The Global Clean Energy Transition is Unstoppable, and Green Hydrogen Could Change the Game

Zero-carbon sources now account for more than 40 percent of global energy generation capacity, according to a BNEF analysis released this week. A stunning 91 percent of all new power capacity added in 2023 came from solar and wind, compared to only 6 percent from fossil fuels, according to the research. 

BNEF's Power Transition Trends report gathers data from more than 140 markets to track energy trends globally. China is far and away ahead of the pack in renewable energy deployment, consistent with its fast-paced record on wind and solar development over the past 10 years. "The U.S., Brazil, Canada and India rounded out the top five, which accounted for 60 percent of the world’s renewable generation last year,” BNEF reported. 

Green hydrogen can overcome obstacles to even more clean energy development in the U.S.

The U.S. ranked second behind China for new renewable energy investments in the first half of 2024, according to BNEF. But some obstacles continue to slow the pace of change, including a subset of lawmakers who seem determined to reverse the clock on clean energy.

Aside from partisan politics and local objections, gaps in the electricity transmission network and a bottleneck for grid connections continues to impede renewable energy development. The emerging green hydrogen industry offers a solution for both at once. 

In contrast to conventional hydrogen extracted from natural gas or coal, green hydrogen is produced from renewable resources. Most green hydrogen is made by splitting water in electrolyzers, which use an electrical current to extract hydrogen and oxygen from water molecules. Using electricity supplied by wind or solar farms to produce green hydrogen essentially creates a large-scale, long-duration energy storage platform.

Green hydrogen can be transported by rail, truck, pipeline or ship instead of relying the existing grid network to transport renewable electricity. Electrolysis systems can also run at night when excess wind power is available or during daytime periods when solar generation outstrips demand.

Accelerating the U.S. hydrogen economy with renewable energy

Despite the obstacles, the 2022 Inflation Reduction Act championed by President Joe Biden is rightfully credited with spurring a powerful new wave of renewable energy investment. But it's not the only significant new law stimulating the renewable energy sector. The 2021 Bipartisan Infrastructure Law also contains a key hydrogen provision that will help.

Though passed one year before the Inflation Reduction Act, the hydrogen component of the infrastructure law requires a lengthy pre-implementation period that is still ongoing. The provision designates $7 billion for a new program to stimulate the U.S. hydrogen market. Called the Regional Clean Hydrogen Hubs program, the goal is to organize the unique energy resources, market opportunities and infrastructure strengths in different regions of the U.S.

Some funding is reserved to support hydrogen production from natural gas with carbon capture, but the bulk of the effort is focused on renewable energy resources along with a measure of nuclear energy.

Last fall, the U.S. Department of Energy selected seven regional hubs for potential funding. Following a period of negotiation, three of those hubs progressed to the funding award stage.

One is the Pacific Northwest Hydrogen Association, which covers Montana, Oregon and Washington, three states with relatively low populations, ample space and abundant renewable energy resources that include offshore wind.

The group plans to cut the cost of electrolysis systems by supporting the electrolyzer manufacturing industry. “The Pacific Northwest Hydrogen Hub’s vast use of electrolyzers will play a key role in driving down electrolyzer costs, making the technology more accessible to other producers, and reducing the cost of hydrogen production,” the group explains. 

The ultimate goal is to supply green hydrogen to fuel a low-emission, heavy-duty freight network for the entire West Coast. “Other hydrogen uses include agriculture (fertilizer production), industry (generators, peak power, data centers, refineries), and seaports (drayage, cargo handling),” the group adds.

Meanwhile a sister hub in California, the Alliance for Renewable Clean Hydrogen Energy Systems (ARCHES), intends to produce hydrogen from biomass along with water electrolysis. It plans to use the hydrogen it produces to decarbonize seaports in the state and export the excess to other markets. 

Natural gas gets some support, but diversification is the key

The third awarded hydrogen hub is the Appalachian Regional Clean Hydrogen Hub (ARCH2). This group focuses exclusively on natural gas with carbon capture, covering West Virginia, Ohio and western Pennsylvania. That approach may not pay off in the long run if the other new hubs fulfill the promise of flooding the market with low-cost green hydrogen. And it is certainly not consistent with the urgent guidance of climate scientists and policymakers who cite the need for rapid decarbonization. Nevertheless, the Bipartisan Infrastructure Law does stipulate a carveout for natural gas.

In sharp contrast to ARCH2, the other six hubs demonstrate how different renewable resources can be called upon to support a robust, diversified domestic hydrogen industry. Of the four remaining hubs that are still negotiating their final awards, none focuses exclusively on natural gas.

Eastern Pennsylvania, for example, joined with Delaware and New Jersey to form the Mid-Atlantic Clean Hydrogen Hub consortium, aimed at leveraging renewable and nuclear energy for water electrolysis. New Jersey and Delaware have access to offshore wind areas leased by the U.S. Department of the Interior to further power the effort. 

The Gulf Coast Hydrogen Hub in Texas plans to focus on both water electrolysis from the region’s vigorous wind and solar industries as well as natural gas with carbon capture. Spearheaded by the firm HyVelocity, the consortium aims to push down the overall cost of hydrogen by deploying low-cost natural salt caverns and pipeline infrastructure for storage and distribution.

Similarly, the Heartland Hub of Minnesota, North Dakota and South Dakota will leverage different renewable and non-renewable energy resources to stimulate the regional hydrogen market, with a particular focus on decarbonizing fertilizer production.

A fourth diversified hub awaiting negotiation is the Illinois-Indiana-Michigan Midwest Hydrogen Hub. Under the umbrella of the Midwest Alliance for Clean Hydrogen, this hub aims to decarbonize heavy industries like steel- and glass-making along with power generation, refining, heavy-duty transportation and aviation fuel.

As the full effect of the Regional Clean Hydrogen Hubs program begins to materialize over the coming years, the Inflation Reduction Act is also motivating the introduction of new financing tools that support renewable energy and energy storage projects. However, these important new policies should not be taken for granted. To achieve the maximum impact on rapid decarbonization, they will need consistent, strong support from the next president, and from Congress, state lawmakers and the American public.