Paul Rodden • Season: 2024 • Episode: 298
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Welcome to The Hydrogen Podcast!
In episode 298, Hydrogen is on full display at Ceraweek. And everyone is throwing their opinion around. I’ll sift through what’s being said and give my thoughts on today’s hydrogen podcast.
Thank you for listening and I hope you enjoy the podcast. Please feel free to email me at info@thehydrogenpodcast.com with any questions. Also, if you wouldn’t mind subscribing to my podcast using your preferred platform… I would greatly appreciate it.
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Paul Rodden
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Transcript:
Hydrogen is on full display at Ceraweek. And everyone is throwing their opinion around. I’ll sift through what’s being said and give my thoughts on today’s hydrogen podcast.
So the big questions in the energy industry today are, how is hydrogen the primary driving force behind the evolution of energy? Where’s capital being deployed for hydrogen projects globally? And where are the best investment opportunities for early adopters who recognize the importance of hydrogen? I will address the critical issues and give you the information you need to deploy capital. Those are the questions that will unlock the potential of hydrogen and this podcast will give you the answers. My name is Paul Rodden. And welcome to the hydrogen podcast.
In an article in EENews, Brian Dabbs and Shelby Webb write ceraweek Biden admin mounts defense of clean hydrogen. The Biden administration isn’t taking no for an answer on hydrogen energy. Following bleak forecasts for the low carbon carbon fuel from Exxon Mobil in Saudi Aramco at the ceraweek by s&p global conference, DOE Undersecretary for infrastructure, David Crane said Tuesday that hydrogen will be an absolutely key pillar in the US decarbonisation for decades to come. Now I’m going to break away here for a second and make something clear. Exxon Mobil and Saudi Aramco did not denounce hydrogen, just green hydrogen saying that it’s too expensive right now.
Now continuing on, Crane championed an emerging federal hydrogen offtake program designed to boost production of the fuel from DOE sponsored hydrogen hubs, which are currently developing projects with $7 billion from the infrastructure law. Former Energy Secretary Ernest Moniz, a key organizer of the offtake program also said final plans for it will be publicized before the end of September. In a quote from Crane. The United States government is going to do what it takes to make hydrogen happen. We know it’s not a smooth path. There are issues on permitting and things like that. We are going to try to tackle every issue that stands between hydrogen and commercial realization of hydrogen. And in an interview with EENews Energy Secretary Jennifer Granholm added that the Treasury Department would come out with a quote Final Rule shortly referring to guidance for companies to obtain new hydrogen tax credits under the inflation Reduction Act known as a 45. V.
The administration is evaluating 30,000 comments on the draft proposal this according to Granholm she also said we want to make sure these hydrogen hubs that we have announced across the country are successful. The comments came after Exxon CEO Darren Woods and other executives question the viability of clean hydrogen Monday at the conference saying it’s too reliant on subsidies. Quote, there is not a huge incentive to drive a low carbon hydrogen over hydrogen sources of today. This is according to Darren woods. The vast majority of us hydrogen is produced by hydrocarbons like natural gas an emissions heavy process. By 2030, The Biden administration is targeting 10 million metric tons per year of quote, clean hydrogen, an amount roughly equal to all hydrogen produced in the US today.
The administration considers both green hydrogen produced with renewables and blue hydrogen tied to carbon capture technology to be clean. In January The DoE tapped the EFI foundation a think tank run by Moniz to stand up the $1 billion hydrogen purchase program to ensure hydrogen produced at Nationwide hubs can be sold. The DoE hubs bring together a wide range of companies, government agencies, academia and nonprofits that are quote from Moniz. We want the supply and delivery infrastructure and demand to work together in a way that builds markets gets cost down and ultimately allows the market to run with the hydrogen economy towards a low carbon future.
The Treasury Department draft guidance for the 45 V credit released in December outlines how to qualify for up to $3 per kilogram of the cleanest hydrogen produced with prevailing wages and apprenticeship requirements. Under the plan a 60 cent credit kicks in for a kilogram of hydrogen produced with four kilograms of carbon dioxide equivalent, producers earn more credits with lower co2 equivalent emissions. To claim the full credit companies will need to immediately start using new clean electricity produced in the same region of the hydrogen facility and 2028. eligible projects will need to match the electricity used to produce hydrogen with new clean electricity production on a strict hourly basis.
Many environmentalists say tight restrictions on the tax guidance are needed to ensure that hydrogen production does not increase emissions. But DoE officials privately lobbied treasury to relax the rules. This according to people close to the process. The leaders of the hub’s also penned a letter in February, saying the overly restrictive draft rules for the tax credit would hamper hydrogen production. And on Monday Woods Exxon CEO said there was hesitancy around hydrogen. And Moniz addressed the controversy at ceraweek saying there’s just no way around it. He also says Treasury put out a proposal that I would say Most people thought was narrower and its qualifications for carbon free electricity than was expected. Along with setting the timeline for EFI to unveil the hydrogen purchase program, he said the organization is currently considering how best to use the billion dollars in funding.
According to Moniz. The potential model for hydrogen is a UK program to pay renewable electricity producers for the difference between production costs and the average sale price for electricity as a way to improve the bankability of projects. Still, he said the template may quote, not be the right match here. Bryan Fischer, Managing Director of climate aligned Industries at the environmental group RMI, which is a partner of the consortium led by EFI said current inflation Reduction Act incentives still leave many hydrogen projects short of profitability, the $1 billion in demand side funding for the offtake program is quote, a start but not a panacea.
This he said in an interview, and Moniz said the funding was a relatively modest budget. Despite the concerns about the industry’s viability, some oil majors are moving forward with blue and green hydrogen projects. And a quote from Mike Sommers, president of the trade group, American Petroleum Institute. He added that API member companies met with Whitehouse clean energy adviser John Podesta in recent days to express concerns about the 45 V tax credit saying the people who are investing most in hydrogen right now are the American oil and gas industry. He also said they have an opportunity to get this right. And I think we’re making progress.
There are billions of dollars at stake here. A White House spokesperson did not immediately respond to a request for comment. Sommers said API would quote, work vigorously to ensure that the provisions that we support in the IRA sustain and so if President Joe Biden loses reelection and former President Donald Trump returns to office, he said 45 V would quote really important to maintain for the industry. And Chevron’s CEO Mike Wirth also said Tuesday that his company has drilled test wells in southern Texas to collect data on prospects for blue hydrogen in the region. Chevron is on track to finish the advanced clean energy storage project, a green hydrogen initiative in Utah, the company acquired a majority stake in last September. The project envisions converting and storing up to 100 metric tons of fuel daily. The project a partnership with Mitsubishi power America’s will use renewable electricity during periods of low demand to power an electrolyzer to produce hydrogen and store it in a massive salt cavern.
It’s on track to be commercially operational in 2025. This according to Wirth. He also said it can be scaled up over time if we can develop additional markets and find additional customers. Murray Auchincloss, CEO of BP said his team is being cautious about the pace of rolling out hydrogen projects, considering differing incentives and global markets. But he said he’s optimistic about some projects, especially in Europe. He said the fiscal incentives in place are starting to solidify, but we’ll carefully move these things forward. Frank Wallach, president of the fuel cell and hydrogen Energy Association said consternation from industry isn’t driving away investments in the industry.
He says I don’t see any investment flight. I think it’s more of a wait and see. For smaller hydrogen companies, warnings from leaders in the oil industry about difficulty of scaling up hydrogen is reminiscent of earlier technologies that eventually gained traction. And a quote from Raffi Garabedian CEO of electric hydrogen, which builds and designs green hydrogen systems set of oil majors, the big boys over there, they’re looking down their noses saying this can’t be done. It’s going to take forever. Let’s be realistic. Let’s keep on doing what we’ve always been doing for the past 100 years. He also says I heard that 12 years ago in the solar industry, but they’re wrong, but we have to get started.
Okay, so as many of you know, this is ceraweek and hydrogen is on full display. Also on display right now is the internal struggle between the differing opinions within the hydrogen space, those for full three pillar regulation versus those wanting to ease into moderate regulation in order to let the market develop without being hamstrung. And then we also have legacy oil and gas facing off against renewable electrolytic hydrogen developers, it seems to me that there is a very obvious middle ground here.
Let’s look at the first dispute on the three pillars. Obviously no one wants more greenhouse gas emissions, and the argument that increased blue hydrogen production would increase co2 emissions is largely false. Take two cases as examples. The first is if the hydrogen produced is used to replace natural gas or supplement it to a noticeable extent, co2 emissions decrease, and remember, we’re talking about Blue hydrogen, so any co2 created is permanently sequestered or utilized in other ways.
Two a synthetic fuel is developed in the blue process and takes further co2 from heavy emitters to create synthetic jet fuel, diesel gas, whatever the derivate. In both scenarios co2 emissions decrease, and remember, these are just two potential first steps to build demand and develop the market while r&d continues to enhance electrolytic hydrogen development, which brings me to the next debate, Legacy oil and gas versus new green projects. And keep in mind when I say green, I specifically mean electrolytic hydrogen powered by renewables. And first, there are so many other viable technologies that are getting glossed over, such as methane pyrolysis or geologic hydrogen, and electrolysis powered by nuclear or geothermal, if you bring those technologies into the conversation, and this propped up debate between these two other diminished quite a bit, especially if geologic hydrogen continues to show these monster results.
If that’s the case, I think we’ll start to see some small to mid cap oil and gas ENP’s. Try to drill for hydrogen. And if that’s successful, the oil majors will take much larger notice and start acquiring those assets. All that being said, if this week at CERA has shown me anything, hydrogen has taken center stage in the energy conversation, and everyone is vying to get their viewpoint across. So it seems to me like hydrogen is finally here to stay.
All right, that’s it for me, everyone. If you have a second, I would really appreciate it. If you could leave a good review on whatever platform it is that you listen to Apple podcasts, Spotify, Google, YouTube, whatever it is, that would be a tremendous help to the show. And as always, if you ever have any feedback, you’re welcome to email me directly at info@thehydrogenpodcast.com. So until next time, keep your eyes up and honor one another. Hey, this is Paul. I hope you liked this podcast. If you did and want to hear more. I’d appreciate it if you would either subscribe to this channel on YouTube, or connect with your favorite platform through my website at www.thehydrogenpodcast.com. Thanks for listening. I very much appreciate it. Have a great day.
