Winning the Global Race for Hydrogen

The race for green hydrogen is on, and the United States is in a prime position to win. With the pivotal role green hydrogen is expected to play in the global energy system going forward, the stakes are high in the race to establish sufficient production and distribution capabilities.

Hydrogen is color-coded based on how it is produced. There are two main types of carbon-neutral hydrogen. Blue hydrogen is produced using natural gas paired with carbon capture technology. Green hydrogen is produced via electrolysis powered by renewable energy. Provisions in the Inflation Reduction Act such as the Clean Hydrogen Production Tax Credit effectively guarantee that clean hydrogen will be a critical component of the global energy system going forward. Bloomberg estimates that the price of green hydrogen could fall as low as 32 cents per pound in most of the world by 2050 – less than a third of the $1/pound “Earthshot” goal declared by the Biden administration.

Green hydrogen, a carbon-neutral fuel produced using renewable energy, has several critical uses. First, hydrogen can be an input in various industrial processes, including making high-grade steel. Most hydrogen produced in the United States today is used for these industrial processes. Today’s hydrogen supply is primarily made using natural gas. The infrastructure already in place could be a tremendous advantage as this evolves towards a mix incorporating more green and blue hydrogen. Second, it could be used as a fuel for power generation or directly for home heating. Finally, hydrogen has immense potential for energy storage, with the energy storage capacity of America’s gas pipelines and gas storage facilities in excess of all battery capacity provided by every lithium battery on Earth. This would allow us to transition to a higher mixture of renewable energy without harming the reliability of our energy distribution infrastructure.

America’s natural gas infrastructure and reserves have helped to ensure American energy security. At a time when European prices for natural gas briefly surpassed $99/MMBtu and remain above $60/MMBtu, prices for natural gas in most of the United States were less than $10/MMBtu. This disparity illustrates why it is so important that the United States remain the world’s leader in developing a clean hydrogen economy. The leverage that controlling the energy of the future brings with it cannot be overstated. Our geopolitical rivals and partners alike recognize this fact.

The United States faces stiff competition in this race. China is currently the world’s largest producer of hydrogen, and has plans to transition to widespread use of green hydrogen by 2025. India plans to produce an eyepopping five million tons of green hydrogen per year by 2030 and recently announced a $2.5 billion investment in green hydrogen production.

What must the United States do to win this competition?

First, we need production capacity. Green hydrogen is typically made with electrolysis powered by renewable energy. This allows hydrogen to be harvested directly from the atmosphere, making the process carbon neutral. Therefore, for a truly secure energy supply chain, the United States could manufacture electrolyzers domestically and at scale and use this to set up a domestic production capacity sufficient to meet our needs in conjunction with blue hydrogen. Using blue hydrogen in addition to green hydrogen has a side benefit of using existing equipment, enabling us to start scaling up the clean hydrogen industry sooner.

Second, we need more infrastructure. Safety is the natural gas industry’s top priority. Incorporating more hydrogen into the mix carried by our infrastructure will be done using best practices guided by science and data. Innovative techniques such as using “pipe-within-a-pipe,” where a plastic sleeve is used to line the inside of an existing pipeline, allow existing infrastructure to be upgraded to handle hydrogen at scale. Securing appropriate funding for infrastructure upgrades should be a priority for the United States. The transportation infrastructure needed to get clean hydrogen from point A to point B is as critical as the existence of enough hydrogen. Permitting reform, as endorsed by figures ranging from Senator Joe Manchin to Representative Alexandria Ocasio-Cortez, will be critical to enabling these clean energy projects to move forward.

The American natural gas industry has studied this issue extensively. The American Gas Association (AGA) recently released a study entitled Net-Zero Emissions Opportunities for Gas Utilities that explores the critical role that hydrogen has to play in leveraging the unique advantages of the gas distribution system towards building a net-zero future. The funding provided by the Inflation Reduction Act will only accelerate the many hydrogen and RNG projects already underway by gas utilities.

The Inflation Reduction Act served as a down payment on what will be needed to win this race. Now is the time to capitalize on this opportunity to ensure that the future of clean energy is made in America.