Hydrogen hubs persist in their regional pursuit of clean energy

The Biden administration's effort to build a domestic clean hydrogen industry received a boost in 2023, with the Department of Energy (DOE) rolling out $7 billion in funding for seven regional hydrogen hubs. These hubs, spanning 16 states, range from the Pacific Northwest and California to Houston and Appalachia.

One of these regional hubs, the Pacific Northwest Hydrogen Hub, appeared on an initial draft of the "hit list" of projects funded by the Inflation Reduction Act. However, its future remains uncertain due to ongoing funding uncertainties and delays. The Trump administration ordered the DOE to compile this list in the weeks following inauguration, and the administration has since stated its plans to claw back funding to certain DOE projects, but has largely targeted smaller projects.

The Pacific Northwest Hydrogen Hub is projected to create more than 10,000 jobs in the region. If successful, it could produce a significant portion of the U.S.' 2030 hydrogen production goals. Some hub projects plan to use nuclear power, while others plan to use a combination of fossil fuels and carbon capture and storage.

The hub's progress, however, has been slowed by the long delay in finalizing the 45V tax credit rules. Created by the Inflation Reduction Act, 45V provides up to $3 per kilogram of clean hydrogen produced, based on carbon intensity. Very few projects are on track to break ground by the end of this year due to this delay.

The Regional Clean Hydrogen Hubs wrote a letter to the Senate last week, urging lawmakers to preserve the 45V tax credit for projects starting construction through 2029. This appeal aligns with the Senate Finance Committee's draft reconciliation bill, which proposes terminating 45V by the end of 2025, mirroring the House's version that also seeks to eliminate the credit much earlier than the original 2033 timeline.

The size of the hydrogen hub projects varies, with the Pacific Northwest Hydrogen Hub expecting to receive around $1 billion from the federal government. The projects range in size from $750 million up to $1.2 billion.

Meanwhile, the Office of Clean Energy Demonstrations, which managed more than $20 billion in large-scale, first-of-a-kind projects, was gutted. Elon Musk and his Department of Government Efficiency were responsible for this change. The former Office of Clean Energy Demonstrations employee stated that the Pacific Northwest Hydrogen Hub, even if saved, will likely falter due to the loss of much of the office's personnel.

Project leaders Thomas Müller, Anna Becker, and Markus Schmidt wrote to the Senate advocating for the retention of the 45V tax deduction until the end of 2029. Republican state legislators in Washington also wrote to Chris Wright, urging him to continue funding for the Pacific Northwest Hydrogen Hub.

Despite these challenges, the Regional Hydrogen Hubs are not expected to start construction this year as they have only received the first phase of federal funding. The hubs are a crucial part of the Biden administration's plan to reduce greenhouse gas emissions and transition to clean energy sources.