Paul Rodden • Season: 2024 • Episode: 295
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In episode 295, The Chicago Tribune dives into the MachH2 hub project and gets the local feedback that everyone needs to hear. I’ll go over the article and give my thoughts on today’s hydrogen podcast.
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Transcript:
The Chicago Tribune dives into the MachH2 hub project and gets the local feedback that everyone needs to hear. I’ll go over the article 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 the Chicago Tribune, Karina Atkins writes, a major investment in hydrogen energy and the Midwest is met with hope and concern. Hydrogen, the most abundant element on earth could be key to fighting climate change, but only if private companies, local communities, and the federal government can agree on how to regulate it, the stakes are high. Without a robust infrastructure to produce and deploy hydrogen energy, the US will lose out on a crucial clean energy source. However, bringing this infrastructure to scale may be fraught with unintended consequences like skyrocketing consumer electricity prices, worsening air pollution and even more greenhouse gas emissions.
The Biden administration has touted hydrogen energy as essential to achieving net zero emissions nationally by 2050 and made a historic $7 billion investment to build seven regional clean hydrogen hubs across the country, including a Midwest hub, the Midwest Alliance for Clean hydrogen or MachH2, a partnership of over 70 private and public entities has been awarded up to $1 billion of these federal funds to create the hub, which will span Illinois, Indiana and Michigan. The Alliance anticipates reducing carbon emissions by approximately 3.9 million metric tons per year, or equivalent to taking over 867,000 gasoline powered cars off the road annually. by supplying hydrogen energy to steelmaking, glass production refining, trucking and aviation These heavy duty industries which are largely concentrated in the Midwest represent nearly 1/3 of national emissions, and have struggled to find sufficient clean energy sources. Hydrogen energy is a promising option because it is an extremely efficient and versatile fuel source, like coal and natural gas. But unlike those hydrocarbons, it can be created without emitting greenhouse gases.
And a quote from Iryna Zenyuk, the Director of the National Fuel Cell Research Center who has no affiliation to the hub’s hydrogen will be critical to decarbonize that last 10 to 20% of industry because we don’t have sufficient biofuels and electric batteries are limited to certain applications. We cannot decarbonize without it. MachH2 put forward plans for nine hydrogen production and distribution projects, but has declined to give specifics, or provide opportunity for community input until it finishes negotiating its award with the US Department of Energy, a process that is expected to take several months. This has left many local communities and environmentalists skeptical, especially as MachH2 also attempts to weaken federal regulations on hydrogen energy production.
The intertwining legacies of industry pollution and disenfranchisement linger in the Rust Belt towns were MachH2 promises to boost local economies and clean up the energy supply. Take Frank Pettis, for example. His grandparents were sharecroppers in the Mississippi River Delta who migrated to Waukegan during the last wave of the great migration. They were drawn by jobs and manufacturing facilities and processing plants that are now Superfund sites and EPA designation for the nation’s most contaminated land.
Today, Pettis is a community organizer at Clean Power Lake County, a nonprofit dedicated to safeguarding air land and water and the Waukegan area after decades of industrial pollution. The same companies that provided his family with jobs also harmed their health said, citing high prevalences of asthma and rare cancers and his community. hydrogen energy has the potential to clean the air in communities like Waukegan, and replace dirty industry jobs with clean energy jobs, but it is not a given that hydrogen energy will be clean. According to the Department of Energy. 95% of the hydrogen in the US is produced via emissions intensive process reliant on hydrocarbons.
MachH2, however, says the hydrogen production facilities that plans to build will use emissions free electricity like nuclear, wind and solar power to split water into hydrogen and oxygen a process called electrolysis. The resulting hydrogen can be used for energy and the oxygen can be harmlessly released into the atmosphere. No greenhouse gases are emitted. But environmental justice activists like Pettis worry that MachH2 due processes won’t be as clean as the Alliance claims Ames, he says in the black community and in the Latino community, we are well acquainted with these buzzword projects like hydrogen that are supposedly the next big thing, but are really just a continuation of systems of harm.
High profile billion dollar private public energy projects promising to clean Illinois energy supply do not have a reassuring track record, future Gen, a carbon capture and sequestration project at a coal fired electric power plant and Mara… a village in Western Illinois was originally bolstered by $1 billion in federal funding, but the funds were withdrawn and the project was indefinitely suspended following accusations that it would raise electricity prices for Illinoisans and at the national level of debate is playing out to determine when electrolysis is eligible for a lucrative federal tax credit that could exceed $70 billion over the next decade. According to Energy Research Group, Bloomberg Nef, these subsidies are on top of the $7 billion dedicated to building out the regional hubs.
The US Department of the Treasury proposed eligibility criteria for the hydrogen production tax credit in December. These rules have been applauded by many environmentalists, but opposed by MachH2 and the leaders of the six other regional hubs. One criterion requires hydrogen producers to source emissions free electricity from power plants that came into operation no more than three years before the hydrogen production facility open.
And a quote from Pete Budden hydrogen advocate with the Natural Resource Defense Council. Otherwise, even if you claim to be using zero carbon energy, for instance, from an existing wind turbine, or an existing nuclear plant, all that happens is a bit of resource shuffling to meet the extra load that you’ve added to the grid. Because the homes and businesses that were previously using that existing Zero Carbon Energy still need energy, another power source has to increase.
And that will be hydrocarbons, because they’re the thing that usually gets turned up when there’s extra load on the grid. In this scenario, emissions would increase communities near hydrocarbon generators would face even more air pollution and electricity prices would spike since the increase in demand isn’t being balanced by an increase in supply. This is according to a letter sent to MachH2 leadership by 47 environmental groups including the Natural Resource Defense Council and Pegasus clean power Lake County. The proposed rules also require clean electricity to be procured from a nearby power plant within the same hour it’s used to produce the hydrogen. These criteria aim to ensure hydrogen isn’t being produced when clean energy isn’t readily available. Otherwise, producers could use hydrocarbon based electricity but offset it by purchasing an equal amount of clean energy produced anywhere in the country at a later date. In a joint letter to the Treasury Department in late February MachH2 and the leadership of the six other hubs said that if the tax credit eligibility requirements are implemented as written, many of their projects will no longer be economically viable.
Several MachH2 alliance partners including energy giants, BP and Constellation Energy, have individually come out against aspects of the rules. Also, the draft requirements would force the Midwest hub to cancel its nuclear hydrogen production project with constellation this according to MachH2 CEO Dorothy Davidson and a separate letter to the Treasury Department. Davidson asked the Treasury Department to allow hydrogen producers to secure up to 10% of their electricity from clean sources more than three years older than their facility, calling it a reasonable and conservative revisions that will enable existing nuclear plants to participate in the hub. The hubs and politicians also worried that hindering hydrogen energy projects before they start could cause the US to forego its competitive edge on the burgeoning industry. The European Union has similar regulations to those the Treasury Department proposed but it’s phasing them in over a longer period of time.
In a similar vein, MachH2 proposed a slower phasin for the requirement that producers secure electricity in the same hour they use it. Meanwhile, on Capitol Hill, some lawmakers are questioning whether the rules are aligned with the intentions of the inflation Reduction Act which authorized the hubs and tax credit. Illinois senators Dick Durbin, and Tammy Duckworth and Michigan Senator Gary Peters, who all voted in support of the Act co signed a letter to the Treasury Department cautioning against the proposed requirements. And a quote from Durbin, Illinois is to lead the nation in clean hydrogen production, but our state could lose out if this tax credit excludes our fleet of existing clean energy resources from qualifying. He also says I’m working to ensure that doesn’t happen. And in his own letter to the Treasury Department in late February, Illinois Governor JB Pritzker also urged for clear, workable circumstances under which existing zero emission generators can receive the 45 V tax credit In the final rule such that the MachH2 hub remains economically viable.
The Treasury Department is expected to finalize the tax credit eligibility requirements later this year. Until then, the viability of MachH2’s projects adds to the list of questions community groups have had about the Alliance for months. MachH2 has deferred sharing specifics or engaging with community stakeholders until it finalizes its award negotiations with the Energy Department. Well before MachH2 was selected in October to create the Midwest hub.
Indiana based organizers sent the Energy Department a letter expressing dismay that they were shut out from the grant application process as submissions were being reviewed in June. However, MachH2 equity justice officer Elizabeth Cox assured that quote, individuals and organizations have not missed out on MachH2 engagement opportunities. There will be advisory committees and councils made up of regional leaders in person and virtual town halls and online dashboards to collect input and report progress as according to Cox who also serves as a senior manager at GTI energy, an Illinois based energy technology development organization and Alliance member.
Nevertheless, environmental justice activists like Pettis worry that decisions affecting emissions, air quality and household electricity prices may already be finalized by the time community members get a seat at the table, according to Pettis, are they willing to incorporate the ideals of the community into their planning? Are they willing to increase transparency around these projects? Or are we going to be given a platform after the decisions have already been made behind closed doors, MachH2 has the potential to dramatically reduce emissions, increased jobs and restore public confidence and public private clean energy projects in the Midwest. Conversely, it could perpetuate a legacy of skepticism of well funded projects with lofty intentions and murky plans.
Okay, so it’s been some time since I talked about the US hydrogen hubs, and after my time in DC and New Mexico, hearing the discussions around the 45 V and the Department of the Treasury’s three pillars, it’s time to take a look at them again, this time with a local viewpoint. And Karina Atkins does a great job diving into the community to get their feedback. As stated in this article, the Midwest has a long history with energy and industrial development. And their skepticism surrounding the hub development is warranted, not necessarily because of what’s happening now. But what has happened in the past. Now, I’ve covered some of the work that the Appalachian hydrogen hub has done in gathering community support, and it would behoove the MachH2 developers to do the same, these projects will need local support and to push that engagement off to a later date could have serious adverse effects.
Now, under the 45V and Treasury regulations, I have yet to meet one person who is in full agreement with how the original pillars were laid out. And the backlash has come from both Republican and Democrat regions, and every private organization that has stake in the hubs getting developed. Yes, grid load is certainly something that needs to be taken into account when adding these projects. But to require hourly matching from newly developed renewable power located only on the same grid as the project is just too much out of the gate.
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.
