Biden selects 7 hydrogen hubs across 16 states for $7 billion in US grants (updated)

AES

13/10/2023 14:09

(Adds details on companies involved in paragraphs 2, 10 and 11)
    By Valerie Volcovici and Jarrett Renshaw
       Oct 13 (Reuters) - 
    President Joe Biden will announce in Philadelphia on Friday
the recipients of $7 billion in federal grants for the
development of regional hydrogen hubs, advancing a key part of
his administration's broader plan to decarbonize the U.S.
economy.
    Seven proposed hubs involving companies ranging from Exxon
Mobil  XOM.N  to Amazon  AMZN.O  were selected, with their
projects spanning 16 states from Pennsylvania to California. The
program is intended to jump-start the production of "clean
hydrogen" along with the infrastructure needed to get it to
industrial users like steelmakers and cement plants. 
    Some 79 proposals had initially applied for the money.
    "The regional hydrogen hubs will kick-start a national
network of clean hydrogen production, consumers and the
connected infrastructure necessary, while supporting the
production, storage and delivery and end use of clean hydrogen,”
a senior administration official said.
    Hydrogen is produced by electrolyzing water, and the fuel
can be considered clean – or low-emission -if it is produced
using renewable energy, nuclear energy or natural gas with
carbon capture technology attached.
    The Biden administration has set a target to increase clean
hydrogen output to 10 million metric tons by 2030, and 50
million by 2050, up fivefold from today - and considers the fuel
an ideal option for cutting emissions from tough-to-decarbonize
industrial users.
    Industry representatives have expressed concerns about the
economics of rapid development, citing high interest rates,
inflation, and uncertainty around permitting and access to
additional federal subsidies.     
    The hub selections will now kick off a long process that
includes multiple phases, from design and development to
permitting, financing and construction. 
    The hubs selected will serve the Middle Atlantic,
Appalachian, Midwest, Minnesota and Plains states, the Gulf
Coast, Pacific Northwest and California. The two largest
projects include $1.2 billion each for Texas and California - 
the former an oil giant and the other a green energy leader.
    The Texas hub, called the HyVelocity Gulf Coast hub, is led
by major industry players, including Exxon, Chevron Corp
 CVX.N , Air Liquide, Mitsubishi Power Americas, Orsted, AES
Corp  AES.N  and Sempra Infrastructure. Amazon is among the
hub's expected end users.
        Amazon, Mitsubishi and Air Liquide are also partners in
the winning Pacific Northwest hub, joining Fortescue Future
Industries as well as local utilities Portland General Electric
and Puget Sound Energy.
  
        Each of the proposed projects involve dozens of partners
from energy companies to local and state governments. 
    Administration officials have touted the program as one of
the biggest investments ever in U.S. clean manufacturing. The
grants are expected to leverage over $40 billion in private
investment, generate tens of thousands of jobs and create a
national hydrogen economy.
    “This federal investment is significant because it
complements and it unlocks so much private investment and
investment from the states," said Chris Hannan, president of the
State Building and Construction Trades Council of California, a
partner in the ARCHES hub which is among the recipients.
    "This starts the process to drive down the cost of
hydrogen," he said.
    U.S. hydrogen industry players are also awaiting guidance
from the Treasury Department on how to access additional
subsidies created by last year’s Inflation Reduction Act. Those
rules are expected at the end of this year.
    Environmentalists want the Treasury to require that the tax
credits, worth up to $100 billion, only go to hydrogen producers
that use new sources of clean electricity instead of tapping
power already on the grid. 
    "We need rigorous guardrails to ensure that U.S. hydrogen
does not create an emissions mess, and that we are not
subsidizing hydrogen that is clean in name only," said Rachel
Fakhry, policy director for emerging technologies at the Natural
Resources Defense Council. 
     Most of the selected hubs include the use of natural gas to
power hydrogen production, which administration officials said
would need to install carbon capture technology to qualify.

 (Reporting by Valerie Volcovici; editing by Diane Craft and
Jonathan Oatis)
 ((valerie.volcovici@thomsonreuters.com;))