Today, over 94 million tonnes [1] of hydrogen are produced annually used in many industrial applications from refineries to producing ammonia needed for fertiliser. The effect; this 112.5 billion-dollar industry [2] is responsible for more than 900 million tonnes [1] of carbon dioxide emissions each year. It is predicted it will be a 1 trillion dollar industry by 2050 [2] so it is of utmost importance to begin decarbonising the production process to help the 70 countries [3], with carbon net-zero pledges, reach their goals. Two countries who have made recent financial commitments to decarbonising hydrogen production are the United States and the United Kingdom.
Snapshot of the US
In recent years, specifically under the Biden Administration, large efforts and investments have been made towards low and no carbon hydrogen production and consumption in the U.S. Two federal bills have been passed addressing hydrogen and its potential in their future energy landscape, the 2021 Infrastructure Investment and Jobs Act and the 2022 Inflation Reduction Act.
2021 Infrastructure Investment and Jobs Act [4]
This act approved 1.2 trillion dollars [4] of spending in the U.S. with the intention of funding infrastructure investments in transportation, broadband and the electrical grid. In respect to hydrogen the bill funds the following aspects.
- $8 billion for the development of at least 4 hydrogen hubs, one of which must specifically focus on producing clean hydrogen from renewable energy sources. These hubs will be large geographic regions that receive funding to create a network of clean hydrogen producers and consumers[4].
- 11 potential US hubs are under preliminary development and approval[4].
- 8 of these potential hubs are in stage 1 of development where memorandums of understanding are being signed and feasibility studies are underway[4].
- 2 hubs are in stage 2 and are acquiring permits and planning infrastructure. These hubs are the Great Lakes Hydrogen Hub in Ohio and the Cavendish NextGen Hydrogen Hub in Florida [4].
- Clean Hydrogen Manufacturing and Recycling - An allocation of $500 million for fiscal year 2022 - 2026 to fund research, development and demonstration projects for all levels of the hydrogen supply chain (production, processing, delivery, storage, hydrogen using equipment manufacturing) [4].
- Clean Hydrogen Electrolysis Program - $1 billion from 2022 - 2026 allocated to “establishing a research development, demonstration, commercialisation, and deployment program for purposes of commercialisation to improve the efficiency, increase the durability, and reduce the cost of producing clean hydrogen using electrolysers.” Within this budget is money for competitive grant competitions, contracts and cooperative agreements.The goal of the program is to reduce the cost of hydrogen production using electrolysers to less than $2 per kilogram of hydrogen by 2026 (compared to over $5/kg today). Recently it was announced how this money will be used and the largest sum, $300 million of it, will be going towards R&D for electrolyser manufacturing [4].
- Lastly, a roadmap was proposed to better understand and solidify the future of hydrogen in the US economy [4-5].
2022 Inflation Reduction Act [6]
This act approved $738 billion of spending in the U.S. with the intention of reducing inflation, reducing prescription drug prices and promoting clean energy production. In respect to hydrogen the bill states the following:
- A tax credit for the production of clean hydrogen, at qualified clean hydrogen production facilities, that are established before 1/1/33, for their first 10 years of service, in the US [6]. The allocated credit ranges from $0.12 to $3.00 per kilogram based on calculations rooted in the producer's ability to meet specific requirements and their lifecycle greenhouse gas emissions calculation [7].
- Rural Energy for America (REAP)
- A 1.7 billion dollar fund that provides guaranteed loan financing and grant funding to agricultural producers and rural, small businesses for renewable energy systems or to make energy efficiency improvements6.
- Alternative Fuel Vehicle Refuelling Property Credit
- Provides a tax credit for alternative fuel vehicles and refuelling and charging property, in low income and rural areas. Fuels include electricity, ethanol, hydrogen etc [6].
- Domestic Manufacturing Conversion Grant
- A 2 billion dollar fund that provides cost-shared grants for domestic production of efficient hybrid, plug-in electric, hydrogen fuel cell… electric vehicles [6].
Lastly, the US has the following renewable energy goals
- Reduce the cost of clean hydrogen by 80% to $1 per kilogram by 2031 [8]
- 100% carbon-pollution-free electric sector by 2035 [8]
- Net zero emissions economy by 2050 [8]
Snapshot of the UK
In 2020, the UK Government announced the £12 billion Ten Point Plan for a Green Industrial Revolution[9] with the goal of accelerating the path to net zero. One of the points focuses on hydrogen. In 2021, the government released its first hydrogen Strategy document10 and most recently, the UK published an Energy Security Strategy [11].
Ten Point Plan for a Green Industrial Revolution [9]
Within this plan, point 2 focused on “Driving the Growth of Low Carbon Hydrogen.” This established the goal of producing 5GW of low carbon hydrogen by 2030. To support this mission the government created a £240 million Net Zero Hydrogen Fund for private sector investments. Furthermore hydrogen was listed as a key priority area in the Net Zero Innovation Portfolio, which provides 1 billion pounds of funding to grow the commercialisation of low carbon technology and innovation9.
UK Hydrogen Strategy [10]
In 2021, the UK released its first hydrogen Strategy document. It highlights the importance green hydrogen will play in supporting the UK’s goal of reaching net -zero by 2050. Furthermore, it establishes a roadmap for hydrogen and addresses the economic impact associated with growing clean hydrogen production [10].
This document allocated and highlights several sources of funding that will support the growth of green hydrogen directly and indirectly.
- The Hydrogen Strategy established a series of competitions, incentivising innovation in hydrogen. This includes the £60 million, Low Carbon Hydrogen Supply 2 Competition, the £68 million Longer Duration Energy Storage Demonstration Competition, the £55 million Industrial Fuel Switching Competition, and the £40 million Red Diesel Replacement Competition [10].
- Commitment to deliver phase 2 of the £315 Industrial Energy Transformation fund that is intended to help businesses reduce their energy demand and carbon emissions [10].
- A £23 million Hydrogen for Transport Programme [10].
- Highlights the existence of the National Bus Strategy which pledges to end the sale of diesel buses and creates Zero Emission Bus Regional Areas (ZEBRA). This program provided £120 million in 2021/2022 to begin the delivery of 4,000 zero emission buses using battery and hydrogen electric power [10].
- The strategy document also emphasises the importance of working with the private sector to achieve their goals. This includes both nationally and internationally. It states they are working with the UK’s export credit agency to finance £2 billion to grow clean energy projects overseas and create export opportunities for British businesses [10].
Energy Security Strategy [11]
This publication provided some further clarity on the Hydrogen Strategy as well as increased ambition. It doubled the ambition for hydrogen production from 5 to 10 GW by 2030, half of which must come from electrolysis. Furthermore, it established £100 million to be awarded to electrolytic hydrogen production contracts through 2023 and further allocation in 2024. This funding stemmed from the Hydrogen Business Model consultation package from April 2022 [11].
Lastly, the UK has the following renewable energy goals
- Implementation of 20% hydrogen blending in natural gas pipelines supplying heating to a large village by 2025 [10]
- 10GW of low carbon hydrogen by 2030 [10]
- Net zero greenhouse gas emission by 2050 [10]
So Who’s Winning?
First, context is important.
Annually the US emits 5 billion metric tonnes of CO2. The UK emits around 350 million [12]. The US emits 14.86 tonnes of CO2 per capita and the UK emits 5.15 [12]. Furthermore, it should be noted that in the US, clean hydrogen is defined as hydrogen that produces less than 2 kgCO2e/kgH2 and in the UK it is defined as hydrogen production where there’s less than 2.4kgCO2e/kgH2.
Comparatively, the US has much more funding declared towards green hydrogen but this is not surprising considering the US’ GDP is 8 times larger than the UK’s [13]. Yet, the UK seems to be more currently focused, with explicit programs and competitions spurring innovation in green hydrogen. Both countries have a long way to go, and only within the last 3 years has there been a significant growth in green hydrogen legislation and funding. This must rapidly increase if both countries wish to meet their goal of being net zero by 2050.
References
- https://www.iea.org/reports/hydrogen September 2022
- https://www.goldmansachs.com/insights/pages/gs-research/carbonomics-the-clean-hydrogen-revolution/carbonomics-the-clean-hydrogen-revolution.pdf February 2022
- https://www.un.org/en/climatechange/net-zero-coalition November 2022
- https://www.congress.gov/bill/117th-congress/house-bill/3684/text November 2021
- https://www.hydrogen.energy.gov/pdfs/clean-hydrogen-strategy-roadmap.pdf September 2022
- https://www.democrats.senate.gov/imo/media/doc/inflation_reduction_act_of_2022.pdf August 2022
- https://www.irs.gov/pub/irs-drop/n-22-58.pdf 2022
- https://www.energy.gov/eere/fuelcells/hydrogen-shot September 2021
- https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/936567/10_POINT_PLAN_BOOKLET.pdfNovember 2020
- https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1011283/UK-Hydrogen-Strategy_web.pdf August 2021
- https://www.gov.uk/government/publications/british-energy-security-strategy/british-energy-security-strategyApril 2022
- https://ourworldindata.org/co2-emissions 2021
- https://www.imf.org/external/datamapper/NGDPD@WEO/OEMDC/ADVEC/WEOWORLD/USA 2023
By Chris Hewgley, April 2023
