The Biden administration announced plans Wednesday to invest up to $1 billion in “clean hydrogen,” an expensive fuel source that requires significant infrastructure to support it that would be unlikely to get significant private investment if not for government intervention in the energy sector, industry experts told the Daily Caller News Foundation.
The Department of Energy (DOE) announcement stated the administration’s intent to invest the funds into Regional Clean Hydrogen Hubs for the widespread deployment of the technology, with a particular focus on providing “demand-side support” to encourage buyers to come forward and support hydrogen projects, according to the agency’s press release. These demand-side incentives are necessary in part because “clean” or “green” hydrogen must be manufactured using renewable energy sources, a much more expensive process than using fossil fuels, Dan Kish, a senior research fellow at the Institute for Energy Research told the DCNF.
“If these things made economic or common sense, people would be doing them,” Kish told the DCNF. “They don’t, so the government is mandating and subsidizing them while knee-capping energy sources they can afford.”
Even if the Biden administration is able to push the cost of green hydrogen down via subsidies, investors and buyers have expressed concern that there might not be enough supply of green hydrogen to make the transition away from fossil fuels worth it, E&E News reported. The process of manufacturing green hydrogen — known as electrolysis — converts water into hydrogen using renewable power, and the hydrogen it generates is nearly 14 times as expensive as natural gas to generate the same amount of power, Isaac Orr, a policy fellow at the Center of the American Experiment told the DCNF.
While proponents of green hydrogen “envision massive facilities” using electrolysis, such facilities are not cost-effective, Jonathan Lesser, an adjunct fellow at the Manhattan Institute studying energy, told the DCNF. In addition, hydrogen is difficult to transport, because it can damage the steel used in existing oil and gas pipelines and has the potential to leak, creating an explosion risk, said Lesser.
Due to the high cost of manufacturing green hydrogen, “there are no large-scale plants that use this,” Lesser told the DCNF. He also noted that plants would need to have a steady supply of water and that hydrogen is less dense than traditional fuel sources and would take up more space.
The Biden administration in May proposed a set of regulations that would require large “baseload” natural gas and coal-fired power plants to either capture their carbon emissions or switch to burning mostly hydrogen by 2038.
“The administration likely favors hydrogen over [carbon capture] because it means more wind and solar will be deployed to create the hydrogen and provide fuel for peaking resources when the wind isn’t blowing, or the sun isn’t shining,” said Orr. “The Administration is keen to use carrots and sticks to force the grid to transition to less reliable energy sources.”
Energy Secretary Jennifer Granholm said that the new funding would help clear up “market uncertainty” around clean hydrogen that “too often delays progress,” in the agency’s Wednesday press release.
The DOE did not immediately respond to a DCNF request for comment.
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