The following commentary was written by Bill Hayes, a finance executive who focuses on
electricity and environmental markets, and Joe Tedino, a Chicago-based writer focusing on the environment and sustainability. See our commentary guidelines for more information.

Last month, 13 senators — including the two representing our state of Illinois — sent a strongly worded letter to Treasury Secretary Janet Yellen calling out rules around the proposed tax credits for the green hydrogen industry as  “inconsistent with the intent and requirements” of the legislation they approved. 

They noted that the tax credits can be vital for incentivizing the production and market-viability of renewable hydrogen power, but the current proposed guidance could undermine the intent of the Inflation Reduction Act and hinder the green hydrogen economy.

We applaud this Senate effort and are pleased to see Illinois Democrats Dick Durbin and Tammy Duckworth were onboard in calling for revising the Treasury’s overly stringent rules. Both have been strong advocates of the Midwest’s MachH2 clean hydrogen hub, and they recently secured $1 billion in federal funding for this project.

The green hydrogen production tax credit in the IRA — the largest investment to reduce carbon dioxide emissions in U.S. history — has the potential to secure a significant role for clean, zero-carbon hydrogen energy in the U.S. by providing a tax credit of up to $3 for each kilogram of fuel produced. 

Yet as the Treasury Department grapples with how to implement rules for awarding the tax credit to hydrogen producers, there are warning signs that overly restrictive regulations may stifle the growth of what had been projected to be a $515B global market by 2035, according to global consultant Research Nester.  

We support the position led by Sen. Alex Padilla (D-Calif.) that asked for a host of changes to the rules in the interest of boosting a burgeoning energy supply that will achieve the intended carbon reduction in a less burdensome way.

At issue are the so-called “Three Pillars,” which are the standards adopted by the Treasury Department for determining whether hydrogen producers are entitled to receive the tax credit. The standards specify how, when, and where renewable electricity must be added to the grid to match the electrical load drawn to power the hydrogen electrolysis operations.

One of these pillars requires that hydrogen producers add renewable generation to the grid that matches their hydrogen load on an hourly basis, instead of an annual basis. The other two add specific location and facility requirements that further limit the flexibility for how and where hydrogen producers add renewable generation to the grid. 

Here’s the problem:  the standards are overly restrictive, leading to unnecessarily excessive costs for achieving the targeted carbon reduction impacts in the hydrogen sector, according to new research published in response to the Treasury guidelines. 

With regard to the extra costs, energy data analytics firm Wood Mackenzie analyzed the impact of just one of the pillars — hourly matching — and found that this requirement alone would raise the total costs of green hydrogen by 68 to 175%, compared to annually matched generation. 

Other researchers found that there is no additional carbon reduction benefit to this fine-tuned hourly matching. Comprehensive research by the consulting firm Energy and Environmental Economics, also known as E3, found that both annual and hourly matching have similar impact on CO2 emissions, across a wide range of scenarios and geographies. The Open Energy Outlook Initiative of Carnegie Mellon has come to the same conclusion. It’s not surprising, since both annual matching and hourly matching lead to identical increases in new renewable generation, and hydrogen producers have a clear incentive to generate their new renewable electricity in times and locations that maximize the amount of displaced fossil fuels.

In short, the hydrogen industry and the good jobs it will support will simply not grow as planned by the U.S. Energy Department if their costs double unnecessarily.

We hope the Treasury Department will look at this research and feedback closely, in order to achieve the targeted carbon reduction in the hydrogen sector at a competitive cost with environmental concerns in mind. Growth in the hydrogen sector is needed to clean up hard-to-abate sectors like steel and airlines, and it is also vital to address climate change.

There’s a global consensus that we need to urgently decarbonize to address the impacts of climate change. The Biden Administration’s goal to reduce GHG’s by 50% by 2030 and become net-zero by 2050 requires robust incentives to develop green energy industries as fast as possible. Without a viable hydrogen sector, we run the risk of being unable to fully decarbonize our economy.

Business leaders and individuals should call or write to the White House and to their representatives in Congress, urging them to revise the tax credit eligibility rules for hydrogen production to ensure the economic viability of this vital emerging industry.

Commentary: Strict regulations threaten the green hydrogen industry is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

Snaking under city streets, behind residential drywall and into furnaces, ovens and other appliances, natural gas pipelines are a ubiquitous presence in U.S. buildings. The question of what to do with them as the planet warms has become a serious debate — dozens of U.S. cities and states have crafted plans to reduce reliance on natural gas, and more than 20 other states have passed laws to preempt that type of regulation.

Now, utilities around the nation have begun testing a controversial idea aimed at reducing the carbon footprint of gas lines, while keeping them in place. Nearly 20 utilities have laid out plans to inject lines with a blend of gas and hydrogen, the latter of which emits no carbon dioxide (CO2) — a major greenhouse gas — when combusted. Testing such blends, these companies say, is an essential step towards understanding the practice, which they argue will help reduce emissions and fight climate change.

Deploying more hydrogen is also a federal priority — the Inflation Reduction Act created a tax credit for hydrogen production, and the Bipartisan Infrastructure Law set aside $9.5 billion to support hydrogen development.

But a federal hydrogen strategy released last year suggests blending hydrogen into gas infrastructure should focus on industrial applications. Many environmental and customer advocates agree; they argue that the use of hydrogen blends in buildings — rather than to power industries that are hard to electrify — makes little sense.

“Every dollar you’re reinvesting into the gas system could be a dollar you’re using to electrify the system,” said Nat Skinner, program manager of the safety branch of the California Public Advocates Office, an independent state office that advocates for consumers in utility regulation. “Finding the right uses for hydrogen is appropriate. But I think being really careful and thoughtful about how we’re doing that is equally important.”

Nearly 30 projects focused on blending hydrogen into gas lines that serve homes and businesses have been proposed or are in operation in more than a dozen states, Floodlight found, and many more utilities have hinted at future proposals. If all are approved, the projects as proposed would cost at least $280 million — and many utilities are asking that customers pay for them.

As regulators consider the proposals, advocates are calling for them to weigh the prudence of the investment. In California — where electric rates have climbed steeply in recent years — the Sierra Club has argued that the projects are “an inappropriate use of ratepayer funds” and “wasteful experiments.”

Blending brings, risks, rewards

Hydrogen blending can be undertaken in a section of pipeline isolated from the rest of the gas network or in a larger “open” system that serves homes. Utilities can inject it in large transmission lines, which ferry gas from processing and storage locations to compressor stations, or into distribution lines, the smaller pipes that bring gas to buildings.

Because hydrogen releases only water vapor and heat when it’s burned, it’s considered a clean fuel. And unlike traditional wind and solar energy, it can produce enough heat to run industrial furnaces. Utilities have framed the fuel as a clear way to slash the emissions associated with their operations.

“These demonstration projects are an important step for us to adopt hydrogen blending statewide, which has the potential to be an effective way to replace fossil fuels,” said Neil Navin, the chief clean fuels officer at Southern California Gas (SoCalGas), in a March statement on its application for hydrogen blending pilots.

Burning hydrogen, particularly in homes, also presents certain risks. Hydrogen burns hotter than natural gas, which can increase emissions of nitrous oxide (NOx), a harmful air pollutant that can react with other elements in the air to produce damaging pollutants including small particulates and ozone.

Hydrogen is a smaller molecule than methane, the main ingredient in natural gas, and can leak more readily out of pipelines. Hydrogen is also flammable. And when certain metals absorb hydrogen atoms, they can become brittle over time, creating risks of pipeline cracks, depending on the materials the pipelines are made of.

There are also outstanding questions about how much hydrogen blending actually reduces greenhouse gas emissions.

Of the utilities that have offered details about the hydrogen source they plan to use for their pilot, roughly half plan to use “green hydrogen,” which is produced using clean electricity generated by renewable sources such as wind and solar. Today, fossil fuels power more than 90% of global hydrogen production, producing “gray hydrogen.”

Most utility blending pilots are targeting blends of up to 20% hydrogen. At those levels, research has shown that hydrogen would reduce carbon dioxide emissions by less than 10%, even when using hydrogen produced with clean manufacturing processes.

Some utilities have estimated the emissions impacts of their pilots. A CenterPoint Energy pilot in Minneapolis using blends of up to 5% green hydrogen was estimated to reduce carbon emissions by 1,200 metric tons per year, which is the approximate energy use of 156 homes. A project in New Jersey testing blends of 1% green hydrogen was estimated to reduce emissions enough to offset the energy use of roughly 24 homes.

Blending gray hydrogen may show no carbon benefit at all, according to some research. That’s in part because hydrogen produces one-third less energy by volume than natural gas, meaning three times the amount of hydrogen is needed to make up for the same unit of natural gas.

And hydrogen requires more energy to manufacture than it will later produce when it’s burned. For these reasons, some environmental groups say hydrogen is an inefficient way to decarbonize homes and businesses; some analysts have called the process “a crime against thermodynamics.”

“There are much better, readily available, more affordable ways to decarbonize buildings in the form of electrification and energy efficiency,” said Jim Dennison, a staff attorney at the Sierra Club.

Advocates including Dennison also worry that investing more in the natural gas system will delay electrification and allow utilities to keep their core pipeline businesses running. “I can see why that’s attractive to those utilities,” he said. “That doesn’t mean it makes sense for customers or the climate.”

‘We’re not sure’ of right mix

While the climate benefits are debated, some research and active projects indicate that burning blended fuel at certain levels can be safe. For decades, Hawaii Gas has used synthetic natural gas that contains 10-12% hydrogen. Countries including Chile, Australia, Portugal and Canada have also run hydrogen blending pilots.

And although pipelines can weather when carrying hydrogen, that’s less likely for distribution lines that reach homes because those pipes are often plastic, said Bri-Mathias Hodge, an associate professor in energy engineering at the University of Colorado-Boulder.

Hodge helped author a 2022 review of technical and regulatory limits on hydrogen and gas blending. With blends below 5%, Hodge said customers are unlikely to face risks or notice a difference in how their appliances or furnaces function.

More uncertainty exists around higher blends. “I think we’re not sure if below 20% or say, from 5 to 20% is safe,” said Ali Mosleh, an engineer at the University of California-Los Angeles who is spearheading hydrogen blend pilot testing with 44 partners, including utilities, to address knowledge gaps in the state.

Although Hodge at UC-Boulder thinks electrification is the more efficient choice for homes, he said the pilots can help utilities get comfortable with blending, which may eventually be applied elsewhere. “It’s not going to really move the needle in terms of decarbonization long term, but it’s a step in the right direction,” he said.

Steven Schueneman, the hydrogen development manager at utility Puget Sound Energy, which serves about 1.2 million electric and 900,000 gas customers in Washington, said incremental approaches like utility blending pilots will signal that hydrogen is a “real industry.” That could help the fuel gain a foothold in other areas, like industrial heat and aviation.

But Schueneman also acknowledges there remains uncertainty around whether hydrogen is the most cost-effective way to decarbonize buildings.

“It’s not clear that blending hydrogen is going to be a prudent decision at the end of the day,” he said.

Puget Sound Energy has conducted two small-scale blending pilots at a test facility. In the future, the utility plans to focus its hydrogen efforts on how blends may function in power plants, rather than in buildings. The nearly 30 blending pilots Floodlight tracked include only projects focused on use in buildings, but other utilities have proposed blending hydrogen at natural gas power plants, where the blend will be burned for electricity.

‘Cost is an essential consideration’

Blending pilots focused on buildings have been spearheaded by some of the largest utilities in the nation as well as smaller-scale gas providers, and are being considered from coast-to-coast.

Dominion Energy, which serves 4.5 million customers in 13 states, has laid out plans for three blending pilots, in Utah, South Carolina and Ohio. National Grid, which has 20 million customers, is pursuing a project in New York. And multiple large California utilities have proposed pilot programs.

Some utilities, such as Dominion and Minnesota-based Xcel Energy, did not reply to several requests for clarification on hydrogen blending plans, or replied to only some queries about their plans. But plans from certain utilities have been detailed in regulatory filings with state utility commissions.

The pilots for which cost data are available range in price from roughly $33,000 for Puget Sound Energy’s small-scale testing (which ratepayers did not fund) up to an estimated $63.5 million for a decade-long pilot proposed by California utility Pacific Gas & Electric (PG&E), which would focus on blending 5% at the start ranging up to 20% hydrogen in transmission gas lines.

If approved, customers would pay up to $94.2 million for PG&E’s pilot, because of the rate of return utilities are able to collect from customers. California utilities are aiming to recover more than $200 million in total from customers for their proposed pilots.

California regulators have rejected some previous blending proposals from utilities, saying companies should use “every reasonable attempt to use existing and other funds before requesting new funds.” Advocates including the Environmental Defense Fund (EDF) have argued that the projects are not in the public interest, particularly amid the state’s spiking utility bills.

“Cost is an essential consideration,” said Erin Murphy, a senior attorney at EDF. “When you’re passing on costs to ratepayers, you have to demonstrate that that is a prudent investment.”

Pilots have gotten pushback in other states, including Colorado and Oregon, where projects were recently dropped or delayed, and opposition has been fierce in California, which has the most pilots proposed to date. The mayor of Truckee, California, which could host a project, submitted a comment to regulators explaining the town does not support it. And following protests at two California universities that planned to collaborate on projects, utilities downsized the plans.

After student opposition at University of California-Irvine, SoCalGas reduced the scope of the project and proposed an additional pilot in Orange Cove, a small agricultural community of about 9,500 people. Ninety-six percent of Orange Cove’s population identifies as Hispanic or Latino, and roughly 47% of residents live below the federal poverty line, according to the U.S. Census.

Some Orange Cove residents also are concerned about blending, which SoCalGas hopes to test at up to 5% hydrogen levels. Genoveva Islas, who grew up there and is the executive director of Cultiva la Salud, a public health nonprofit based in nearby Fresno, said the local approval process lacked transparency and public input.

The project is slated to sit steps away from the Orange Cove football field, near the town’s high school, middle school and community center. “In short, I would just say it is concerning,” Islas said.

In an email, the utility told Floodlight that the city “proactively asked SoCalGas to undertake this project in its community” and said it was “expected to bring socioeconomic benefits to Orange Cove.” The utility also said it hosted a community engagement meeting about the project in Spanish and English and has provided fact sheets to the community in both languages.

In Colorado, where Xcel Energy had planned to blend hydrogen in an isolated neighborhood, some residents learned of the pilot from a journalist reporting on the project.

That has made some feel like unwilling test subjects in an experiment that others, like the Sierra Club’s Dennison, say are unnecessary. “The community’s immediate reaction is that they don’t want to be guinea pigs,” Islas said. “They do not understand how this decision was made without their involvement or their consent.”

The great majority of the projects, including the one in Orange Cove, are still under review by regulators. Meanwhile, researchers are undertaking more studies to understand the technical limits of blending.

“There are a lot of unknowns,” said Mosleh from UCLA. “Some fundamental research needs to be done.”

Utilities are trying hydrogen-blended fuels. There are a lot of unknowns. is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

The Biden administration’s lucrative incentives for hydrogen are slated to only go to “green” producers who use newly built clean energy sources to make the fuel — and some hydrogen producers aren’t happy about it.

Clean hydrogen has the potential to be a low- or zero-emission alternative to fossil fuels, and could clean up energy-intensive industries like steelmaking and heavy-duty transportation. But it’s not economical to produce just yet.

That’s why the Inflation Reduction Act established the 45V tax credit to help incentivize hydrogen that’s produced with clean energy under these three conditions:

1. Renewable energy used to make hydrogen must be newly added to the grid, not taken from existing sources
2. It has to be generated near the hydrogen plant
3. It has to be generated around the same time it’s used

Many companies, including federally backed hydrogen hubs, have pushed back against the rules, saying they will make their projects economically unviable.

But they’re not the only voice out there, Kari Lydersen reports for the Energy News Network. Companies like Hy Stor Energy and Q Hydrogen say they’re committed to producing clean hydrogen, and want the Treasury to only reward fuel that’s produced from new clean energy sources.

Without these parameters, producing hydrogen could actually end up driving up emissions, environmental advocates and academics say. That’s why Hy Stor Energy wants to build new renewable energy, use it to produce hydrogen, and then store it in a network of underground salt caverns for use when renewables can’t meet power demand. Q Hydrogen meanwhile draws its electricity from a nearby hydroelectric plant, and aims to sell its clean fuel to industrial users that otherwise would rely on fossil fuels.

Read more about these hydrogen innovators at the Energy News Network.

— Kathryn Krawczyk

More clean energy news

🛑 Coal exports on hold: The bridge collapse in Baltimore is blocking access to the U.S.’s second-largest port for coal exports and will likely disrupt the industry for at least six weeks. (E&E News)

♿ Are EVs really for everyone? Electric vehicle chargers are often inaccessible for people with disabilities, a growing problem as officials forecast millions more electric vehicles on roads in the coming years. (Mother Jones)

🚛 Rolling toward zero-emission trucks: The U.S. EPA announces a new rule that aims to get more zero-emission heavy- and medium-duty trucks on the road by 2032, earning praise from environmental groups but concern from truck and engine manufacturers. (New York Times, NPR)

🏥 Efficiency saves lives: Appliance energy efficiency standards reduced emissions and prevented as many as 4,400 pollution-related deaths in 2017, researchers find, making a case for even stronger requirements. (Utility Dive)

⛵ Offshore wins: Over the past week, four developers bid to build offshore wind projects off the Connecticut, Massachusetts, and Rhode Island coasts, and the federal Interior Department approved three large offshore wind farms. (CT Mirror, E&E News, Associated Press)

🏭 Passing on gas: As economic growth drives new electricity demand, utilities look to natural gas as a quick fix, but customers and clean energy advocates say the strategy lacks ambition and ignores the giant pool of federal money currently available for cleaner alternatives. (Grist/WABE) 

🌱 Greenhouse effect: Indoor farming offers producers steady growing conditions amid increasingly unpredictable weather, but their energy consumption represents a potential threat that could worsen climate change. (Washington Post)

👀 Eyes on state climate policy: A new searchable database aims to reveal how lobbying is derailing climate policy in 17 state legislatures. (Inside Climate News)

🗑️ Trash’s emissions impact: Landfills release an average of three times more methane than they report to federal regulators, a study of 1,200 landfills across the country finds. (New York Times)

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These hydrogen innovators want to keep it green is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

The term “clean energy” often brings to mind gleaming solar panels, spinning wind turbines or water surging through a hydroelectric dam.  

Few people would imagine dark salt caverns a mile underground, but these geologic formations could play a key role in the development of emissions-free green hydrogen.

Hy Stor Energy wants to use such salt caverns in Mississippi and elsewhere to store hydrogen made by splitting water molecules with electrolysis powered by new renewable energy. The fuel could then be stored in the caverns until electricity demand spikes and then used to generate emissions-free electricity when other renewables can’t meet demand. 

Hy Stor Energy is among the companies that supports proposed rules for a potentially lucrative federal tax credit for “green” hydrogen fuel production. These companies provide a counterpoint to power companies and other industry players who are pressuring the government to relax provisions that demand green hydrogen production does not use existing renewable or nuclear power that would otherwise be used on the grid. 

Companies, including members of federally funded hydrogen hubs, have argued that under the proposed rules governing the tax credit known as 45V, not enough hydrogen will be produced to meet demand and help develop a zero-emission economy. 

But environmental advocates and academics point to studies showing that hydrogen production without stringent rules can actually lead to emissions increases. They, along with some industry sources, are calling on the U.S. Treasury Department to enshrine proposed requirements that hydrogen receiving tax credits meet “three pillars”: The renewable energy used to power electrolysis must be newly added to the grid, known as incrementality or additionality; it must be generated near the hydrogen plant, known as deliverability; and it must be generated around the same time it is used, known as hourly matching.

“Without the right rules in place, you’re going to see companies try to make as much hydrogen as possible, since the 45V tax credit is so lucrative,” said Dan Esposito, manager of the electricity program for the consulting firm Energy Innovation: Policy & Technology.

That, in turn, would place additional demand on the existing grid, much of which would be supported by coal and natural gas. 

“Not only are you making [greenhouse gas emissions] worse, you’re making it more difficult to clean up our electric system,” Esposito said. “The climate community is saying if we set weak rules it will be a disaster, this will not be clean hydrogen, it will just be a huge greenwashing campaign.”

Hy Stor Energy is among the hydrogen companies and renewable energy developers that have sent letters supporting the rules as proposed. A March 1 letter to Treasury and White House officials from companies including Hy Stor Energy says:

“Clear section 45V guidance that upholds the three pillars is necessary to guard against harmful climate impacts and significant emissions increases that might be driven by increases in fossil fuel-based generation to sustain electrolysis when renewable generation sources are not available. Weak section 45V rules would permit this perverse result, thus imposing significant climate and market risk that would undermine the achievement of U.S. climate goals, further the perception of political risk in U.S. climate regulation, and upset the hard-won momentum currently driving investment in the sector.”

That letter was also signed by renewable energy developers CWP Global and ACCIONA, ACCIONA affiliate Nordex Green Hydrogen, major hydrogen producers Air Products and Synergetic, geothermal energy provider Fervo Energy and others.

The action followed a Feb. 26 letter from seven federally funded hydrogen hubs to the Treasury Department arguing against the three pillars. That letter touts the job creation potential of the hubs, but adds:

“Unfortunately, these investments and jobs will not fully materialize unless Treasury’s guidance, in its current form, is significantly revised, as many of the projects generating these investments and supporting jobs will no longer be economically viable.”

Esposito noted that when the hubs were created by the 2021 Bipartisan Infrastructure Law, the Inflation Reduction Act, including the 45V tax credits, had not yet passed; it was signed by President Joe Biden nine months later. In other words, the federal government expected the hubs to be able to succeed even without tax credits, Esposito argues. 

“The public evidence suggests the hubs can do this the right way from the start,” he said. “They’re supposed to be centers of innovation, the whole point is they are research and development, so we shouldn’t give them the easiest path forward.” 

Salt to industry 

Hy Stor Energy CCO Claire Behar said that the company controls 10 salt domes in Mississippi and has necessary permits from the state oil and gas regulatory body to move forward with their hydrogen production and storage project. 

“We like to think our location at scale can really serve as a strategic hydrogen reserve, with years worth of hydrogen storage,” Behar said. 

Power generation companies, “green steel” mills, and other hydrogen-hungry industries could be co-located near Hy Stor Energy. The company says these industries would basically be powered by renewables built specifically for this purpose, fueled by hydrogen that is created by renewables then stored for when it’s needed. 

“It is really about having that large-scale storage that is dispatchable, we’re able to deliver a 24/7 product,” said Behar. “Those end users understand that the zero-carbon solution will have to be hydrogen. We’re focused on both the industry already existing in our region — maritime, large industrial — and also attracting new greenfield customers.” 

Behar said requiring new renewable generation is crucial to define hydrogen production as clean. 

“We can’t be cannibalizing current demand by using those renewables” already on the grid, Behar said. “We need a strong 45V rule that will protect against harmful climate impacts. If we have weak or blurred rules, it can really carry significant climate and emissions risks that will undermine both the achievement of climate goals and industry credibility.” 

New technologies 

Start-up company Q Hydrogen argues that green hydrogen can be produced in ways that use much less energy and water than typical electrolysis. Q Hydrogen CEO Whitaker Irvin Jr. said his company never pushed for tax credits, and he thinks Q Hydrogen can produce hydrogen at a profit without such supports. 

But since tax credits are reality, he wants stringent rules making sure that only truly green hydrogen production is eligible. 

“The economic incentive is so astoundingly large, that if it does exist people can be creative and make [the three pillars] work,” Irvin said. 

Irvin explained that technology pioneered by his father to develop a more efficient heat pump can actually make hydrogen with low energy and water requirements, by using streams of air with wide temperature differential to create a chemical reaction. 

The company’s flagship facility is in the New Hampshire town of Groveton, drawing water from the Ammonoosuc River and electricity from a nearby hydroelectric plant, as well as backup power from the grid. 

The hydrogen produced can in turn create clean energy that can be sold to industrial users and deployed when needed, Irvin said. This could relieve demand on the grid from existing industries during peak demand times, and help attract new industries to a town that has struggled economically since a paper mill closed in 2007. Irvin said he ultimately hopes the hydrogen-powered plant on the former paper mill site can sell power into New England’s grid. 

He said Q Hydrogen would qualify for tax credits under the proposed IRS rules, since they use relatively little energy and since New England’s grid operator already employs technology that makes it possible to log when and where renewable energy is consumed and produced, helping to meet the hourly matching and deliverability pillars of the rules. This capability, along with ample water resources, are the reasons Irvin chose New England for the company’s first commercial-scale plant.

The company has a pilot operation in Park City, Utah, running since 2016, that can produce 10,000-50,000 kgs of hydrogen per day. Plants are also planned in Sweden and Germany, he said.  

In December 2022, Q Hydrogen wrote a letter to the Treasury Department in response to its request for input on the tax credits. The letter urges the department to require additionality and stringent accounting for emissions impacts, in awarding tax credits. 

“We don’t need [the tax credit] to be financially viable, but the industry does,” Irvin said. “That boost will allow for innovation, technological deployments, mass use at scale. I compare it to the early solar and wind days when subsidies were involved. I see this as the beginning of hydrogen becoming a real player in the market.” 

Hourly matching

The 45V rules as drafted require hourly matching documentation for renewable energy by 2028, showing that the renewable energy used to power hydrogen production was generated within the same hour. 

Currently, energy attribute certificates, or EACS — similar to renewable energy credits — are based on annual matching, denoting how much clean power a user theoretically buys and uses in a year. 

But if that power is mostly generated by solar in the summer, for example, the user is actually still relying on fossil fuel generation in the winter. Hourly matching can help ensure that renewable energy is literally powering an operation, but critics have said the software and other technology isn’t available to document hourly matching on a large scale any time soon. 

Toby Ferenczi is co-founder and CEO of Granular Energy, a software company that provides hourly matching certification to utilities around the world. He says such documentation is entirely feasible and will drive construction of more renewable energy, including for powering green hydrogen. 

“How do you as a consumer choose one type of electricity over another?” asked Ferenczi. “Whether you are a homeowner trying to buy clean energy for your home, or a tech company trying to buy clean energy for your data center, or a green hydrogen developer trying to buy green energy for your electrolyzer, it’s the same question.” 

Hourly matching does not prevent green hydrogen producers from diverting renewable energy from the grid and causing other customers to rely on fossil fuels. But affixing time stamps to renewable energy credits and mandating hourly matching for tax credits will create market value for renewable energy used in real time, Ferenczi argues, driving the construction of more renewables and energy storage. Batteries or other storage technologies can store renewable energy that would also qualify for hourly matching when dispatched. 

“Eventually tradable instruments can be priced according to supply and demand, with revenue streams for things like energy storage and flexibility, as well as more renewable energy,” Ferenczi said. “If you’re a green hydrogen producer, you could either sign lots of individual contracts with individual wind farms or solar farms, or just sign up for a product from your local utility or energy supplier” that can provide clean energy with hourly-matched credentials. 

Even hydrogen producers that have exclusive power purchase agreements, or PPAs, with new renewable developments or on-site renewables will still need energy from the grid when the wind isn’t blowing or sun isn’t shining, he argues. So hourly matching will help them ensure all their power is truly green. He thinks hourly matching is a potentially better way to create more renewable energy than PPAs with new renewable developments. 

“Additionality is first of all very difficult to prove. Even if you’re the one that signed a PPA, how do you know that someone else wouldn’t have signed that same PPA?” he asked. “Is it the person who signed the PPA who gets to claim the benefit, as opposed to the person who put up the equity or debt for the project or took the risk of developing the site at the very beginning? It’s very difficult to claim additionality and then assign the rights to those claims to any one individual.” 

Time-stamped EACs are kept in a registry operated by regional transmission organizations. While technology upgrades will be needed to handle hourly matching nationwide, Ferenczi said PJM and other transmission organizations — including New England’s — already have similar capability. 

Ferenczi said it is crucial that tax credit rules retain strong requirements to ensure “clean” hydrogen production doesn’t actually increase emissions, and called on regulators to make sure the proposed rules “aren’t watered down.” 

“They’re absolutely essential to preventing what could be a catastrophe in terms of carbon emissions, that pushes up the cost of electricity for everyone,” said Ferenczi, who previously founded an international NGO called Energy Tag focused on time-stamped EACs. “If we build a fleet of gas turbines to meet this increased demand [for electricity to make hydrogen] because you don’t have an hourly matching requirement, you’re going to have a perverse side effect which is the opposite of what you intended.”

Editor’s note: This article has been updated to correct Claire Behar’s title.

Not everyone in the hydrogen business wants to see weaker rules for federal tax credits is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

Climate and clean energy advocates weighing in on CenterPoint Energy’s ideas to decarbonize its natural gas business in Minnesota applaud the effort but say it falls short of what’s needed to meet the moment.

The state’s largest gas utility submitted an “innovation plan” last summer to the Minnesota Public Utilities Commission, which is taking public comments on the plan through March 15. Over the course of hundreds of pages, the utility proposes 18 pilot projects — from tree planting and geothermal to carbon capture and hydrogen blending.

Altogether, the utility is asking to spend more than $105 million on 18 pilot projects that it estimates will reduce the equivalent of around 330,000 metric tons of carbon emissions over the five year plan, which would represent about a 4% reduction, according to calculations by clean energy organizations.

The plan “is going to move us, but it’s not going to move as fast enough,” said Melissa Partin, climate policy analyst with the Minnesota Center for Environmental Advocacy, one of several groups that have submitted comments on the plan.

The docket (M-23/215) stems from the Natural Gas Innovation Act, a 2021 state law that, among other things, authorizes gas utilities to collect money from ratepayers for projects aimed at reducing greenhouse gas emissions. Xcel Energy submitted a similar plan to state regulators late last year for its natural gas utility.

Gas utilities are expected to make up a growing share of the state’s climate pollution as the state’s electric utilities transition to 100% clean power by 2040. Two out of every three households heats their home with natural gas, and many industries rely on the fuel to operate medium and heavy machinery — a potentially daunting challenge as the state seeks net-zero climate emissions by 2050.

Not a ‘silver bullet’

The Minnesota Center for Environmental Advocacy and other advocates have asked the Public Utilities Commission to supplement the pilot project spending with emission-reduction targets for the utilities.

While many of CenterPoint’s ideas look promising and some could eventually scale up to make a bigger impact, Partin said the Natural Gas Innovation Act will not alone drive the state across the finish line for its climate goals.

Other strategies will be needed, such as updating commercial and residential building codes, improving energy efficiency standards for appliances, and considering a ban on allowing any natural gas in new buildings, which, Partin said, “will be difficult in Minnesota’s current political climate.”

Utilities are somewhat hamstrung by the act’s requirement that half the budget for the initial plans must go to alternative fuels, which “stacks the deck” in favor of renewable natural gas and hydrogen, Partin said.

CenterPoint is already blending hydrogen into its system from a downtown Minneapolis facility, and so proposing additional such projects does not seem to fit the definition of “innovation,” Partin said. Meanwhile, a recent study by the Institute for Energy and Environmental Research found little to no climate benefit from blending hydrogen in existing gas supply lines, in part because hydrogen is less energy dense and more prone to leaking.

Joe Dammel, managing director of buildings for Fresh Energy, said CenterPoint’s plan “is definitely not a silver bullet; it’s not going to get us where we need to get.”  

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While praising the utility for its yearlong stakeholder process and for proposing new resources and changes to its business model, the plan shows that CenterPoint will not contribute “their fair share of the emissions reductions needed based on this,” Dammel said.

CenterPoint’s pilots for weatherization and retrofitting homes look promising, he said, but ideas for purchasing carbon offsets, selling gas-powered heat pumps and injecting hydrogen into the existing gas system have little chance of success.

CenterPoint’s proposal to create green hydrogen, produced from renewable energy, and blending it into the gas distribution system is not “scalable” and has limitations. Commercial gas heat pumps “are not a very viable technology,” Dammel said. Instead, the utility should focus on applying hydrogen technology to decarbonize industrial end users.

Dammel added that to reach the state’s 2050 carbon neutrality goal CenterPoint’s first plan would have to increase its emissions reduction six-fold, from 4% to 27%.

The cost of learning 

Audrey Partridge, policy director for the Center for Energy and Environment, said the pilot programs will lead to better data and a greater understanding of the potential energy sources and their carbon emissions.

“I’ve heard people describe it as throwing spaghetti at the wall,” Partridge said. “But we need to come up with all the possible solutions and pursue them on a small scale to see which ones are going to stick. These aren’t necessarily mature ideas, as you would see in other areas of energy. They’re very, very new.”

The pilots that could yield important advances include using heat pumps for large loads and electrification of low and medium heat processes in the industrial sector, she said. Residential deep energy retrofits and geothermal technologies will likely reduce natural gas consumption.

“We do hope that CenterPoint and Xcel get approval to move forward on these plans so that we can start to learn from them,” Partridge said.

The docket could begin a new path for CenterPoint, which only sells gas. The Minneapolis Deputy Commissioner of Sustainability, Healthy Homes and Environment, Patrick Hanlon, said CenterPoint’s plan allows the utility to provide “heat as a service,” a crucial distinction that gives room for innovations the city supports, including ground source networked geothermal systems, district energy and other approaches.

“Heat as a service allows CenterPoint to move away from natural gas and move towards some alternative, more climate-friendly sources of heat,” Hanlon said. The city also wants to ensure that residents are “not burdened” with the cost of the innovative pilots or switching to a different level of service, he said.

The attorney general’s office, which represents ratepayers, suggested the cost for some pilots outweighed the carbon benefits while suggesting the commission modify or deny sections of the plan.

“Portions of CenterPoint’s plan are not yet ready for primetime: several of the proposals lack necessary partners, and many lack sufficient detail to establish their prudence,” the office wrote. “Other proposed projects are unlikely to achieve the greenhouse gas savings CenterPoint suggests and unlikely to justify the astronomical cost to ratepayers.”

The attorney general and clean energy groups also raised concerns about CenterPoint’s request to exceed pilot budgets by as much as 25% without statutory approval. Clean energy groups also seek modifications to CenterPoint’s plan to recover the cost of projects.

The Public Utilities Commission is expected to hold hearings later this year before deciding on the plans for both utilities.

Minnesota ‘innovation plans’ call on gas utilities to imagine their clean energy future  is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.