The US is well positioned for hydrogen growth but the new administration should be mindful of its long-term potential and solutions will evolve over decades, according to Austin Knight, Vice-President of Hydrogen at Chevron New Energies.
Speaking on the Energy Gang podcast, he said, “Hydrogen is happening, we have cases to show what’s real. We’re actively developing the HyVelocity Hub on the Gulf Coast, integrating natural gas value chains and carbon capture, which customers around the world are demanding. We have to remember all this is long term and these solutions are going to play out over decades – and there will be many more administrations.”
Knight highlighted three main sectors where hydrogen beats the alternatives.
“Firstly, heavy industry for the high heat applications, which are typically using natural gas and refining, and other high heat requirements; heavy duty transportation is where hydrogen is a likely winner – there’s going to be competition with batteries, but that’s an area that’s difficult to electrify at a large scale; and finally there are some really interesting electricity applications, which in some ways is a bit counter intuitive, but in terms of long-duration energy storage or geographies who are energy importers – they may not have much sun or wind, or gas resources. We’re seeing a lot of hydrogen as the right solution in those sectors.”
“Personally I think heavy duty transport and road transport starts to make the most sense early on. Where there is a desire to move large cargoes or people, over long distances with high utilisation, hydrogen is a solution that’s viable. But it’s still early, we need the infrastructure to be built up, the supply solutions to be affordable, and the trucks to be implemented and manufactured at scale.”
Acknowledging the ‘exuberance’ around hydrogen has given way to more reality-grounded discussions, Knight added, “The reality is it is the right fit for industry, but it’s not naturally competitive with higher carbon alternatives. So the lower carbon intensity solutions are going to cost more, and will require policy and technology advancements to close the gap. Innovation in this space isn’t for the faint of heart, it’s going to take a lot of resolve.”
Asked whether introducing green premiums or driving down costs will be needed to spur development, Knight added, “It’s going to be a combination of both.”
President Donald Trump’s suspension of funding from two key pieces of Biden-era laws has cast uncertainty over the future of clean hydrogen development.
Source: H2 Intelligence
On his first day in office, he issued an executive order to halt further funding from the Inflation Reduction Act (IRA) and Infrastructure Investment and Jobs Act (IIJA), which offered production tax credits of up to $3/kg and a combined $7bn of funding for seven hydrogen hubs, respectively, and backed fossil fuel development.
So far, only Xcel Energy’s pilot hydrogen plant, at the Prairie Island Nuclear Generating Station, has produced hydrogen as part of the hub program, according to H2 Intelligence research.
The pilot facility was inaugurated last year to test the feasibility of using nuclear energy to generate hydrogen with a Solid Oxide Fuel Cell (SOEC) electrolyser. Xcel Energy’s project and the majority of H2Hub production sites are eagerly awaiting funding from the DOE before they proceed to take final investment decision (FID) and subsequently begin construction. By 2035, the majority of production sites should be operational.
By 2030, H2Hub production sites could be producing as much as 5,450 tonnes per day (tpd) of clean or low-carbon hydrogen. The HyVelocity hub is projected to produce 1,295 tpd.
The US produces 9.3 million tonnes per annum (mtpa), equivalent to 13.9% of worldwide hydrogen production and second only to China, according to the intelligence platform.
Currently, almost 88% of total hydrogen output is grey and produced by a steam methane reformer (SMR). The top producers of hydrogen are the prominent tier 1 gas companies; Linde has a dominant presence and roughly a third of hydrogen is produced on a captive basis. The refining and chemicals sectors, which utilise 90% of annual production volumes, are characterised by captive hydrogen producers who build and operate hydrogen plants catered to their own needs.
Source: H2 Intelligence
Source: H2 Intelligence
Looking to 2030, blue and green hydrogen production is expected to supersede grey production and the US alone could be producing over 12 mtpa of low-carbon hydrogen. The production and supply environment will undoubted shift away from the traditional gas producers and towards the oil & gas business (SoCalGas, ExxonMobil).
Chemical and fertiliser producers (Yara, CF Industries), which require large volumes of hydrogen for ammonia, will also make significant hydrogen production contributions to the US market. Production technology will shift away from SMRs and gasification technology, towards electrolytic hydrogen production. Steam methane and autothermal reformers (ATRs) will continue to see use as projects focus on equipping old assets with carbon capture technology. The refining and chemicals sectors will still be relevant in 2030 though new demand for hydrogen in the merchant (export), power and mobility sectors will become more evident.
