Climate and clean energy advocates weighing in on CenterPoint Energy’s ideas to decarbonize its natural gas business in Minnesota applaud the effort but say it falls short of what’s needed to meet the moment.

The state’s largest gas utility submitted an “innovation plan” last summer to the Minnesota Public Utilities Commission, which is taking public comments on the plan through March 15. Over the course of hundreds of pages, the utility proposes 18 pilot projects — from tree planting and geothermal to carbon capture and hydrogen blending.

Altogether, the utility is asking to spend more than $105 million on 18 pilot projects that it estimates will reduce the equivalent of around 330,000 metric tons of carbon emissions over the five year plan, which would represent about a 4% reduction, according to calculations by clean energy organizations.

The plan “is going to move us, but it’s not going to move as fast enough,” said Melissa Partin, climate policy analyst with the Minnesota Center for Environmental Advocacy, one of several groups that have submitted comments on the plan.

The docket (M-23/215) stems from the Natural Gas Innovation Act, a 2021 state law that, among other things, authorizes gas utilities to collect money from ratepayers for projects aimed at reducing greenhouse gas emissions. Xcel Energy submitted a similar plan to state regulators late last year for its natural gas utility.

Gas utilities are expected to make up a growing share of the state’s climate pollution as the state’s electric utilities transition to 100% clean power by 2040. Two out of every three households heats their home with natural gas, and many industries rely on the fuel to operate medium and heavy machinery — a potentially daunting challenge as the state seeks net-zero climate emissions by 2050.

Not a ‘silver bullet’

The Minnesota Center for Environmental Advocacy and other advocates have asked the Public Utilities Commission to supplement the pilot project spending with emission-reduction targets for the utilities.

While many of CenterPoint’s ideas look promising and some could eventually scale up to make a bigger impact, Partin said the Natural Gas Innovation Act will not alone drive the state across the finish line for its climate goals.

Other strategies will be needed, such as updating commercial and residential building codes, improving energy efficiency standards for appliances, and considering a ban on allowing any natural gas in new buildings, which, Partin said, “will be difficult in Minnesota’s current political climate.”

Utilities are somewhat hamstrung by the act’s requirement that half the budget for the initial plans must go to alternative fuels, which “stacks the deck” in favor of renewable natural gas and hydrogen, Partin said.

CenterPoint is already blending hydrogen into its system from a downtown Minneapolis facility, and so proposing additional such projects does not seem to fit the definition of “innovation,” Partin said. Meanwhile, a recent study by the Institute for Energy and Environmental Research found little to no climate benefit from blending hydrogen in existing gas supply lines, in part because hydrogen is less energy dense and more prone to leaking.

Joe Dammel, managing director of buildings for Fresh Energy, said CenterPoint’s plan “is definitely not a silver bullet; it’s not going to get us where we need to get.”  

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While praising the utility for its yearlong stakeholder process and for proposing new resources and changes to its business model, the plan shows that CenterPoint will not contribute “their fair share of the emissions reductions needed based on this,” Dammel said.

CenterPoint’s pilots for weatherization and retrofitting homes look promising, he said, but ideas for purchasing carbon offsets, selling gas-powered heat pumps and injecting hydrogen into the existing gas system have little chance of success.

CenterPoint’s proposal to create green hydrogen, produced from renewable energy, and blending it into the gas distribution system is not “scalable” and has limitations. Commercial gas heat pumps “are not a very viable technology,” Dammel said. Instead, the utility should focus on applying hydrogen technology to decarbonize industrial end users.

Dammel added that to reach the state’s 2050 carbon neutrality goal CenterPoint’s first plan would have to increase its emissions reduction six-fold, from 4% to 27%.

The cost of learning 

Audrey Partridge, policy director for the Center for Energy and Environment, said the pilot programs will lead to better data and a greater understanding of the potential energy sources and their carbon emissions.

“I’ve heard people describe it as throwing spaghetti at the wall,” Partridge said. “But we need to come up with all the possible solutions and pursue them on a small scale to see which ones are going to stick. These aren’t necessarily mature ideas, as you would see in other areas of energy. They’re very, very new.”

The pilots that could yield important advances include using heat pumps for large loads and electrification of low and medium heat processes in the industrial sector, she said. Residential deep energy retrofits and geothermal technologies will likely reduce natural gas consumption.

“We do hope that CenterPoint and Xcel get approval to move forward on these plans so that we can start to learn from them,” Partridge said.

The docket could begin a new path for CenterPoint, which only sells gas. The Minneapolis Deputy Commissioner of Sustainability, Healthy Homes and Environment, Patrick Hanlon, said CenterPoint’s plan allows the utility to provide “heat as a service,” a crucial distinction that gives room for innovations the city supports, including ground source networked geothermal systems, district energy and other approaches.

“Heat as a service allows CenterPoint to move away from natural gas and move towards some alternative, more climate-friendly sources of heat,” Hanlon said. The city also wants to ensure that residents are “not burdened” with the cost of the innovative pilots or switching to a different level of service, he said.

The attorney general’s office, which represents ratepayers, suggested the cost for some pilots outweighed the carbon benefits while suggesting the commission modify or deny sections of the plan.

“Portions of CenterPoint’s plan are not yet ready for primetime: several of the proposals lack necessary partners, and many lack sufficient detail to establish their prudence,” the office wrote. “Other proposed projects are unlikely to achieve the greenhouse gas savings CenterPoint suggests and unlikely to justify the astronomical cost to ratepayers.”

The attorney general and clean energy groups also raised concerns about CenterPoint’s request to exceed pilot budgets by as much as 25% without statutory approval. Clean energy groups also seek modifications to CenterPoint’s plan to recover the cost of projects.

The Public Utilities Commission is expected to hold hearings later this year before deciding on the plans for both utilities.

Minnesota ‘innovation plans’ call on gas utilities to imagine their clean energy future  is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

⛷️ Good morning! Kathryn is just back from a much-deserved vacation and will return to the Weekly next week.

Meanwhile, gather ’round! We need to talk about hydrogen.

In theory, hydrogen sounds like a miracle fuel. Split water molecules with clean power, use the hydrogen to fuel everything from trucks to steelmaking, boom: endless clean energy. Doesn’t that sound nice?

Reality, of course, is never that simple, and with all the news about hydrogen hubs and the rainbow of green vs. blue vs. pink and so on, it’s easy to get lost.

But if you only have the bandwidth for one hydrogen story right now, it should be the debate over a tax credit called 45V, that could have major implications for future emissions.

As reporter Kari Lydersen explained in a story earlier this month, draft rules for the 45V tax credit require “green” hydrogen to be produced by new, adjacent renewable energy to qualify, much like the illustration above.

But promoters of hydrogen hubs, which energy writer David Roberts has dismissively dubbed “subsidy-farming machines,” sent a letter Monday urging the Treasury Department to allow green hydrogen produced from existing renewable energy to qualify, arguing the proposed rules are so strict they’ll be unable to bring productions costs down quickly enough to meet federal goals.

Earthjustice attorney Lauren Piette calls that a “loophole” that will simply divert existing clean energy capacity that would then be backfilled by coal and gas generation, potentially causing a net increase in emissions and spiking utility bills.

Beyond grid implications, advocates are also warning of other unintended climate consequences if hydrogen is not used or handled carefully — potentially creating more heat-trapping emissions than burning natural gas. 

More clean energy news

🚘 Something we can agree on: While policies to phase out gasoline cars have become politically polarized, a study finds electric vehicles are popular with Democrats and Republicans alike. (CNN)

🌊 A milestone for offshore wind: Vineyard Wind last week became the first large-scale offshore wind farm in the U.S. to begin delivering power, a step Massachusetts Gov. Maura Healey calls “a turning point in the clean energy transition.” (Associated Press)

🏡 Building tension: Policies to improve energy efficiency in housing have faced strong opposition from builders associations, who frequently deploy inflated cost estimates to fight code upgrades. (Washington Post)

✅ Just in case: Federal regulators are scrambling to implement policies to cut heat-trapping emissions and meet U.S. climate obligations in case the White House changes hands after the 2024 election. (Bloomberg)

💡 Looking to the future: State and local governments are preparing applications for a $5 billion federal grant program to implement big ideas in climate action plans. (Energy News Network)

🏢 Greener cities: A Chicago environmental justice organization is helping to build out a geothermal heating and cooling network on the city’s South Side. (Grist)

👷 Learning from history: A new weatherization jobs resource hub in Wisconsin is part of advocates’ effort to avoid the boom-and-bust cycle that followed previous increases in federal energy efficiency funding. (Energy News Network)

📢 We want to hear from you! Send us your questions, comments, and story tips by replying to this email.

💸 Support our work: The Energy News Network is powered by support from readers like you. If you like Energy News Weekly, share it with a friend! Or give today and help us keep our news open and accessible for all.

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Why you should be paying attention to hydrogen right now is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

As the federal government rolls out billions of dollars in subsidies to produce hydrogen fuel for use in vehicles, factories and power plants, a growing body of evidence is undercutting its clean credentials.

The U.S. Department of Energy recently awarded $7 billion to seven regional hydrogen production hubs, on top of a lucrative tax credit whose rules have become the subject of intense industry lobbying.

Meanwhile, scientists and advocates are warning that the government’s rush to scale hydrogen has not adequately considered the fuel’s climate risks, including the potential of leaked hydrogen to prolong the heat-trapping impact of methane and act as a greenhouse gas itself when it creates water vapor in the upper atmosphere.

Multiple studies have also found burning hydrogen in power plants increases formation of nitrogen oxides (NOx), a pollutant that causes smog, harms public health, and also contributes to warming.

Hydrogen is “an indirect global warming gas,” said David Schlissel, an analyst who has testified before the U.S. Federal Energy Regulatory Commission, the Nuclear Regulatory Commission and numerous state commissions on energy issues. “It increases the lifetime of methane in the atmosphere. And if you burn it in a power plant, you produce a lot of NOx, which leads to smog.”

A national coalition of environmental justice organizations are among those seeking to explain this science and demand more accountability for hydrogen’s complicated climate impacts. The Just Solutions coalition released a report last month by the Institute for Energy and Environmental Research exploring the emissions and water use implications of increasing our reliance on hydrogen for fuel and power.

Similar concerns and findings were revealed in recent research by Cornell University scientists and by the Institute for Energy Economics and Financial Analysis, where Schlissel is an analyst.

Different uses, different concerns

When pure hydrogen is combined with oxygen in hydrogen fuel cells, electricity is produced and the only byproducts are water vapor and heat. Such fuel cells can be used as power plants – sending electricity to the grid – or they can power vehicles like trucks or locomotives. A hydrogen fuel cell car, for example, is essentially an electric car with a built-in charging source.

Pure hydrogen can also be burned to power electricity generation or industrial processes, similar to natural gas combustion but without directly creating pollution that causes climate change or harms public health. Hydrogen can be combined with natural gas or burned in converted natural gas power plants.

Pure hydrogen today is produced mostly from natural gas, resulting in carbon emissions. If that carbon is sequestered, it is known as blue hydrogen. If hydrogen is produced from water in a process powered by renewables, known as green hydrogen, theoretically few greenhouse gas or other emissions result.

But advocates have questioned the viability of large-scale carbon sequestration as well as the ripple effects of diverting renewable power to make hydrogen from water. 

And then there are the more complicated ways that hydrogen could increase greenhouse gas and public health-harming emissions, scientists and community leaders say.

Even if hydrogen production, combustion and fuel cell use does not directly release greenhouse gas, it could contribute to climate change because of the way it interacts with or affects other elements in the atmosphere.

If hydrogen is to be used for everything from power generation to fuel cells to industrial processes, it will need to be produced at hydrogen plants and then usually transported and stored. Similar to natural gas, there’s ample potential during this process for pure hydrogen to “leak” into the atmosphere. 

When that happens, pure hydrogen can have a complicated effect on the concentration of the powerful greenhouse gas methane in the atmosphere, an effect that hasn’t been adequately considered in federal policy, explains nuclear engineer Arjun Makhijani, co-author of the IEER report and author of Mending the Ozone Hole, by MIT Press.

‘Cleaning up’ methane

Single-bonded hydrogen and oxygen atoms are known as hydroxyl radicals (HO) that “clean up” methane and other gases in the atmosphere by oxidizing and transforming them. Hydroxyl radicals decompose methane this way. But when pure hydrogen (H₂) is released into the atmosphere, it also is broken down by these hydroxyl radicals, meaning they are less available to break down methane. 

Hydroxyl radicals are “the main cleanser of atmospheric chemical pollution, with a lifetime of about a second — it’s that active — compared to methane which has a half-life of (about) 9 years,” said Makhijani. When hydroxyl radicals are “used up” breaking down pure hydrogen, there are fewer of them to break down methane. 

This effect is considered to account for half of the global warming potential represented by hydrogen, the IEER study says. 

“If you’re producing hydrogen and it leaks a lot, you’re going to increase methane concentrations even if methane emissions do not increase,” said Makhijani. “It’s like you’re stopping up the toilet.” 

Also, when hydrogen is released into the atmosphere, some of it ends up transforming into water vapor in the stratosphere. While water vapor in the lower troposphere does not cause warming, vapor higher up in the atmosphere creates a greenhouse effect of its own. This is thought to account for about 30% of the warming potential of hydrogen, IEER reports. 

Meanwhile when combusted to produce electricity or power industrial processes, hydrogen burns very hot. That heat drives oxygen and nitrogen in the atmosphere to form NOx, a pollutant that creates smog and harms public health while also contributing to global warming. This effect is considered to represent about 20% of the warming potential of hydrogen, IEER reported.

When hydrogen is blended with natural gas for use in heating or electricity generation, the formation of NOx can be significantly greater than when gas alone is burned, multiple studies have found.

“NOx emissions are not the only reason why burning hydrogen to make electricity is a bad idea — it is also wildly inefficient and hard to do,” said Lauren Piette, a senior associate attorney in the clean energy program for Earthjustice. 

“Burning green hydrogen in a gas plant to make electricity is like using a Rube Goldberg machine to strike a match. You take all this zero-carbon energy from solar and wind, use it to power an energy-hungry electrolyzer to make hydrogen, then burn that hydrogen in a gas plant to make a significantly smaller amount of electricity than you started with.”

Hydrogen can be mixed with natural gas to be burned in turbines or to fire traditional steel-making blast furnaces. Many clean energy advocates consider this to be an inefficient use of hydrogen, since the reduction in greenhouse gas emissions is relatively moderate and can be dwarfed by the lifecycle greenhouse emissions related to producing and transporting hydrogen. 

“You’re spending a lot of money to make hydrogen from natural gas and then using it for the same purpose as natural gas — so why not just burn the gas,” said Makhijani.

Estimating leakage

A significant part of this equation is the rate of leakage — of both natural gas and hydrogen during transport and storage.

Natural gas typically leaks from pipelines and storage tanks at an average rate of about 2.7% of its volume, according to a 2018 paper in Science. Other peer-reviewed studies have found similar leakage rates. However the Argonne National Laboratory’s GREET model, used by the federal government to define standards for clean hydrogen, assumes a 1% natural gas leakage rate. Experts have demanded that federal models and rules be adjusted to reflect higher expected leakage rates. 

“The government is playing a shell game — they have set up their GREET model to show that blue hydrogen with carbon capture is close to being clean,” said Schlissel. “That only works if you make extremely optimistic and unrealistic assumptions about upstream methane leakage.”

Hydrogen is a lighter, less concentrated gas, so it takes up more room — proportionate to its energy value — than natural gas.

This means squeezing enough hydrogen into a pipeline or storage tank to compensate for the natural gas it is replacing will increase the pressure on the infrastructure. And increased pressure means more likelihood of leaks. 

Because of its expansive volume, hydrogen is often compressed for storage or transportation in tanks; it can also leak during this process.

“A recent analysis by Columbia University has estimated current leakage rates at around 2.9%” for hydrogen, Abbe Ramanan, project director for the Clean Energy Group, noted in a 2023 article for Utility Dive. “However, the push to produce more hydrogen — and deploy it in more leak-prone use cases, like pipelines — could push economy-wide leakage rates to 29.6 million tons or 5.6% of all hydrogen produced by 2050.”

To qualify as “clean,” the Department of Energy says “well to gate” emissions from a kilogram of hydrogen must be equal or less to the equivalent of 4 kg of carbon dioxide.

IEER estimated that producing hydrogen from natural gas, or combining hydrogen with natural gas for use in turbines or furnaces, can only meet this standard if natural gas leakage is reduced below current average rates, and hydrogen leakage is also kept extremely low. 

“If you’re producing hydrogen and it leaks a lot, you’re going to increase methane concentrations even if methane emissions do not increase,” said Makhijani. “That means we shouldn’t be doing blue hydrogen, we shouldn’t even be talking about blue hydrogen, until we eliminate two-thirds of methane leaks and keep hydrogen leaks very low and fix problems with carbon capture and sequestration. That’s going to be a long time coming.” 

Scientists have also demanded that the government consider the rate that methane causes warming over 20 years in its models. Currently the GREET model uses a 100-year methane-impact metric, which makes methane’s potency appear lower in comparison to carbon dioxide than if it is measured on a 20-year scale. Since methane is a more powerful greenhouse gas in the short-term, the impacts of hydrogen production that reduces carbon dioxide emissions but leads to methane increases must be measured on a shorter time scale, the experts say.

The IEEFA in its 2023 paper found that if a 20-year methane impact standard is used and a “realistic” 2.5% leakage rate for methane, the carbon dioxide emissions-equivalent measure for hydrogen jumps to 10.5 to 11.4 kg, far above the 4 kg standard used to define clean hydrogen.

“IEEFA is extremely concerned that the current blue hydrogen hype is going to result in the funding of projects that exacerbate climate change and lock in our reliance on fossil fuels for decades,” the report says.

In fact, experts have found that blue hydrogen can be worse for the climate than gray hydrogen, which is made from natural gas without carbon sequestration.

“Far from being low carbon, greenhouse gas emissions from the production of blue hydrogen are quite high, particularly due to the release of fugitive methane,” says the abstract of a 2021 paper by Cornell scientists Robert Howarth and Mark Jacobson, who used a 3.5% natural gas leakage rate in their calculations. “While carbon dioxide emissions are lower, fugitive methane emissions for blue hydrogen are higher than for gray hydrogen because of an increased use of natural gas to power the carbon capture.”

Better solutions?

The Cornell scientists note that oil and gas companies including Shell and BP have heavily promoted hydrogen as a clean fuel, including through the Hydrogen Council, which also includes automakers, mining companies and other industries.

“From the industry perspective, switching from natural gas to blue hydrogen may be viewed as economically beneficial since even more natural gas is needed to generate the same amount of heat,” the Cornell authors write. “We see no way that blue hydrogen can be considered ‘green.’”

Schlissel, like other experts and advocates, said it’s possible that hydrogen produced from water, powered by renewable energy, could be a viable and emissions-reducing way to power steel-making, heavy transportation or other hard-to-decarbonize sectors. But he’s frustrated that the federal government is investing so heavily in hydrogen when other solutions exist. 

Along with all the emissions questions around blue hydrogen, he notes that it’s not yet clear that industries and power companies are ready to buy massive amounts of hydrogen. The DOE’s hydrogen hub plan includes a billion dollars to be spent to develop markets. 

“They’re spending a huge amount of money in a short amount of time, they’re keeping the public in the dark, when we have [more established clean] technologies at our fingertips,” Schlissel said. “Renewables, energy efficiency, battery storage growth is skyrocketing.”

Scientists warn a poorly managed hydrogen rush could make climate change worse is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

The following commentary was written by Hilary Lewis, Steel Director at Industrious Labs, an advocacy organization focused on transforming heavy industry for climate, workers and communities. See our commentary guidelines for more information.

The domestic steel industry and the jobs that come with it have been in sharp decline for decades, disproportionately harming the Midwest and leaving behind the distasteful nickname of the “Rust Belt.” However, new federal funding is bringing a renewed hope of reshoring and reinvesting in American manufacturing and the many industries up and down the supply chain, including steel. While the headline investment in steel is a potential share of the $6.3 billion available for industrial demonstration projects, a critical tax credit for clean hydrogen cannot be overlooked as a potential game changer for the steel industry and steel communities. 

The Inflation Reduction Act’s 45V tax credit could provide hundreds of billions of dollars in federal funding, and be used to put the steel industry on the path to reduce climate emissions by over 90 percent. As a result, this historic tax credit could lead to healthier air and economic investment, recasting the Midwest as a global leader in cleaner steelmaking. However, strict safeguards need to be implemented to ensure that only qualified projects receive the credit.

Steel is a fundamental part of our modern lives, responsible for the iconic skyscrapers, bridges, cars, and machinery we use everyday. It is also essential to switch to a clean economy, with recent federal legislation to build out renewables, revamp transmission and reshore domestic manufacturing expected to generate massive demand for steel. Most new steel in the U.S. is made in just over a dozen coal-burning blast furnaces surrounding the Great Lakes. Hydrogen can replace fossil fuels in modern steelmaking technologies to reduce pollution that harms human health and the environment – without sacrificing quality. Direct reduced iron technology can be built or retrofitted to use hydrogen in steel production, but the viability of this pathway relies on clean, affordable, and accessible hydrogen. The 45V hydrogen tax credit is essential to realizing this vision.

Earlier this year, the Treasury Department announced proposed rules for the 45V tax credit that would ensure that only hydrogen made with new, renewable energy would qualify. This is an enormous win for the climate. Creating hydrogen uses a significant amount of energy, and without rules to require new clean energy supply and accurate accounting for this hydrogen production, the process could bring more fossil fuel plants online to meet the spiked demand on the grid. Since green hydrogen is needed for the leading commercial pathway to clean up primary steelmaking, strict tax credit rules will ensure the hydrogen powering potential modern, clean steel plants is actually clean.

However, legacy energy companies are lining up to water down the tax credit proposal. Weak rules would put the green steel boom – and the billions of dollars in investment that come with it – at risk. Moreover, regional analyses from the U.S. show the need to invest in low-carbon steel to maintain Indiana steelmaker’s competitive edge and reverse Pennsylvania’s trending steel job losses. With an estimated 6.7 million tons of annual demand for near-zero emissions steel by 2030 in the U.S. alone, investing in modern, clean steel plants today can revitalize the steel industry and earn a price premium for steelmakers. Countries globally, from Namibia to Sweden, are already constructing green steel plants to cash-in on this opportunity. A robust 45V tax credit will allow industries like steel to bring a highly sought after commodity to market at a standard that meets customer expectations. 

We must get the 45V tax credit right to pave the way to decarbonizing steel and other high-priority, high-pollution industries. Transitioning the steel industry alone would require approximately 1.5 million metric tons of hydrogen – a huge potential source of demand for hydrogen companies that take advantage of the credit. Using hydrogen to clean up the steel sector should help drive us forward into a clean energy future, not come at the cost of our health and the climate. Failure to advance strong rules for clean hydrogen risks locking in more fossil fuels, harming communities, jeopardizing jobs, and sending business opportunities abroad.

Commentary: A little-known tax credit could revitalize Midwest steelmaking is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.

Almost 50 environmental justice groups on Tuesday sent a letter to leaders of the federally-funded Midwestern hydrogen hub, imploring them not to try to loosen requirements for tax incentives for hydrogen produced with clean energy.  

The U.S. Treasury in December published draft rules saying that to receive lucrative 45V tax credits for producing clean hydrogen, the energy used must not be diverted from the grid, but be “additional” energy created specifically to power the electrolysis process used to produce pure hydrogen from water. 

Environmental advocates are largely pleased with Treasury’s draft rules, which also say clean energy must be generated around the same time and near where it is used for hydrogen production, to reap incentives. But organizations are worried that industry groups are lobbying to weaken the draft rules, which are open for public comment through Feb. 26. 

The Midwest Alliance for Clean Hydrogen (MachH2), a coalition of industry and research groups that won up to $1 billion in Department of Energy hydrogen hub funding, has proposed to produce much “pink hydrogen” powered by nuclear energy from Illinois. Critics say this, as well as “green hydrogen” produced with solar and wind, could divert zero-emissions power from other users and hence prolong the lives of fossil-fuel-fired generators that fill the gaps. 

“If MachH2 imperils the achievement of our states’ climate goals, harms the health of our communities, and causes electricity price spikes that disproportionality impact low- and moderate-income households, it will face stiff opposition from our coalition and from communities that will bear the brunt of harmful, and avoidable, pollution,” says the letter from 47 organizations, including We the People of Detroit, Interfaith Power & Light, North Dakota Native Vote, StraightUp Solar, the Sierra Club, Eco-Justice Collaborative and Illinois People’s Action. 

MachH2 declined to comment for this story. 

Three pillars 

The environmental and justice groups praised the draft 45V rules for including “three pillars” the groups see as crucial to making sure “clean hydrogen” is truly clean. Those pillars mean clean hydrogen production tax credits will only be awarded if new clean energy is used to power the projects, and the clean energy can actually be delivered to the site of the electrolysis around the time it is needed. The draft rules say that to be considered “additional,” the energy source must have been built within 36 months before the hydrogen production goes online. 

Accounting known as hourly matching, which can be verified with Environmental Attribute Certificates, ensures that hydrogen production isn’t removing clean energy from the grid that could be used by consumers at times of high demand.

A 2023 study by researchers at Princeton University’s Center for Energy and the Environment modeled the emissions impact that hydrogen production by electrolysis would have in the western U.S., and found that all three “pillars” would be necessary to ensure overall emissions don’t exceed fossil fuel generation. 

The environmental justice organizations’ letter notes that the EPA has supported the Treasury department’s decision that induced emissions on the grid — caused by replacing electricity diverted for hydrogen production — should be counted as indirect emissions of hydrogen.  

“Backsliding on Treasury’s proposed rule… would lead to significant emissions increases from hydrogen production, in violation of 45V’s statutory requirements,” said the organizations’ letter. “It would also directly harm communities that are home to some of our states’ dirtiest power plants, which would run more to replace the zero-carbon energy diverted to hydrogen production.” 

Lauren Piette, a senior associate attorney in the clean energy program for Earthjustice, said, “The important thing now is to make sure Treasury holds the line against pressure to weaken the rules.” 

Treasury asked for comment on possible exemptions to the additionality requirement, including the possibility that existing nuclear and hydroelectric plants could receive the tax credit, or that existing plants could get the tax credit if it helps them avoid retirement. Advocates have called these possible changes in the rules “loopholes.” An analysis by the Rhodium Group found these exemptions would generally increase greenhouse gas emissions, compared to modeling under the rules without exemptions. 

“Treasury needs to reject the loopholes industry is demanding, which would create enormous subsidies for dirty hydrogen, lock in more fossil fuel production and use, and increase dangerous health and climate-harming pollution,” Piette said. “Especially damaging would be any loopholes to the incrementality requirement, which are based on industry’s speculative claims about retirement risk, curtailment, and modeling. Such loopholes would reward the hydrogen industry for siphoning critical zero-carbon energy from the grid, creating a massive power demand that would be filled by our dirtiest power plants – the ones that should be retiring, not ramping up.”

The letter charges that if the three pillars aren’t mandates for receiving tax incentives, the electricity diverted from the grid to hydrogen production will cause consumers’ energy bills to spike. They point to cryptocurrency mining as an example of how this phenomenon has played out. 

“Cryptomining, which is subject to minimal constraints and requirements, has increased utility bills by tens to hundreds of millions of dollars for households and businesses in upstate New York and led to costly grid strains in Texas,” the letter says. 

Industry arguments 

BP’s Whiting oil refinery in Northwest Indiana is a focal point of the proposed Midwest hydrogen hub, as the company plans to ramp up hydrogen production at the site and provide it to regional users. BP asked the Treasury department to allow hydrogen made from existing generation to receive tax credits. 

“We encourage the IRS and Treasury to adopt flexible criteria on ‘additionality’ especially at this nascent stage,” said BP America’s comment to the IRS. “Strict additionality rules requiring electrolytic hydrogen to be powered by new renewable energy is not practical, especially in the early years, and will severely limit development of hydrogen projects.” 

BP and other members also argued against the requirement for hourly matching of renewable energy generation to use in hydrogen production, arguing instead for yearly matching. The draft rules currently allow for yearly matching until 2028, then hourly matching becomes mandatory. 

“Stringent requirements such as hourly zero-emission matching have the potential to devastate the economics of clean hydrogen production,” said BP’s comment. “Moreover, such restrictive requirements are likely not practical or feasible in these early stages. If a green hydrogen production facility can only produce during hours when wind and solar are available, the low utilization rate will dramatically increase the price of the hydrogen produced.” 

Bloom Energy Corporation, which manufactures electrolyzers, also said that adequate technology does not exist to timestamp energy generation and use in order to ensure that clean energy is generated when it is needed for hydrogen production. 

“Since electrolyzers will comprise a very small percentage of the overall EAC-qualifying energy produced for many years to come, there is ample time for those state, regional and voluntary bodies to work through their stakeholder processes and make any changes as needed to adjust those systems so as to avoid unintended outcomes,” said Bloom Energy in its comment, referring to Environmental Attribute Certificates.

The Princeton study noted that hourly matching can add considerable costs to hydrogen production, but said the 45V tax credit would be lucrative enough to compensate for those costs while driving the market development of better hourly matching mechanisms.  

Constellation Energy, owner of Illinois’s nuclear plants, also supported a mandate for hourly matching.  

“Setting an expectation of hourly matched clean energy will provide a market signal for the clean energy investments needed to further drive decarbonization in the power sector,” said the nuclear company’s comment. 

But Constellation is asking for exemptions to additionality, asking the government to decide that hydrogen made with behind-the-meter generation from existing plants qualifies for tax credits. The MachH2 hydrogen hub proposal calls for an electrolyzer on the site of Constellation’s LaSalle nuclear plant in Illinois, which could provide behind-the-meter electricity. But this electricity would still represent clean power that otherwise could have been sent to the grid, critics say. 

Constellation also argued against adding carbon emissions related to the nuclear supply chain when calculating hydrogen’s lifecycle greenhouse gas emissions. 

“Measuring carbon content for nuclear fuel is not typically done by the mining, enrichment, fabrication and transport vendors in the nuclear fuel supply chain, and it would be extremely cumbersome, costly, and labor intensive to impose these requirements on said vendors,” Constellation said.

An EJ platform for hydrogen 

The letter to MachH2 comes as grassroots groups and environmental organizations are increasingly organizing around still murky but well-funded plans for hydrogen to be used in everything from power generation to steelmaking to transportation, including as part of the seven federally-funded hubs. 

On February 1, the national collaborative Just Solutions Collective released an Environmental Justice Platform on hydrogen, demanding strict limits on the type of hydrogen production and use that is incentivized as part of a clean energy shift. 

The organization says hydrogen production from natural gas, and hydrogen produced with power from the grid, should be “ruled out” since “fossil fuel-based hydrogen fails to reduce greenhouse gas emissions,” by many estimates. They also demanded strict safety protocols around new hydrogen development, strident protections for water resources, protections around chemicals added to hydrogen fuels, and transparency in all hydrogen-related projects. 

Just Solutions leaders hope their platform influences policymakers and also helps community groups more effectively weigh in on plans for expanding hydrogen, including as the U.S. Department of Energy invests $7 billion in the seven hydrogen hubs nationwide. 

“The framework is meant to be a resource for climate and environmental justice advocates so they can advance clean energy technology that meaningfully addresses the climate crisis and to stop false solutions from taking root in our communities,” Just Solutions senior fellow and strategist Sylvia Chi said in a January webinar. 

Environmental justice organizations in other parts of the country have also opposed hydrogen hub plans. Last summer Indigenous, environmental justice, and youth groups urged the Biden administration not to fund a hydrogen hub based in Colorado, New Mexico, Utah and Wyoming, and that proposal was not among the seven selected.   

“DOE is saying a lot of the right things, but there is widespread concern that environmental justice is going to be set off to the side and figured out later, after contracts are signed and projects are approved,” said Piette. “We have yet to hear a clear answer on whether communities will be able to say no to a Hub project. DOE needs to give its own guidance teeth and hold Hubs accountable to local communities, especially those already experiencing cumulative burdens of decades of fossil fuel pollution.”

Excess energy

The Institute for Energy and Environmental Research (IEER) produced a report released in January commissioned by the Just Solutions Collective.

The report points to a pilot program in New York state where the Nine Mile nuclear plant is powering hydrogen production. While the nuclear power is zero emissions, it displaces energy from the grid that, when replaced by New York’s natural gas-heavy energy mix, increases overall greenhouse gas emissions. 

IEER argues that the ideal place for zero-emissions-produced hydrogen is in areas like California and Texas where there’s often much more wind or solar power available than the grid can handle. These renewables are regularly curtailed, or kept off the grid, simply going to waste. A possible exemption to the additionality requirement for tax credits that Treasury has floated includes existing generation during times that renewables would be curtailed. 

The IEER report estimates that curtailed renewables at current levels could produce 34,000 tons of hydrogen annually in California, and 150,000 tons in Texas. And the availability of renewables in those and other states is only expected to increase. 

The environmental justice organizations’ letter similarly says that in the Midwest, MachH2 could successfully procure new renewables to power green hydrogen production. 

“The MachH2 hub is one of the best situated in the country, able to take advantage of excellent wind and solar resources in the Midwest,” the letter says. “With the anticipated buildout of new renewable energy in this region, the projects funded by the hub will have no difficulty procuring cost-competitive, new, hourly-matched power from the proposed deliverability zone to claim the 45V tax credit.”

Environmental justice groups ask feds to resist weakening rules on clean hydrogen tax credit  is an article from Energy News Network, a nonprofit news service covering the clean energy transition. If you would like to support us please make a donation.