December 14, 2023

Hydrogen

In the USA, green hydrogen is still not being invested in even when there is an uncapped tax credit available for those who do. There are two reasons for this:

• no clear definition of what constitutes "green" hydrogen
• the standards for green hydrogen
• no real demand for the product

The fight over the future of US green hydrogen has intensified after news outlets leaked draft rules from the White House that would only subsidise projects reaching a higher green standard than what many industry players expected. (FT)

These "high" standards are ones that would match EU standards for the fuel and reject hydrogen produced with fossil fuels.

While expectations have been that there will be a massive increase in green hydrogen production, those projections have been based on the cheap production of the fuel. Some start-ups that have invested in production have been caught-out on the standards side as they rely on natural gas and/or green electricity imports for some of their production.

Many groups that use electricity for production are using electricity generated from natural gas generators meaning that the hydrogen they produce is even less climate friendly than just burning natural gas.

In the US, debate continues on the purpose of hydrogen. Is it simply to produce another form of combustible fuel, or is it to reduce emissions. The goals are very different depending on which industry you are coming from.

Currently, the only place that you have good expected demand for hydrogen is in California (and states/provinces following) with regulation that puts hydrogen fuel cells in trucks.

The issue is that the technology is still more expensive and less developed than electrification.

These many barriers stand in the way of hydrogen becoming a top-tier fuel of the future.