing of clean-energy vehicles, including those with hydrogen fuel cells.

The PTC would help promote the supply side of a hydrogen economy, and the grants would help spur demand, according to Marcia Hook, a partner with the law firm Kirkland & Ellis.

“The [reconciliation] bill helps fuel the transition—there will have to be a fundamental shift to using hydrogen more widely,” she says.

The reconciliation bill is still subject to change during Congressional debate.

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Author: Ros Davidson