And thanks to proposed rules from the administration, that output may actually be low-emissions. After a year of fierce lobbying from various industry factions, environmentalists and fossil fuel companies about how the government should define “clean hydrogen,” the Biden administration in December proposed strict stipulations that experts agree will incentivize the production of genuinely zero-carbon hydrogen. (This outcome was anything but a given.)
Should these proposed rules survive the latest round of pushback and become final rules, they could help the industry overcome long-standing criticism that “clean” hydrogen is a murky concept that could, at best, create accidental carbon emissions or, at worst, become a sort of Trojan horse through which fossil fuel companies can smuggle dirty hydrogen into the walls of the decarbonization movement.
Even so, a second major criticism of the fuel would remain: While clean hydrogen can be used for many different purposes, it’s rarely the best option, for reasons of economic and energy efficiency.
When electricity or batteries can do a job directly, they are almost always the cheaper and more practical carbon-free choice. Energy is lost at every step of the clean hydrogen production process, so using the fuel for any electrification-eligible task is a waste of not just energy but of renewable energy — a resource the world is in no position to be careless about dispensing. This is why heat pumps, electric vehicles and renewables are winning, and hydrogen fuel-cell passenger vehicles, hydrogen-powered boilers and hydrogen-burning power plants hardly exist.
But when electrification can’t do the job — that’s when clean hydrogen can and should fill the gap.
The most promising applications for the fuel are cargo shipping, long-haul aviation and steelmaking, tasks that are all difficult to accomplish with direct electrification.
Convincing companies in these industries to switch to clean hydrogen is no simple thing. As it stands, they lack an urgent economic incentive to abandon the billions and billions of dollars worth of fossil-fuel-burning assets they already have. The Inflation Reduction Act’s clean hydrogen subsidies tackle one piece of this equation by making the fuel cheaper, but it doesn’t exactly pay for the costly factory retrofits and product redesigns required to switch to hydrogen-based operations.
Advocates are trying to fix this by pushing lawmakers to introduce policies that would make clean hydrogen more attractive to buyers, like a carbon tax or advance market commitments. In the meantime, all eyes are on the fertilizer industry as a potential anchor customer that can help kick-start the fledgling industry. Should the climate law succeed in making clean hydrogen cheaper than the fossil-fuel-based hydrogen fertilizer producers use by the tons today, then they will have a strong incentive to switch over — and clean hydrogen may finally prove itself to be a force for decarbonization.
If the emerging clean hydrogen industry can manage to keep its product genuinely clean and sell it mostly to appropriate buyers, the fuel will play a meaningful role in the energy transition. If it does not, it will still play a meaningful role — only it will slow down the all-important sprint away from fossil fuels, rather than speed it up.
We’re at the dawn of something important, either way.
That’s why Canary Media is dedicating this week to covering the clean hydrogen industry taking shape in the U.S. and around the world. The fuel has a dubious past, present and possibly even future, but it might just be our best shot at solving some of the most vexing decarbonization problems. Canary’s stories throughout this week will focus on this dilemma, and the tightrope policymakers, industry players and climate advocates are walking to ensure that the emerging clean hydrogen economy is a boon to decarbonization efforts, not a bust.
