In this week’s episode, host Daniel Raimi talks with Aaron Bergman and Alan Krupnick—both scholars at Resources for the Future—about the technology and policy landscape of hydrogen fuel. Bergman and Krupnick discuss methods of hydrogen fuel production, the raft of new federal policies that incentivize the production of low-emissions hydrogen and build up the regional marketplaces known as “hydrogen hubs,” why some communities oppose hydrogen development, and how hydrogen can contribute to global warming.
Listen to the Podcast
- Hydrogen could provide a low-carbon alternative in the industrial sector: “Hydrogen has the potential to displace a lot of carbon dioxide emissions in industrial and other sectors out there … You need heat for these industrial processes, and a lot of that heat is produced by burning natural gas. There’s potential to replace some of that heat with hydrogen.” —Aaron Bergman (4:36)
- The Bipartisan Infrastructure Law funds a national hydrogen program: “The program is supposed to help demonstrate the production, processing, delivery, storage, and end use of clean hydrogen and serve as a basis for the development of a clean hydrogen market. This hydrogen can be traded around the country. This is a very large program; the program’s budget of $7 billion will be available to support these hubs.” —Alan Krupnick (10:13)
- Some environmental justice communities have concerns about large hydrogen projects: “Environmental justice groups, like many environmental groups, have an ethic about keeping it in the ground—that is, keeping fossil fuels in the ground rather than using them and then trying to clean up the mess they make … I don’t want to treat all environmental justice groups as equal and monolithic. For instance, Native American communities have a lot of disadvantaged areas within them, but there’s more concern among some tribes about jobs, particularly with replacing lost fossil fuel jobs with jobs in hydrogen. Those communities may be a little bit more amenable to larger-scale hydrogen projects.” —Alan Krupnick (23:50)
- Hydrogen fuel poses some climate risks: “The way in which hydrogen interacts with the other gases in the atmosphere causes them to stay in the atmosphere longer. This leads to its global-warming impact … You have to compare the impacts of the leaked hydrogen on the atmosphere with how you are displacing current uses of carbon.” —Aaron Bergman (26:34)
The Full Transcript
Daniel Raimi: Hello and welcome to Resources Radio, a weekly podcast from Resources For the Future. I’m your host, Daniel Raimi.
Today we talk with Alan Krupnick and Aaron Bergman, fellows at Resources for the Future (RFF), about a hot topic in the world of energy: hydrogen. We’ll talk about the raft of new federal policies that are seeking to incentivize the production of low-emissions hydrogen, along with building up regional marketplaces, known as “hydrogen hubs.” Along with understanding the technology and policy landscape, Alan and Aaron will help explain why there is considerable opposition to hydrogen development in some communities and how hydrogen can contribute to global warming. Stay with us.
Alan Krupnick and Aaron Bergman from RFF, welcome to Resources Radio.
Aaron Bergman: Thank you.
Alan Krupnick: Thank you very much. Pleasure to be here.
Daniel Raimi: Alan, our listeners will be pleased to hear your voice again, but Aaron is new to RFF and Resources Radio, so we’d love to start off the episode by asking you, as we ask all our guests, how you got interested in working on energy or environmental topics—whether you got inspired as a kid to work on this stuff or if it came later in life.
Aaron Bergman: I would say it came later in life. I was originally a physicist doing physics, which was very far afield from the real world. But I was always interested in climate change, and, as a scientist, was a little offended that science was not always taken into account in public policy. As I was thinking about my career, I was very interested in having the opportunity to join the government and work on climate change to try to bring both the scientific background and real analysis to public policy. I came to Washington, DC, on what’s called a AAAS Fellowship—a fellowship granted by the American Academy for the Advancement of Science. I got to work in the Office of Policy at the Department of Energy for a number of years and was recently lucky to join Resources for the Future.
Daniel Raimi: We’re so pleased to have you, and it’s great that you have that physics background that you can bring to bear and help educate all of us policy people about these important topics.
In today’s conversation, we’re going to talk about hydrogen. Before we get into details about policy and environmental issues, it would make sense for either of you to get us started with a bit of background about the different ways that hydrogen is produced, what it might be used for, how it’s used today, and then how it might be used in the future in ways that people are clearly excited about. Aaron, why don’t you get us started with that one.
Aaron Bergman: Most of the hydrogen generated today is produced from natural gas through a process known as steam-methane reforming. This process produces hydrogen from natural gas, which is a combination of carbon and hydrogen, and carbon dioxide. The process produces carbon dioxide emissions. One of the things you can do to reduce the byproduct emissions of carbon dioxide is to combine steam-methane reforming with carbon capture and sequestration. This produces what is often called “blue hydrogen.”
Hydrogen Production Processes
* Emissions depend on the mix of electricity sources on the grid.
Hydrogen gas is produced using a variety of methods and fuel inputs. Brown and gray hydrogen produce carbon dioxide emissions, while green and blue hydrogen minimize carbon dioxide as a byproduct.
The other main method that is not widely used right now in the world, but that we’ll see more of as we move towards a net-zero future, is producing hydrogen from water in a process in which you run electricity through the water, turning the water into separate components of hydrogen and oxygen. This process doesn’t have any direct carbon dioxide or greenhouse gas emissions. However, it does use power from the grid, and the grid as it exists right now does produce a lot of carbon dioxide as you produce electricity.
If you were to instead fuel the process, which is called electrolysis, solely using carbon-free electricity for renewable power, that’s called “green hydrogen.” There’s a whole array of hydrogen colors—we don’t necessarily want to get into all of them—that I believe they go all the way out to turquoise. You can make gray, blue, and brown hydrogen from fossil fuels by breaking up the carbon and the hydrogen through those processes, or produce green hydrogen by splitting water atoms via electrolysis.
On the consumption side, a lot of hydrogen used today is used in refineries. They use it to reduce the amount of sulfur, oil, and various other things in refining. Hydrogen is also used in making ammonia for fertilizing. Those are the big uses of hydrogen in the world right now.
As we’re going forward, hydrogen has the potential to displace a lot of carbon dioxide emissions in industrial and other sectors out there. Hydrogen can be used in iron and steel manufacturing, specifically to process heat, but also in a lot of industrial processes. You need heat for these industrial processes, and a lot of that heat is produced by burning natural gas. There’s potential to replace some of that heat with hydrogen. It can be used in the electric sector. Some people use it for long-term energy storage. You can store the hydrogen and then burn that hydrogen to generate electricity.
Finally, you can move to the transportation sector. A number of years ago, people thought about using hydrogen for light-duty vehicles, specifically for passenger vehicles. That doesn’t seem likely anymore. Electricity seems to be more efficient, and we’re already seeing a lot of electric vehicles out there, but there’s still room for hydrogen to be used in heavy-duty vehicles, ports, transportation, and more situations like that. A lot of people are exploring the use of hydrogen in those areas.
Daniel Raimi: There’s been a big expansion of federal government subsidies for hydrogen production, particularly included in the Inflation Reduction Act. Aaron, can you tell us a bit about those policies and whether we have any sense at this point about how effective they might be in spurring the industry to scale in the United States?
Aaron Bergman: There are two big subsidies that are part of the Inflation Reduction Act, and these are the first time hydrogen has been directly subsidized under the tax code. The first one is what we call the “45V” tax credit. This is named after where it appears in the tax code, so it’s not very intuitive, but this policy subsidizes the production of hydrogen directly. The policy gives a certain amount of dollars for every kilogram of hydrogen you produce, but it’s based on a sliding scale. If you can produce hydrogen with zero emissions, you get a relatively high subsidy. As the amount of emissions that is associated with producing the hydrogen goes up, the amount of money you receive eventually goes down to zero.
But it’s not just the emissions that occur at the direct point of hydrogen production that are important here. The tax code tells you to take into account what we call “life-cycle emissions.” These are the emissions from the electricity that you use to produce green hydrogen. If you’re making electricity from natural gas, you don’t only take into account any emissions that aren’t captured at the site; you have to look at what is happening to the methane leakage upstream, because methane is a greenhouse gas, too.
You have to take all of those emissions together, calculate the total emissions, compare it to the table, and see what level of subsidy you get. If you can qualify for the lowest level of emissions, it’s a big deal. That can make your hydrogen very cost competitive and valuable. But it’s hard. You would need to either use zero-carbon electricity from renewables or capture large amounts—in excess of 90 percent—of the carbon from blue hydrogen.
How you calculate these things is going to depend on what the US Internal Revenue Service (IRS) decides to do with the emissions calculations. There are not obvious ways to figure out how many emissions are associated with your electricity consumption. The IRS is going to have to issue regulations to help manufacturers calculate their electricity-related emissions. The IRS could make it difficult to demonstrate that you’re using zero-carbon electricity, which would make it very hard for green hydrogen to compete, or they could make it relatively straightforward for you to demonstrate that you have zero-emissions electricity, and that would make green hydrogen much more competitive.
The potential downside there is that, if you don’t get the calculation right, you might actually be increasing emissions due to the emissions from the electricity grid. That’s the direct hydrogen production tax credit in a nutshell.
There is also a tax credit for capturing carbon in the tax code, and this is called the “45Q” tax credit. This has been around for a while, but they really pushed the value up in the Inflation Reduction Act. For blue hydrogen, where you produce the hydrogen from natural gas and then capture the carbon and put it in the ground to utilize it, manufacturers don’t have to worry about life-cycle calculations. They can simply calculate the amount of carbon dioxide that they capture and store on the ground, multiply it by $85 per ton, and take that. It’s relatively straightforward, and it provides a significant subsidy for blue hydrogen.
That’s one of the interesting things that’s been set up in the Inflation Reduction Act. That there’s a relatively complex method of subsidizing hydrogen directly in the 45V tax credit, but blue hydrogen producers have this easy path that can be almost as valuable as the hydrogen tax credit.
Daniel Raimi: With that background in place, we know a bit about the technology, and we know a little about the policy. We’re going to move forward with a question about another major federal policy push, which is on the demand side for hydrogen. Who’s going to use all that hydrogen? One of the things the federal government is doing is trying to push this idea of hydrogen hubs. Alan, what is a hydrogen hub, and how are different parts of the United States competing to try to become a hub?
Alan Krupnick: The purpose of this program, which Congress mandated in the Bipartisan Infrastructure Law, is to develop clean hydrogen hubs. The US Department of Energy defines hydrogen hubs as regional networks of hydrogen producers and consumers linked by connective infrastructure like pipelines. The program is supposed to help demonstrate the production, processing, delivery, storage, and end use of clean hydrogen and serve as a basis for the development of a clean hydrogen market. This hydrogen can be traded around the country. This is a very large program. The program’s budget of $7 billion will be available to support these hubs. There will be 6–10 hubs around the country that will eventually be supported.
We’re already through the first round of proposal selections. There have been 79 preliminary applications, all from different groups, and 33 of these have been encouraged by the Department of Energy to go to the next round and submit a full proposal. The rest of the groups have been discouraged, but they’re not precluded from submitting—they could redo their proposals and have a competitive proposal. Those proposals are due in April.
Congress wrote this law to require a couple of things of the program and of these hubs. The two most important features of the program are regional diversity and feedstock diversity. As you would expect from Congress, they want to encourage hubs in all regions of the country so that every senator or house member can have something to tout.
In addition, they provide the feedstock diversity you want. Feedstock diversity means how you’re making the hydrogen. You can make hydrogen from fossil fuels—mostly from natural gas. You can make it from renewables. You can make it from biomass, and you can make it from nuclear power. These are the four processes that Congress identified.
In fact, we do see production variety coming in these 33 encouraged proposals. There are a variety of end uses that these proposals are identifying and plan to use. They cover the transportation sector (although, as Aaron mentioned, not light-duty vehicles), the electricity sector, industrial uses, and even residential and commercial heating. The program has really piqued the interest of industry, state governments, and nonprofits, some of which are working on these proposals. It certainly piqued our interest at RFF, because we’re studying this process intently.
Daniel Raimi: One of the things, Alan, that you’ve been doing with Aaron and others at RFF is looking at the issues that the Department of Energy is going to have to consider as it’s trying to figure out which of the 33 encouraged applications or some of the discouraged applications will ultimately be designated as hubs. What are some of those top-tier issues that the Department of Energy is going to be considering?
Alan Krupnick: There are a bunch of issues that have to be addressed reasonably well. The first is the decision process of the Department of Energy to sort out approximately 6–10 applications that will get funding from the original 33. So far, that process is confusing. There’s a scoring process, which is standard for the Department of Energy’s grantmaking, where you get a certain amount of points for the experience of the team, their ability to follow through, and the quality of the proposal.
But there are also at least 16 additional criteria that are in the announcement for submitting applications. Some of these criteria have extra credit attached to them, although it’s not quantified. Some key criteria are missing. As economists, we would deem the cost-effectiveness of producing hydrogen to be important. That’s not an explicit criteria. That’s a big issue. A second issue is how to sort all this out; mainly, the quantity of the work to go from 33 serious multi-partner proposals down to 6–10. That’s going to be tough.
The third issue is staffing at the Department of Energy. There are new offices that have been created, one of which is responsible for this program. They’re trying to gear up and staff up with enough people to make these decisions, and that’s a big task.
The next issue is political pressure. The congressional committees with responsibility for the oversight of this program contain senators from states that have submitted proposals. There are also proposals that came from states that don’t have senators on this committee. I have no idea at this point how that all works out, but you can imagine that the Department of Energy is going to feel political pressure.
Finally, there’s the need for speed, because when Congress passed these important laws, they expected that the United States would get going on its carbon dioxide–mitigation activities to meet the Biden administration’s goals of net zero by 2050, along with some interim goals. There’s a lot of concern about what happens if the administration turns over in 2024, and there’s less enthusiasm for activities to address climate change. There’s a need for speed; with short staff and so on, it’s a big task.
Daniel Raimi: Do you have any sense of whether the Department of Energy appears to have the capacity to accomplish this major task in the timeframe that it envisions and at the level of quality that we might like? Or, is that something that we can’t really know from the outside?
Alan Krupnick: The people that we’ve interacted with are talented and committed to this program. It’s an impressive group, but it’s also a lot of work. Regarding the program, I talked about the 6–10 hubs eventually being declared winners, but it doesn’t take place immediately. There’s an April deadline to get their applications in, and then the first choosing and winnowing-down will be in September of 2023. There are milestones to be reached along the way after that. There will be a couple of years before these hubs are actually operational.
Aaron Bergman: The Department of Energy has more on their plate than just hydrogen hubs, too. The Bipartisan Infrastructure Law and the Inflation Reduction Act gave a tremendous amount of money for Department of Energy activities, including direct air capture and other research development. I know the Department of Energy is very interested in hiring people right now. If any of the listeners here are interested in a government job, you can go to energy.gov, and I’m sure they would be interested in your application.
Alan Krupnick: Yes, RFF will take a commission on that.
Daniel Raimi: RFF’s hiring, too—apply to us before you apply to the Department of Energy.
Alan Krupnick: If we might take a moment: This is an issue, because everyone wants to hire people now who can address climate change from an engineering perspective, from an economic perspective, from a sociological perspective, and from a bureaucratic administrative perspective. It’s not just RFF and the Department of Energy—it’s across the country, and, indeed, across the world. There’s going to be a real premium on these people.
Daniel Raimi: That’s definitely a future podcast episode for us—staffing the energy transition. That’s a great suggestion, Alan.
We’ve talked about the technology, and we’ve talked about some of the policies, but people have concerns about the potential for scaling up hydrogen from all angles. I want to ask you about two of them today.
The first one is about environmental justice concerns. There has been major opposition to hydrogen development from some environmental justice advocates—and not just opposition to blue hydrogen development. Alan, can you help us understand where that opposition comes from and whether there’s room for compromise? Are there middle grounds that can be reached so that large-scale hydrogen could be deployed in ways that would be amenable to some environmental justice advocates?
Alan Krupnick: There are middle grounds. The issue is whether the environmental justice groups will accept them and whether industry groups and government can deliver. Let’s start there. The environmental justice groups feel that disadvantaged communities have been taking a disproportionate burden of environmental pollution from many sources over many years.
Daniel Raimi: We cover that on the show a lot, and there’s lots of good evidence for it.
Alan Krupnick: There’s plenty of evidence. So, their concern is appropriate, and they see hydrogen production as another activity in a long series of industrial activities that’s going to affect these communities. There are two particular pollutants that they’re concerned about: nitrogen dioxide and ammonia. Both are emissions from the use of carbon capture. There can also be emissions from the use of steam-methane reforming, the main approach that Aaron mentioned. Plus, there are emissions from the use of hydrogen in the chemical industry and so on. There are some grounds for being concerned about these emissions.
All polluters, particularly air polluters, have various obligations under the Clean Air Act to keep these emissions low in order to meet standards. These emissions can still be viewed as an added burden. As far as the opposition, there needs to be an open and deep dialogue with these groups, which has yet to happen. There’s a lot of finger pointing and very little talking.
What has to happen is to identify locations of particular sensitivity to disadvantaged communities and, maybe, pledge to stay away from them. They should consider pledges to eliminate added emissions by absolutely top-level emissions controls being added to polluting processes.
There are some issues that give me a bit more pause. The E in “EJ” is environmental, and the environmental justice groups, like many environmental groups, have an ethic about keeping it in the ground—that is, keeping fossil fuels in the ground rather than using them and then trying to clean up the mess they make. That one’s pretty tough to deal with. I don’t want to treat all environmental justice groups as equal and monolithic. For instance, Native American communities have a lot of disadvantaged areas within them, but there’s more concern among some tribes about jobs, particularly with replacing lost fossil fuel jobs with jobs in hydrogen. Those communities may be a little bit more amenable to larger-scale hydrogen projects.
Daniel Raimi: There are a couple tribes that are actively pursuing projects around hydrogen and carbon capture. You mentioned the need for deep, sustained engagement with local communities, and you said that right after you said that we need to go really fast. Can you reflect on this tension between wanting to go really fast and getting these things deployed and, at the same time, needing to do deep community engagement, which presumably has to occur over a longer time scale?
Alan Krupnick: I don’t have a solution to this. I should say that as fast as we want to go, there’s still some time. If you capture the carbon and make blue hydrogen, it’s going to take new pipelines to deliver that hydrogen to long-term storage, because our pipeline network is so sparse. Getting a pipeline approved and built, including getting right of way and eminent domain, are lengthy processes. There’s time to negotiate, but, of course, no one wants to dilly dally.
Aaron Bergman: One thing worth adding is that part of the score of the applications for the hydrogen hubs is community engagement. The Department of Energy is definitely taking that seriously as part of the application process.
Daniel Raimi: Aaron, I’d love to ask you this last question about the greenhouse gas impacts of hydrogen. We’ve been talking about hydrogen as a low-carbon solution, but if hydrogen leaks out of pipelines or other infrastructure, it has an indirect greenhouse gas effect. We don’t have a great track record of managing leaks from pipelines, especially around things like methane, where we’ve learned over time that methane leaks are more substantial than we had previously thought. Can you talk a bit about this issue of hydrogen leaks, why they’re a big deal from an environmental perspective, and whether you think there are cost-effective solutions to keep those leaks to a low number?
Aaron Bergman: Let’s first start with the unusual nature of hydrogen. Generally, when we talk about greenhouse gases, we’re talking about the gases that trap heat in the atmosphere, but hydrogen doesn’t do that. The way in which hydrogen interacts with the other gases in the atmosphere causes them to stay in the atmosphere longer. This leads to its global-warming impact.
The global-warming potential of hydrogen, which is the ratio of how much heat a compound traps compared to carbon over a 100-year timeframe (I hope the scientists won’t get angry at me for that description), is on the order of 10 or so. It definitely has a greenhouse gas impact. It is not as large as, for example, hydrofluorocarbons, which can have global-warming potentials in the hundreds and thousands, but it’s something to pay attention to. I don’t know if there’s a consensus right now on how big a deal this is. You have to compare the impacts of the leaked hydrogen on the atmosphere with how you are displacing current uses of carbon. There are benefits and there are costs from the global warming point of view.
With respect to leakage, hydrogen is a very small molecule; it’s the smallest molecule out there. It has two atoms in it, so it can get through a lot of tight spaces. It’s definitely a challenge to keep it from leaking. There are engineering solutions, and I know there’s a lot of work going on right now to figure out how best to do this. This is still an area of ongoing research and development. We can definitely do it. You can store hydrogen in a way that it doesn’t leak, but you asked about whether you can do it in a cost-effective manner, and that remains to be seen.
Alan Krupnick: I might add one thing to what Aaron said, which is that you can blend a small percentage of hydrogen with natural gas. If you wanted to burn hydrogen at a power plant, up to 10 percent of the natural gas–hydrogen mixture could be hydrogen. That would allow you to use the existing pipeline network for natural gas, which is really extensive. If you get more than that—and, obviously, if you get to 100 percent—you’re going to need special pipelines to stop those sneaky molecules from leaking.
Daniel Raimi: We have lots to watch for on all sorts of environmental fronts. Finally, I’m going to ask you both to recommend something that you’ve read or watched or heard that you think is great. It could be related to the environment or not. We’re not too picky. Let’s start with Alan. Alan, last time you recommended something about the Holocaust, so I’m hoping you can give us something a little more upbeat.
Alan Krupnick: I’m afraid not. The last book I read, which had upbeat and not-so-upbeat parts, was by Evanna Lynch, and it’s called The Opposite of Butterfly Hunting. Evanna Lynch is an icon in my family, because she plays Luna Lovegood in the Harry Potter movies. She wrote an autobiography, which has some very low parts, because she’s had anorexia. I learned a lot about anorexia that I was not planning to learn about. She also talks about how she ended up getting the role of Luna Lovegood, and it’s very entertaining. I’ll leave it there.
Daniel Raimi: Aaron, how about you?
Aaron Bergman: I have two small children at home, and that has had the effect of making my tastes very lowbrow. The most recent thing I watched was a movie from the ’80s called Clue, which is one of those movies I saw growing up, and you wonder, is it really going to hold up? It’s got Tim Curry and Martin Mull. I mean, it’s got Madeline Kahn and a great cast, and it mostly holds up. There are definitely some parts there, but it’s a good way to distract yourself as you’re trying to fall asleep.
Daniel Raimi: I understand that issue of having young kids. Another movie that people have probably heard about and that we were talking about earlier is Glass Onion, which might be particularly relevant for today’s episode, because it features hydrogen. I have to say, they don’t really get into the weeds about the kind of hydrogen that you’re interested in. The hydrogen in the movie looks like a piece of chalk. It’s confusing; you don’t know what exactly they were going to do with that hydrogen in Glass Onion.
Aaron Bergman: Solid hydrogen would be fairly hard to come by.
Alan Krupnick: That’s right. And that hydrogen is not well contained, let’s put it that way.
Daniel Raimi: We’ll leave the film critiques for another day and say thank you again to Alan Krupnick and Aaron Bergman of RFF. Thank you so much for coming on the show and helping us understand the basics on this fast-evolving issue of hydrogen.
Aaron Bergman: Thank you.
Alan Krupnick: Yeah, thanks, Daniel.
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