US hydrogen industry watchers are scraping for details on how the winners of a combined $7 billion in federal grants plan to spend those funds, with much of the Biden administration's hydrogen hubs program still hidden behind confidentiality agreements.
The search for information continues two months after the US Energy Department awarded about $1 billion each to seven regional projects, narrowed from dozens of applicants vying to become first movers in the nascent hydrogen sector. The Oct. 13 announcement culminated a nearly two-year competition for the federal funds.
Missing from that announcement were the names of the companies that would be investing that money to develop the production and distribution of "clean" hydrogen, which under the hubs program includes hydrogen produced using natural gas.
While the DOE has since shared the lead contractors associated with each project, the agency has not released the winning grant applications due to the proprietary information contained. Many of the lead contractors are nonprofits or public-private partnerships set up to administer the program on behalf of the other developers involved.
The void has left many stakeholders piecing together details from corporate press releases that have come out since the DOE's reveal. Hundreds of entities have announced their involvement in at least one hub. However, few specify whether they will be receiving federal funds or committing their own capital, according to an S&P Global Commodity Insights analysis of those announcements.
"The use cases for the hydrogen associated with some of the hubs is not obvious to me," Sasha Mackler, executive director of the Bipartisan Policy Center's energy program, said in an interview. "I'm sure they've thought it through, I'm just waiting to see what the plans are."
A closer look at the hubs
Hydrogen gas does not release CO2 when burned, and it has the potential to substitute for fossil fuels in various applications, including transportation and heavy industry.
The bipartisan infrastructure law of 2021 authorized the DOE to spend $8 billion on the development of regional hydrogen hubs, or networks of producers and offtakers. Since then, the agency has set aside $1 billion of that funding for a separate program to spur hydrogen demand, leaving the rest to be invested in hydrogen hubs across 16 US states.
The DOE has estimated that the seven winning hubs will generate approximately $40 billion in total private investment. The value far exceeds the 51% private share required by statute, said Brian Murphy, hydrogen and low carbon fuels analyst at Commodity Insights.
"From this perspective, the hub grants are a substantive incentive rather than the driving force behind clean hydrogen market development in the US," Murphy said.
While attracting criticism over transparency, the Biden administration has said it plans to factor input from host communities into the proposed hydrogen hubs. Starting in late October, the DOE's Office of Clean Energy Demonstrations hosted a series of question-and-answer sessions that included presentations from project representatives for each hub.
Some of the briefings pinpoint specific projects within each hub proposal, such as the Midwestern Alliance for Clean Hydrogen. Clustered around the Great Lakes, the hub plans to use both electricity and natural gas to produce hydrogen for the transportation sector, among other end uses. Early projects involve Constellation Energy Corp., Invenergy LLC, L'Air Liquide SA, and BP PLC's Whiting refinery, according to the alliance's presentation.
Another award recipient, the Alliance for Renewable Clean Hydrogen Energy Systems (ARCHES), has said it plans to spend its $1.2 billion in DOE funding on 39 projects across California. The public-private partnership is planning 70 projects in total.
One project selected for DOE funding would convert Northern California Power Agency's Lodi Energy Center Project to run on a blend of natural gas and hydrogen, according to GHD Inc. and utility worker union IBEW 1245. The Lodi, Calif., power plant was involved in a study launched by Pacific Gas and Electric Co. in 2022 to test hydrogen-gas blending for various end uses.
A spokesperson for ARCHES declined to disclose the full list of DOE-funding projects, noting that the full award is still subject to negotiation.
Meanwhile, advocacy groups are pressing for details on the potential health and environmental impacts of the infrastructure proposed.
"There's a lack of transparency, which is just kind of fueling distrust from community-based organizations," Batoul Al-Sadi, an equity advocate with the Natural Resources Defense Council (NRDC), said in an interview.
The NRDC supports the adoption of low-carbon hydrogen but has called on the DOE for greater transparency on its hydrogen spending. Like electricity, hydrogen has a highly variable carbon footprint, depending on how it is produced.
"I think that we definitely need more information," said Erik Kamrath, a hydrogen advocate with NRDC, noting that the group attended every one of the community briefings.
Of particular importance to the NRDC are the emissions reduction targets for each hub, as well as the relative volumes of hydrogen produced by various energy sources, such as renewable-powered electricity and natural gas.
Stakeholders involved with four of the seven hubs have said they plan to produce hydrogen from gas feedstock, using carbon capture technology to mitigate emissions. But the process — resulting in what's known as "blue" hydrogen — has come under the scrutiny of environmentalists, even though the DOE is required by statute to invest in it.
At the very least, Kamrath said, the DOE could share when certain data points will be made public. "We're very aware that some types of information are confidential for business," Kamrath added.
Targeted demand
Another subject of scrutiny has been the proposed end uses of the hydrogen, with some industry watchers urging the Biden administration to prioritize hard-to-electrify applications.
Since Oct. 13, several hydrogen hubs have offered more clarity on their targeted demand. At least six of the seven hubs plan to produce hydrogen as a fuel for heavy-duty vehicles, while at least four plan to supply hydrogen to ammonia plants.
The target end uses proposed for each hub are "focused on local high-emitting sectors where clean hydrogen can play a role," Murphy said.
For example, Murphy noted that the Gulf Coast's HyVelocity Hub is located near roughly half of existing US hydrogen demand from oil refineries and ammonia plants.
Murphy said the success of a hub could decrease the cost of clean hydrogen locally through economies of scale. Cheaper clean hydrogen could become an attractive solution for additional end uses, leading to expanding demand, he said.
The US DOE in 2021 set a goal of reducing the cost of hydrogen produced with zero or near-zero carbon emissions to $1/kg by 2031. The Platts assessment of the monthly average price of carbon-neutral hydrogen in November was $2.20/kg for the California market and $1.51/kg on the US Gulf Coast.
Platts carbon-neutral hydrogen price assessments are an offering of S&P Global Commodity Insights.
S&P Global Commodity Insights reporter Daniel Weeks produces content for distribution on Platts Connect. S&P Global Commodity Insights is a division of S&P Global Inc.
S&P Global Commodity Insights produces content for distribution on S&P Capital IQ Pro.