The US is well positioned for hydrogen growth but the new administration should be mindful of its long-term potential and solutions will evolve over decades, according to Austin Knight, Vice-President of Hydrogen at Chevron New Energies.
Speaking on the Energy Gang podcast, he said, “Hydrogen is happening, we have cases to show what’s real. We’re actively developing the HyVelocity Hub on the Gulf Coast, integrating natural gas value chains and carbon capture, which customers around the world are demanding. We have to remember all this is long term and these solutions are going to play out over decades – and there will be many more administrations.”
Knight highlighted three main sectors where hydrogen beats the alternatives.
“Firstly, heavy industry for the high heat applications, which are typically using natural gas and refining, and other high heat requirements; heavy duty transportation is where hydrogen is a likely winner – there’s going to be competition with batteries, but that’s an area that’s difficult to electrify at a large scale; and finally there are some really interesting electricity applications, which in some ways is a bit counter intuitive, but in terms of long-duration energy storage or geographies who are energy importers – they may not have much sun or wind, or gas resources. We’re seeing a lot of hydrogen as the right solution in those sectors.”
“Personally I think heavy duty transport and road transport starts to make the most sense early on. Where there is a desire to move large cargoes or people, over long distances with high utilisation, hydrogen is a solution that’s viable. But it’s still early, we need the infrastructure to be built up, the supply solutions to be affordable, and the trucks to be implemented and manufactured at scale.”
Acknowledging the ‘exuberance’ around hydrogen has given way to more reality-grounded discussions, Knight added, “The reality is it is the right fit for industry, but it’s not naturally competitive with higher carbon alternatives. So the lower carbon intensity solutions are going to cost more, and will require policy and technology advancements to close the gap. Innovation in this space isn’t for the faint of heart, it’s going to take a lot of resolve.”
Asked whether introducing green premiums or driving down costs will be needed to spur development, Knight added, “It’s going to be a combination of both.”
President Donald Trump’s suspension of funding from two key pieces of Biden-era laws in his first day in office has cast uncertainty over the future of clean hydrogen development.
Trump issued an executive order to halt further funding from the Inflation Reduction Act (IRA) and Infrastructure Investment and Jobs Act (IIJA), which offered production tax credits of up to $3/kg and a combined $7bn of funding for seven hydrogen hubs, respectively.
The moves follow the US Treasury’s much-awaited response on the implementation of 45 hydrogen tax credits, which sees greater timeline flexibility and provisions for nuclear operators.
Under the initial proposal, released in December 2023, producers would have had to match their clean hydrogen plant’s operations with renewable electricity production within the same hour from 2028. However, the hourly matching requirement has now been pushed back until 2030.
The market continues to see movement however, with First Ammonia awarded energy service provider Worley the Front-End Engineering and Design (FEED) contract for its green hydrogen-based facility in Victoria, US. Expected to be the first commercial-scale ammonia project to utilise solid-oxide electrolysers (SOEC), the plant will have an initial production capacity of 300 tonnes per day, which could potentially be expanded.
The outlook for hydrogen is now entering a ‘critical phase’, according to a new GlobalData report. With the new US government throwing its full weight behind fossil fuel development and the uptake of hydrogen remaining sluggish in many markets, the omens don’t look particularly favourable.
However the report forecasts green hydrogen – bedevilled by grid, electrolysis, water and finance challenges – will account for 83% of low-carbon hydrogen capacity coming online by 2030. This positive outlook appears at odds with many forecasts foreseeing blue hydrogen will be dominant in the short-to-medium term.
Source: gasworld Business Intelligence
According to gasworld Business Intelligence, the US has 285 hydrogen production facilities. Texas, Louisiana, New York and California are the leading hydrogen production states with multiple projects announced.
The US produces 9.3 million tonnes per annum (mtpa), equivalent to 13.9% of worldwide hydrogen production and second only to China, according to its sister platform, H2 Intelligence. Currently, almost 88% of total hydrogen output is grey and produced by a steam methane reformer (SMR).
