Paul Rodden • Season: 2024 • Episode: 365
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Welcome to The Hydrogen Podcast!
Episode 365, In this episode, Paul discusses what’s propelling the hydrogen economy forward, focusing on key projects like ExxonMobil’s Baytown plant and groundbreaking initiatives across Europe. He explores how massive investments, advanced technologies, and a global shift towards low-carbon hydrogen are transforming hydrogen into a pivotal energy source.
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Transcript:
What’s really pushing the hydrogen economy forward, and what projects can we look to to get the current temperature of the future of hydrogen? I’ll go over this 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 is 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 oil and gas journal, Patrick Goodman, with the Fluor Corporation, writes, the state of hydrogen moving beyond the hype. Patrick writes, It has been five years since the International Energy Agency released the report titled, “The Future of Hydrogen.” This sparked a flurry of activity worldwide with the 2020s quickly being dubbed the “Decade of Hydrogen,” and the past few years seeing exciting new project announcements across the full range of the hydrogen color spectrum. However, very few have progressed to Final Investment Decision (FID). With 2030 as the first major signpost on the energy transition roadmap, it is becoming clear that industry is not on track to meet the decarbonization goals initially laid out by governments around the world. This begs the question, is the hydrogen future all hype, or something more?
The idea of a hydrogen economy goes back to the 1970s with multiple boom and bust cycles since. This raises the question: Is this just another hype cycle? Aside from government policy and social considerations, a key difference this time is the rapid expansion of low-cost renewable energy sources.
The peak of expectations perhaps can be tied to the passage of the 45V hydrogen production tax credits in 2022, part of the United States government’s Inflation Reduction Act, that aims to support clean energy initiatives within the country. It is designed to encourage the production of clean hydrogen generated with low greenhouse gas emissions.
This low carbon hydrogen should be part of the solution, particularly in hard-to-decarbonize sectors. According to the recent Harnessing Hydrogen report prepared by the National Petroleum Council, achieving net zero emissions in the United States without low-carbon hydrogen will cost hundreds of billions more on an annual basis compared to net zero with low-carbon hydrogen.
Every major industrial project faces challenges, and hydrogen is no exception. Low- carbon hydrogen projects face challenges around policy uncertainty, stubbornly high capital costs, financing hurdles, technology maturity, limited infrastructure and a lack of harmonized or fully developed codes and standards.
Many of these challenges can and will be addressed as the first wave of projects is deployed. Capital costs will fall as the industry scales and plants become more repeatable. Financing will become more routine as the number of uncertainties and risk surrounding these projects falls. Additionally, the deployment of these projects will grow the pool of skilled workers and begin to develop a more mature and interconnected hydrogen ecosystem.
However, the industry needs policy and regulatory certainty to begin this process. As proposed, the 45V regulations do ensure low-carbon hydrogen is truly clean – providing important credibility to the industry. The regulations are strict, but the incentives are substantial. At this point, the 45V tax credit and associated regulatory framework is yet to be finalized. The public comment period netted nearly 30,000 comments from the public and industry experts and some lawmakers are seeking to add flexibility to 45V. Therefore, until the 45V tax credit and proposed regulations are finalized, the market continues to seek certainty, sidelining some key projects.
While challenges abound, there are positive indicators in the market. The delay in widespread project implementation has allowed electrolyzer manufacturers to ramp up capacity. Electrolyzers, devices that use electricity to split water into hydrogen and oxygen, are key to creating green hydrogen. The limited supply of electrolyzers was a major concern two years ago but today equipment manufacturers have significantly stepped up, alleviating this concern and demonstrating their belief in the growth of the market.
Another small but growing bright spot is low-carbon hydrogen demand. The focus has largely been on the hydrogen supply side, but key to a fully functioning clean hydrogen economy is stimulating demand and providing a cost-effective means to connect the supply to the demand. Early offtake agreements center on decarbonizing traditional hydrogen users in the refining, chemicals and fertilizer space. Notably, growth areas like green steel are also gaining traction in the market.
While dealing with hydrogen is not new, the scope and scale that we are now considering is much broader than ever before. Uncertainty around policy details remains a major challenge, but progress is being made worldwide with important steps in the United States, Europe and beyond. Traditional sectors will lead the way in low-carbon hydrogen and provide an avenue for deployment in new applications. Unlike previous hydrogen booms, this one is on a path to move beyond the hype with a strong growth trajectory and substantial projects expected for the foreseeable future.
As the industry overcomes initial hurdles and begins to scale, hydrogen stands to play one of the most pivotal roles in the global energy market, offering a pathway to a cleaner, more sustainable energy future. The Decade of Hydrogen is just the beginning.
Fluor partnered with SoCalGas, the largest natural gas distribution utility in the U.S., to provide engineering, procurement and construction management (EPCM) services to design and build what is considered to be North America’s first-ever clean, renewable hydrogen powered microgrid and home.
This project, located near Los Angeles, demonstrates how net-zero gas made from renewable electricity can be used in pure form or as a blend to fuel energy systems and communities of the future.
The project was finished in late 2022 and was named a World-Changing Idea by Fast Company and awarded the U.S. Green Building Council of L.A.’s Sustainable Innovation Award. It features a clean, renewable hydrogen production and storage along with a nearly 2,000 square-foot home that can draw power from solar panels and convert excess renewable energy into clean renewable hydrogen.
Ok, so this article really does build off of what I was talking about previously in the last podcast, about the new Trump administration and the hydrogen economy both here in the U.S. and abroad, i.e., why is this hydrogen boom different than previous generations. Well, it differs significantly from previous generations in terms of scale, technology, and alignment with climate goals. Because, 1. There’s the focus on clean hydrogen production. Previous hydrogen booms were and still are, dominated by grey hydrogen, and these earlier efforts were mainly driven by industrial needs, like refining and chemical production. But with the spotlight now on green hydrogen and blue hydrogen, the shift now aligns hydrogen development with global efforts to reduce carbon emissions and combat climate change. We have a massive government and private investment, which is being buoyed by unprecedented funding from initiatives like the U.S. Inflation Reduction Act, which is going to provide billions in tax credits for clean hydrogen production.
We also see similar commitments globally, within the EU, Japan, and Australia, also making significant investments. We’ve also seen that the private sector involvement has skyrocketed, with energy giants, automakers, and start-ups investing in hydrogen technologies across transportation, energy storage, and heavy industry. Whereas before it was strictly just industrial applications and niche uses, but now the hydrogen economy is expanding into things like transportation with fuel cell vehicles, trains, and ships. We now have energy storage and grid balancing applications that we can leverage hydrogen for. And so, with that in mind, let’s really take a look at what I believe is going to be pushing the global hydrogen economy forward. The first is the Exxon Mobil’s bay town project. Now, this facility in Texas is poised to be the world’s largest low-carbon hydrogen plant, and it’s designed to produce over 1 billion cubic feet of hydrogen a day, enough to power heavy industries and enable the production of one million tons of ammonia annually. What’s groundbreaking here is the integration of carbon capture technology, which is expected to trap over 98% of CO2 emissions, making this a cornerstone of low-carbon hydrogen development.
But why does that matter? Well, with this project, Exxon Mobil isn’t just leaning into hydrogen, it’s reshaping how hydrocarbon players fit into the low-carbon economy. The company plans to use Air Liquide’s Hydrogen Pipeline Network to distribute the hydrogen efficiently across the Gulf Coast, showcasing the role of infrastructure in scaling hydrogen deployment. This project recently hit its FID. This facility, with a planned 200 megawatt electrolysis capacity, is set to deliver green hydrogen to decarbonize BP’s refinery operations.
The first phase is expected to come online by 2026, cutting emissions while helping to meet Spain’s ambitious hydrogen targets. What makes this project special is its reliance on renewable energy, positioning it as a leader in Europe’s transition to green hydrogen. It also marks a critical step for Ibudrola, which is rapidly becoming a major player in hydrogen production alongside its renewable portfolio.
We can also look at Europe more broadly. In July of this year, six large projects reached FID within a single month. These projects are Shell’s 100 megawatt electrolyzer in Germany, Total Energy and RWE’s Aranha Wind offshore wind-powered electrolyzer in the Netherlands. We also have smaller but strategic projects in Belgium, such as the HAAF Green initiative in Zebruga. Together these projects represent nearly 1 gigawatt of electrolyzr capacity and are set heavy industries, reduce emissions and feed into Europe’s growing hydrogen backbone. Really all of this to say that what sets this hydrogen boom apart is its global reach and diversity.
Unlike in past cycles, today’s projects are backed by massive public and private investments, robust policy frameworks like the IRA and Europe’s Green Deal, technological advancements in carbon capture and renewable powered electrolyzrs. So with projects in the US, Europe and beyond moving toward FID or already reached FID, hydrogen is set to transition from a niche technology to a global industrial workhorse.
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.
