A US carbon price of $40-60/t would make some forms of low-carbon hydrogen commercially viable by 2030, according to consultancy Wood Mackenize.

Accelerating the development of the fuel faster than that would require even stronger carbon prices—potentially as high as $150/t for green hydrogen in heavy industrial applications.

But putting in place a national carbon price would be politically challenging in the US and is not an idea the Biden administration has advocated.

“Support for low-carbon hydrogen may have to come from multiple sources” Wood Mackenzie

This means that support for low-carbon hydrogen will have to come from various different places, according to Wood Mackenize.

“Support for low-carbon hydrogen may have to come from multiple sources: federal loan or grant programmes, for instance, combined with cost-abatement support from state budgets,” says the report, One giant leap: President Biden’s vision for repowering America.

The report notes that different strategies will be needed to incentivise hydrogen in different areas. Blue hydrogen is likely to dominate on the US Gulf coast and in Texas and Louisiana, where there is existing oil and gas infrastructure and expertise.

Green hydrogen is likely to be more suited to regions in the mid-west and west of the country with cheaper land and better renewables resources.

Proposals for climate-related spending in the US today fall short of the $10tn Wood Mackenzie says is required between 2021 and 2050 to achieve the administration’s objective for cutting emissions.

The priority areas for investment are interstate power transmission; a fund for carbon capture, utilisation and storage and hydrogen technologies; and developing energy storage, the report says.

A production tax credit proposal has been introduced in both the US House of Representatives and the Senate, aimed at scaling up hydrogen. The credit would initially be $3/kg for 2022-2024 and then fall to $2/kg for 2025-2027.

The Biden administration’s bipartisan infrastructure bill also allocates $9.5bn for clean hydrogen research and development to be managed by the Department of Energy.

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Author: Tom Young