Texas must fine-tune regulatory oversight to unlock hydrogen opportunity: report

Texas need only make minor adjustments to its regulatory framework to capitalise on its hydrogen potential, according to a new industry-led report.

The Texas Hydrogen Production Policy Council’s December 2024 report said the US state has “prevalent” regulatory oversight, thanks to its unabated fossil fuel-based hydrogen production and use legacy.

Based on the findings from representatives from the likes of Air Liquide, Air Products, Baker Hughes, Chevron, GT Energy, Port of Corpus Christi and more, the report said, “All aspects of Texas’ existing conventional hydrogen industry – production, transportation and storage – are already well-regulated.”

However, it added that new technologies and applications joining the industry warrant “ongoing evaluation.” It calls for state policymakers to maintain existing frameworks with “targeted clarifications and improvements.”

Despite large-scale pure hydrogen dedicated production facilities, the report highlights overlap with other industries, such as ammonia, chemicals and oil refineries.

It claims introducing new regulations for hydrogen production in industry would create an “exceedingly complex administrative challenge,” and that “maintaining the current regulatory landscape is a sound strategy.”

Instead, it focuses on storage and transportation, calling for regulators to adopt the federal minimum pipeline safety standard, and clear requirements to ensure proper management of risks associated with hydrogen’s properties.

“Rulemaking should address hydrogen infrastructure, such as pipeline and casing materials, separately from infrastructure used for other products when is technically merited based on hydrogen’s unique physical properties,” the report reads.

To encourage end-users, it says the state should identify “hydrogen-focused individuals” at relevant state agencies to improve the “effectiveness and efficiency” of oversight in hydrogen applications.

By having centralised points of contact, who can serve as resources to the public and industry, it says could provide consistent guidance.

“For example, identifying a hydrogen-focused individual at the Railroad Commission of Texas (RRC) who can provide guidance regarding hydrogen matters within the RRC’s jurisdiction.”

Finally, it stresses the need for the state to continue “streamlining and standardising” its permitting processes.

“In other parts of the US, a lack of permitting clarity and efficiency is inhibiting the development of facilities and infrastructure needed for the hydrogen industry to expand. Texas has an opportunity to remain best-in-class in its permitting processes, positioning the state to maximise growth opportunities in the hydrogen sector.”

As the producer of 25% of US gas and holder of nearly a third of US wind capacity, the Hydrogen Council in 2023 said investment in hydrogen infrastructure in Texas could be worth $247bn by 2050.

Production facilities for hydrogen-derived liquid fuels (kerosene and ammonia) could make up close to 30% of all hydrogen demand and replace existing refineries along the Gulf Coast, according to the Council’s Hydrogen in Decarbonised Energy Systems report.