Biden set to award $7 billion for U.S. hydrogen hubs

Ari Natter, Bloomberg October 10, 2023

(Bloomberg) — President Joe Biden is set this week to announce as much as $7 billion in funding for hydrogen projects across the country as part of a competition to jump-start production of the clean-burning fuel in the U.S., according to people familiar with the matter.

The funding for so-called hydrogen hubs, where the gas can both be produced and used, is intended to highlight its potential as carbon-free fuel to run factories and power plants. The amount of hydrogen produced in the U.S. could surge to 10 million metric tons by 2030, according to a report released earlier this year by the Energy Department.

Biden is scheduled on Friday to visit Pennsylvania, which is leading an Appalachian hydrogen hub that proposes to use natural gas and carbon capture, where he will give remarks on the clean-energy transition, according to the White House. The project, in partnership with West Virginia and Ohio, also includes Shell Plc. 

The awards mark the culmination of a furious race between states for the funding, which was included in 2021’s bipartisan infrastructure legislation. The Energy Department in January urged 33 projects to submit full applications, after receiving 79 proposals. Between six and 10 are expected to receive final awards.

Representatives of the White House and the Energy Department didn’t immediately comment. One of the people, who was granted anonymity to discuss non-public deliberations, cautioned Biden’s agenda could shift amid the administration’s evolving response to Hamas’s attack on Israel. 

Other top contenders for Energy Department funding include a Rochester, New York, project led by a coalition of seven northeast states in conjunction with Plug Power Inc., as well as a California-based public-private partnership that includes retailer Inc. and industrial gas company Air Products and Chemicals Inc. A West Virginia hydrogen hub backed by Senator Joe Manchin that is partnering with natural gas producer EQT Corp. is also under consideration.

The Biden administration has said the gas is needed to achieve its climate goals and has launched an effort to reduce costs — one of the biggest barriers of its widespread use — by 80% to $1 a kilogram by 2030. 

“Clean hydrogen faces a range of first-of-its-kind challenges including cost and business models,” said Alex Kizer, a senior vice president at the Energy Futures Initiative, a Washington non-profit. “The hubs can act as engines for kick starting how these types of challenges can be sorted through.”

Not everyone is a fan. Opponents argue that while hydrogen is a clean-burning source of power, it takes a great deal of energy to produce — and when it’s made with electricity from coal or natural gas, it has a bigger carbon footprint.

“We don’t want to see billions of our tax dollars spent increasing emissions and environmental harm,” said Lukas Ross, a senior program manager with the environmental group Friends of the Earth. “The Department of Energy has considerable power over how this money is implemented. It’s in their hands whether the hydrogen hub program becomes a lifeline for oil [industry].”

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