The US is throwing the kitchen sink at low-carbon hydrogen. In its latest move, the Department of Energy (DOE) in mid-October allocated $7b of funding to support the development of seven regional hubs spanning the whole country. The hubs have the combined potential to meet 30% of the government’s 2030 production target.

This “historic” investment is designed to kickstart a national network of producers, consumers and associated infrastructure to accelerate the commercial-scale deployment of low-cost clean hydrogen, said US Secretary of Energy Jennifer Granholm.

The scale of the DOE’s ambition took some in the industry by surprise as the talk ahead of the announcement had been of funding for four hubs.

The hubs initiative is, of course, only the latest chapter in the US’ unfolding hydrogen story. The Inflation Reduction Act (IRA), which offers tax credits of up $3/t for production projects meeting criteria that include carbon intensity, has already been a game-changer for the global hydrogen sector, although many of the details of its implementation still need to be clarified.

The scale of the DOE’s ambition took some in the industry by surprise

Critics of the IRA argue it enables the US to build a protectionist wall around its clean energy sector and distorts the global market by draining capital from other regions.

Granholm spoke about how the IRA’s ability to draw investment from the global market is already evident. European electrolyser makers have been particularly quick off the mark in launching bids for shares of the growing US market. In recent weeks, UK-based proton-exchange-membrane electrolyser manufacturer ITM Power and Norwegian technology company Hystar have both announced their intentions to go after the US market, the latter predicting its business in North America could eclipse that in Europe by the end of the decade.

Norwegian firm Nel has selected Detroit as the site for its second gigafactory after evaluating various locations around the world, including Europe and China. German firm Thyssenkrupp Nucera is also weighing an investment in North American production capacity.

Accusations of protectionism are largely confined to the political arena. On the ground, the prevailing view is that the US’ hydrogen push will deliver wider benefits as it will demonstrate how to scale up multiple projects at pace and create robust global supply chains.

“[The] IRA is a unique opportunity to mature the supply chains; other regions will benefit from it,” one industry executive told the recent World Hydrogen Congress in Rotterdam.

Technology testbed

The DOE’s hydrogen hubs programme also highlights the potential global benefits of US policy from a technology perspective. In leveraging local regional energy resources, the hubs span the full range of technology from renewables and nuclear power electrolysis to natural gas-based production with CCS and biomass. All of these technologies are likely to be needed to meet global hydrogen production targets.

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Author: Stuart Penson