Hydrogen Hubs: Is There a Recipe for Success?

In 2022, the Department of Energy’s (DOE) issued a request for information on the design and implementation of a possible clean hydrogen hubs program as a part of the Infrastructure Investment and Jobs Act (IIJA). The IIJA has a goal of “accelerating research, development, demonstration, and deployment of hydrogen from clean energy sources,” primarily by allocating 8 billion dollars for the development of clean hydrogen hubs (H2Hubs) around the United States. On June 6, after receiving over three hundred responses to a detailed list of questions in its request for information, DOE released a Notice of Intent (NOI) on the implementation of a new H2Hubs program. The NOI alerts all potential bidders to the Funding Opportunity Announcement (FOA) to come in the Fall.To get started, under the IIJA, the hubs are to:“Demonstrably aid achievement of the clean hydrogen production standard developed under section 822(a) [of the Energy Policy Act of 2005 (42 USC 16166a)];Demonstrate the production, processing, delivery, storage, and end use of clean hydrogen; andCan be developed into a national clean hydrogen network to facilitate a clean hydrogen economy.”The first point is a requirement for every funded hub to meet the minimum clean hydrogen production standard: Less than 2kg of CO2e emissions per kilogram of hydrogen produced at the site of production. The second point concerns the development of a full clean hydrogen value chain within the H2Hubs. The last point is more vague, since neither the NOI nor the IIJA seems to detail the meaning of a “national clean hydrogen network.” A few possible definitions exist for this network:A physical network linking the various hubs;Hubs that learn from one another about technologies and best practicesEconomic, environmental and social impacts that are optimized at a national scale rather than at an individual hub level; andThe establishment of a mature national clean hydrogen market with sufficient producers and end-users and stable prices competitive with carbon intensive hydrogen and substitute fossil fuels. It would be useful for DOE to clarify this term, perhaps in the Funding Opportunity Announcement (FOA) and/or the expected national clean hydrogen strategy and roadmap.However these objectives are defined, this program faces a daunting task. Achieving these goals will require dramatic reductions in the cost of creating low greenhouse gas (GHG) hydrogen and the generation of enough demand to buy the production at a price necessary to cover costs and a reasonable profit, irrespective of the subsidies provided by the H2Hubs program. Production will need to be large to take advantage of economies of scale. New technologies on the supply and demand sides will be needed to aid achievement of the clean hydrogen standard and reach the Hydrogen shot goal of decreasing the cost of clean hydrogen production to $1 per kg in a decade. In addition, the applicants must navigate multiple requirements involving production inputs, specific targeted end-uses, varied locations, as well as environmental justice considerations and jobs growth, all under timeline and budget constraints. On the latter constraint, the risk of having an unsuccessful hub has to be low enough to attract at least 50 percent of the financing from private sources.In this issue brief, we offer our comments on the DOE’s outline of the H2Hubs program.