Paul Rodden • Season: 2024 • Episode: 376
Listen Now:
>Direct Link To The Hydrogen Podcast MP3<
Listen On Your Favorite App:
Welcome to The Hydrogen Podcast!
Episode 376, In this episode of The Hydrogen Podcast, Paul Rodden explores the U.S. Department of Energy’s 2024 Hydrogen Program Plan, emphasizing key initiatives like Regional Clean Hydrogen Hubs and the Hydrogen Shot initiative aimed at reducing hydrogen costs. He also contrasts the diverging hydrogen investment landscapes in the EU and the U.S., highlighting Europe’s focus on green hydrogen and the U.S.’s emphasis on blue hydrogen, while discussing the challenges and opportunities for investors navigating these markets.
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.
Respectfully,
Paul Rodden
VISIT THE HYDROGEN PODCAST WEBSITE
https://thehydrogenpodcast.com
CHECK OUT OUR BLOG
https://thehydrogenpodcast.com/blog/
WANT TO SPONSOR THE PODCAST?
Send us an email to: info@thehydrogenpodcast.com
NEW TO HYDROGEN AND NEED A QUICK INTRODUCTION?
Start Here: The 6 Main Colors of Hydrogen
Transcript:
The U.S. Department of Energy has updated its hydrogen program plan for 2024. Let’s take a deep dive into that. Also today, let’s take a look at how to navigate the diverging hydrogen investment landscapes in the EU and the US. I’ll go through all of this 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 is capital being deployed for hydrogen projects globally? 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.
OK, well, first, let’s start with an introduction to what the hydrogen program plan really is. The Department of Energy has released its 2024 Hydrogen Program Plan, which is set to provide a strategic framework for research, development, demonstration and deployment or RDD&D of clean hydrogen technologies. Now, this plan integrates efforts across various DOE offices. Those offices include the Office of Energy Efficiency and Renewable Energy, fossil energy and carbon management, nuclear energy, electricity, science, loan programs office, manufacturing energy supply chains, clean energy demonstrations, and Advanced Research Projects Agency Energy, or ARPA-e. Now, the plan aims to coordinate these diverse efforts to advance the production, transport, storage and utilization of hydrogen across multiple sectors of the economy. But what about the key updates for this 2024 release?
Well, first there’s the alignment with the National Hydrogen Strategy and Roadmap. The plan works hand in hand with the National Strategy released earlier. While the Strategy outlines long-term goals, the program plan focuses on implementation. It explains how different DOE offices like the Office of Energy Efficiency, Fossil Energy and Advanced Research Projects Agency Energy, coordinate their efforts. The second is the Regional Clean Hydrogen Hubs. Now, a key focus of the plan is creating Regional Clean Hydrogen Hubs. These hubs are designed to integrate hydrogen production, transportation and use within a single region. For example, a hub in Texas might leverage its natural gas resources for blue hydrogen while developing infrastructure for hydrogen powered trucks and refueling stations. In this case, that’s the High Velocity Hub here in Texas. These hubs also address a critical issue, scaling. By concentrating activities in specific regions, we can achieve economies of scale, which drive downs costs to make hydrogen more competitive with hydrocarbons. The third also is hydrogen shot initiative.
Let’s talk about DOE’s moonshot effort, Hydrogen Shot. This initiative aims to slash the cost of clean hydrogen to $1 per kg by 2030. To put that in perspective, green hydrogen from electrolysis currently costs $4-6 per kg. Achieving this goal will require breakthroughs in areas like electrolyzer efficiency, renewable energy integration and scaling production. The fourth key update is workforce and community engagement. The plan doesn’t just focus on technology. It prioritizes people. It includes programs to train workers for hydrogen jobs and ensure communities, especially those transitioning from coal or oil industries, have access to these opportunities. For example, a coal town might transition to producing hydrogen using renewable energy while retraining workers for roles in hydrogen production and logistics. Let’s also dive into the offices and see how the plan emphasizes collaboration as the backbone of success. Here’s how the DOE integrates efforts across its offices.
First there’s the Office of Science. It conducts foundational research – like improving catalysts for hydrogen production or studying hydrogen storage materials. There’s also the Office of Energy Efficiency & Renewable Energy. Works on scaling up green hydrogen technologies, focusing on renewable-powered electrolyzers. There’s also the Office of Fossil Energy and Carbon Management. It develops blue hydrogen technologies using carbon capture to minimize emissions from natural gas reforming. There’s the Loan Programs Office, which provides financing for large-scale projects, reducing financial risks for private investors. There’s also the Office of Nuclear Energy. It investigates how nuclear power plants can produce hydrogen through high-temperature electrolysis. By combining these efforts, the DOE ensures no stone is left unturned in advancing hydrogen’s potential. The plan also emphasizes public-private partnerships, ensuring that innovations in the lab make their way to the real world. What does this plan mean for stakeholders? For industry leaders, it’s a clear signal that hydrogen is here to stay.
The plan provides the certainty needed to invest in hydrogen technologies, whether it’s building electrolyser factories, developing pipelines or launching hydrogen powered fleets. For researchers, it identifies key challenges and opportunities, from improving electrolysis efficiency to creating new hydrogen storage materials. This helps focus efforts on high-impact areas. For communities, especially those relying on hydrocarbons, hydrogen offers a pathway to economic revitalization. Towns that once depended on coal mining could host hydrogen production facilities, creating jobs and spurring economic growth. And for policymakers, the plan highlights regulatory and policy needs, such as creating incentives for hydrogen production and ensuring safe standards for hydrogen storage and transport. Next, let’s talk about navigating the diverging hydrogen investment landscapes in the EU and in the U.S. What is the current state of hydrogen investments look like? Investors are increasingly channeling funds to ESG projects, with Deloitte projecting that ESG assets will soon constitute half of all professionally managed assets.
However, when it comes to clean hydrogen, investors exhibit a degree of caution reminiscent of the early days of solar and wind investments. Tom Baker, Managing Director and partner at Boston Consulting Group, observes that the hydrogen industry may flow a development trajectory similar to that of utility scale renewables. Initially, there was significant hype, followed by a period where the industry struggled to meet these high expectations, leading to skepticism. Over time, through market consolidation and steady growth, renewables became a viable investment. Baker suggests that hydrogen is likely to experience a similar pattern, though the timeline may be more extended due to complexities involved in reducing costs and scaling technologies. The International Energy Agency reports that global investments in electrolyers and related equipment, a critical component for hydrogen production, are on the rise.
Notably, China accounted for half of such investments in 2023. Europe contributed a third, and the U.S. comprised 12%. This distribution highlights regional disparities in commitment to developing hydrogen infrastructure. While both the EU and U.S. recognize the potential of hydrogen in achieving climate goals, the pace and nature of investments are diverging, influenced by distinct political, economic and regulatory landscapes. In Europe, the energy crisis precipitated by geopolitical tensions, notably Russia’s invasion of Ukraine, has accelerated the push towards energy independence and the adoption of renewable energy sources, including hydrogen. Despite this urgency, hydrogen remains relatively expensive, and there are limited incentives for industries to transition from traditional hydrocarbons. This situation poses challenges for developers seeking large-scale, dependable off-takers for hydrogen projects.
Conversely, in the U.S., political uncertainty and the absence of clear definitions for what constitutes clean hydrogen have impeded progress. The IRA introduced tax credits aimed at promoting low-emissions technologies including hydrogen. However, ambiguities surrounding the classification of clean hydrogen, particularly concerning electrolytic hydrogen under SF-45E have led to delays in project development. The IRS is expected to provide clarity on these definitions in early 2025, which could significantly influence the direction of hydrogen investments.
Additionally, the U.S. market currently favors blue hydrogen, produced from natural gas with carbon capture and storage, due to abundant and inexpensive natural gas resources, however, the lack of finalized regulations and incentives has resulted in many projects remaining in planning stages, awaiting clear policy signals before proceeding to execution. The focus on different types of hydrogen production is evident in investment patterns and infrastructure development across regions. In Europe, there is a pronounced emphasis on green hydrogen, which is produced via electrolysis powered by renewable energy sources.
This preference is reflected in substantial investments in electrolyzer technology and associated infrastructure. The EU has implemented various funding mechanisms and policy frameworks to support the scaling of green hydrogen, aiming to integrate it into the broader energy system to achieve decarbonization targets. In contrast, the United States has seen more activity around blue hydrogen projects leveraging its natural gas abundance.
However, the investment landscape is complicated by high valuations of hydrogen companies, technological uncertainties, and the nascent state of supply chains. These factors contribute to investor hesitancy as the pathway to scalability and profitability remains unclear without robust policy support and market demand. The fragmented nature of the U.S. energy grid presents additional challenges compared to Europe’s more integrated system—developing a cohesive national hydrogen infrastructure in the U.S. requires navigating complex regulatory environments across federal and state levels, which can impede the swift deployment of hydrogen projects.
But even with these differences, investors on both sides of the Atlantic face several common challenges when considering hydrogen projects, though the specifics may vary by region. What are the key concerns? The first is high production costs. Renewable hydrogen production remains more expensive than hydrocarbon-based alternatives, creating a green premium that can deter investment without sufficient government incentives or mandates. Another one is technological uncertainties. As the hydrogen industry is still developing, uncertainties around the scalability and efficiency of technologies pose risks for investors seeking reliable returns. There are also supply chain limitations. The lack of established supply chains for hydrogen production, storage, and distribution adds layers of complexity and risk to potential projects.
There is also market demand. Limited current demand for clean hydrogen makes it challenging to secure long-term offtake agreements which are crucial for the financial viability of large scale projects. Addressing these barriers requires coordinated policy efforts, technological advancements, and the development of robust market frameworks to instill confidence among investors and accelerate the growth of the hydrogen economy. It’s evident that while both the European Union and the United States are committed to integrating hydrogen into their energy transitions, they face distinct challenges shaped by their unique political, economic, and infrastructural context. Europe’s focus on green hydrogen and its Integrated Policy approach position it as a leader in hydrogen investments, yet it must overcome cost and demand hurdles to achieve widespread adoption. The United States, with its emphasis on blue hydrogen and abundant natural gas resources, awaits clearer policy definitions and incentives to unlock its hydrogen potential. For investors, understanding these regional dynamics is crucial.
Staying informed about policy developments and technological advancements and market signals will be key to navigating the evolving hydrogen landscape.
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.
