US Gulf Coast hub aims for 3.2 million mt/year of clean hydrogen: CHF

The group leading the US Gulf Coast's push to become a clean hydrogen hub is aiming for the region to produce about 3.2 million mt/year of low-carbon hydrogen, no matter its color designation, said Center for Houston's Future CEO Brett Perlman.

In pursuit of the Department of Energy's $8 billion on tap to finance six to 10 regional hydrogen hubs, the Houston-based hub – now christened HyVelocity Hub – submitted its concept paper on Nov. 7, in which it expressed its 3.2 million mt/year ambition. Final applications for DOE funding, originally appropriated by Congress in 2021 through the passage of the Infrastructure Investment and Jobs Act, are due April 2023.

One of the major pitches within HyVelocity Hub's concept paper is its color agnosticism, or its indifference towards hydrogen production methods. Perlman said he wants the hub to focus on hydrogen produced with a low carbon intensity rather than hydrogen produced by a specific technology.

"We already have a lot of companies – start-ups and also established companies – that want to locate in Houston because they know Houston is going to be a leader for this activity," Perlman said. "That was how Silicon Valley got created – you get a critical mass of companies. I think we'll start to see the same thing in Houston."

"It'd be the Silicon Bayou, we like to say, of clean hydrogen," he said.

The 3.2 million mt/year target, or 9,000 mt/day, would be roughly equivalent to the amount of conventional hydrogen produced in the region today for methanol production, ammonia production and oil refining. While there's not yet a target year whereby the Gulf Coast region could reach that target, Perlman said its reasonable to expect that level of production within the next 12 years.

"2023 is really going to be about the application process, and 2024 will be about more detailed planning," he said. "Really, the DOE money wouldn't even flow until sometime in 2024."

Corporate members of the HyVelocity Hub coalition include GTI Energy, Air Liquide and Chevron, all of whom have committed to contributing to the 50% match required by the DOE hub program.

"These are very large companies with significant balance sheets, so I think one of the strengths of this is the projects that are being proposed are by companies that are both committed to Texas and committed to this development," Perlman said.

Hub concept papers submitted

The Gulf Coast region will be one of several vying for a slice of the hub funding. Each selected region is expected to receive between $1 billion-$1.25 billion through the application process with a matching requirement.

In the Midwest, the Great Lakes Hydrogen Partnership, a corporate and academic consortium, announced Nov. 7 that it had submitted its concept paper in preparation for a full application.

The partnership, comprised of Linde, Energy Harbor, GE Aerospace, Cleveland-Cliffs steel manufacturing and the University of Toledo, aims to "transition Midwest manufacturing, mobility, power generation and technology operators away from greenhouse gas emitting feedstocks and fuels, to hydrogen, a low carbon alternative solution," it said.

Unlike the Gulf Coast's pitch, the Midwest region is pegging its hydrogen hopes on nuclear-powered hydrogen generation thanks to its access to ample carbon-free nuclear power. The region also boasts access to Interstate 80 and Interstate 75, a high concentration of manufacturing and technology companies, the Great Lakes marine shipping fleet and a highly skilled workforce, the consortium said.

In the Appalachia region, Pennsylvania Governor Tom Wolf is vying to ensure that Pennsylvania secures hub status. On Nov. 11, the Wolf administration announced that it had submitted its concept paper to the DOE designed to use clean hydrogen to decarbonize the tri-state area's manufacturing sectors.

Wolf also signed a bill that establishes a $50 million/year tax credit specifically for a manufacturing facility that would be a key part of the region's clean hydrogen hub. The bill was in part intended to send a "signal of the serious commitment Governor Wolf has made to a clean energy future," the Pennsylvania Department of Community and Economic Development said in a statement.

Platts, part of S&P Global Commodity Insights, assessed green hydrogen produced by PEM electrolysis in the US Gulf Coast at $5.07/kg (including capex) on Nov. 15, while that produced in Appalachia was assessed at $6.85/kg. Meanwhile, costs for green hydrogen in the upper Midwest were assessed at $5.78/kg on Nov. 15.

Hub ingredients

On Nov. 15, the clean hydrogen advocacy group Hydrogen Forward published a set of criteria that it says would constitute an effective hydrogen hub. Those elements include cross-sectoral deployment to scale demand, market-based carbon-intensity framework to enable competition and innovation, community and workforce engagement, and strong public private partnerships.

"While the H2Hubs program is spurring a competition, this is really an opportunity for collaboration, with the government, important stakeholders and among the industry," Hydrogen Forward said. "While this is a race, it's a relay race, and everyone will see benefits from it."