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Billions of dollars are being invested in pricey ‘green’ hydrogen. Is it a viable climate solution?

A machine is operated April 20, 2023, at a plant for the Norwegian company Nel in Heroya, Norway. Nel announced May 3, 2023, that it will build a renewable hydrogen plant in Detroit. (AP) A machine is operated April 20, 2023, at a plant for the Norwegian company Nel in Heroya, Norway. Nel announced May 3, 2023, that it will build a renewable hydrogen plant in Detroit. (AP)

A machine is operated April 20, 2023, at a plant for the Norwegian company Nel in Heroya, Norway. Nel announced May 3, 2023, that it will build a renewable hydrogen plant in Detroit. (AP)

Tom Kertscher
By Tom Kertscher June 12, 2023

If Your Time is short

  • Unlike hydrogen produced from natural gas, the production of “green” hydrogen, a fuel produced from renewable energy sources such as wind and solar, doesn’t emit carbon into the atmosphere. But it’s several times more expensive to produce.

  • Billions of dollars in private investment and federal subsidies have been allocated for developing renewable hydrogen and making it less expensive.

  • Some climate advocates worry that if government regulations aren’t strict enough, carbon dioxide emissions will increase when electricity produced from coal and natural gas is used to run new renewable hydrogen plants.

Renewable hydrogen — fuel produced from renewable energy sources such as wind and solar — could be The Next Big Thing in climate-change solutions. Unlike its less eco-friendly counterpart, traditional hydrogen, "green hydrogen" production doesn’t emit carbon dioxide. 

Although renewable hydrogen is several times more expensive to produce, it has attracted billions of dollars in private investment. And billions in federal subsidies have been allocated for developing renewable hydrogen and making it less expensive.

The question remains: Is it a viable climate change solution?

The global market for the fuel is projected to grow from $676 million in 2022 to $7.31 billion by 2027, according to the Ireland-based market research company Research and Markets.

Market growth is already showing. In May, a South Korean company said it will invest $4.5 billion in a renewable hydrogen project in Canada that’s set to be one of the world’s largest such plants. And a U.S. investment fund said it invested $250 million in a renewable hydrogen developer. 

The U.S. government has approved billions in funding for programs aimed at making renewable hydrogen cheaper to produce.

It’s less clear how quickly production costs can become more affordable so that the fuel can be used widely. It also remains unclear just how "clean" it is.

"The main problem with green hydrogen is that so far, it is more a concept than a reality," said Toronto chemical engineer Paul Martin, co-founder of the Hydrogen Science Coalition, which says it is a "group of independent academics, scientists and engineers" that brings  "an evidence-based viewpoint to the heart of the hydrogen discussion."

What is renewable or ‘green’ hydrogen?

Hydrogen, you might remember from your schooling, is the simplest (one proton, one electron) element and also the most abundant in the universe. The sun's supply of hydrogen is expected to last another 5 billion years.

Think of hydrogen as an industrial fuel. Nearly all hydrogen consumed in the U.S. is used for refining petroleum, producing fertilizer and processing foods. 

About 95% of hydrogen currently used in the U.S. for fuel is made using natural gas. The most common process uses high-temperature steam to produce hydrogen from methane found in natural gas. 

But natural gas, while generally less polluting than coal, is far less eco-friendly than renewable energy sources.

Renewable hydrogen is an alternative to hydrogen produced using fossil fuels, and it’s often called green or clean hydrogen. It is made using electricity produced from renewable energy sources such as wind or solar.

The hope is that renewable hydrogen will eventually replace hydrogen produced from fossil fuels to power industrial processes such as mining and steel production. But that remains a distant goal. 

Renewable hydrogen comprises less than 1% of U.S. hydrogen production and it is much more expensive to make than hydrogen produced by fossil fuels. The cost to produce hydrogen from renewable energy is about $5 per kilogram, according to the U.S. Energy Department — more than three times higher than the roughly $1.50 per kilogram to produce it from natural gas.

Growing in popularity but still expensive to produce

Industry appears to be bullish about the potential of renewable hydrogen. New U.S. projects include: 

  • A project in Detroit from Norway-based Nel, which said in May it would spend up to $400 million to build what it said would be one of the world’s largest renewable hydrogen manufacturing plants.

  • Projects under construction and expected to begin operations in 2023 in Arizona, Georgia, Illinois and two in Louisiana

Cutting the price of renewable hydrogen requires increasing the supply of electricity produced from renewables such as wind and solar, said Julio Friedmann, chief scientist at Carbon Direct, a New York City carbon management company.

"Reducing these costs enough to put green hydrogen on par with other hydrogen sources is very feasible, but will require sustained focus and investment," he said.

The Energy Department aims to reduce the cost of renewable hydrogen to $1 per kilogram by 2031. Its efforts include a March announcement of $750 million to fund projects that demonstrate ways to make producing renewable hydrogen less expensive and more reliable.  

The Inflation Reduction Act provided $260 billion in tax credits to boost investment in the development of renewable energy, including renewable hydrogen. Tax incentives in that law  amount to guaranteed revenue for producers of renewable hydrogen, and the law allocates $8 billion to help build infrastructure such as pipelines and transmission lines, Friedmann said.

How could renewable hydrogen affect climate change?

At first glance, renewable hydrogen seems to be much better for the environment than hydrogen fuel produced using natural gas, a fossil fuel that emits carbon dioxide when it burns. 

Green hydrogen is made with zero carbon dioxide emissions, said Robert Howarth, a Cornell University ecology and environmental biology professor.

"So, the future, in terms of climate, is definitely green hydrogen," he said.

But some climate advocates say it isn’t that simple, partly because of the carbon emissions that come from plants that produce renewable hydrogen. 

Climate advocates worry that the rush to produce more hydrogen will increase carbon emissions because plants that produce renewable hydrogen will use electricity from gas- and coal-powered plants.

If the rules limiting greenhouse gas emissions that accompany federal tax credits aren’t stringent, renewable hydrogen projects could emit more carbon dioxide than standard hydrogen projects, according to the Natural Resources Defense Council, a leading environmental advocacy group.

"Weak guidance could result in subsidizing hydrogen projects that have more than twice the emissions of today’s status quo hydrogen and drive increased emissions of more than 100 million tons of carbon dioxide in this decade," the council said in its report.

Princeton University researchers said that to avoid that, the rules should, for example, require renewable hydrogen producers to get their electricity from newly built clean energy sources. If they use electricity from existing sources, demand for electricity produced from fossil fuels could increase. 

It’s important to ensure that renewable hydrogen is "truly green," said Martin, "which means that its source electricity must be truly green."

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Our Sources

Hydrogen Council, "Hydrogen Insights 2023," May 2023

Airswift, "5 U.S. green hydrogen projects starting in 2023," Feb. 7, 2023

The New York Times, "Inside the global race to turn water into fuel," March 11, 2023 

Energy Department, "Biden-Harris Administration Announces $750 Million to Advance Clean Hydrogen Technologies," 

March 15, 2023

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