The pathway to:
Clean Hydrogen
Commercial Liftoff
Clean hydrogen* plays a key role in the decarbonization of both industrial sectors, like steelmaking and petrochemical processes, and transportation sectors, like aviation fuels and heavy-duty trucking. It may also serve as a key long-duration storage technology to meet rising electricity demand. It can be produced using different technologies, including but not limited to: electrolysis powered by clean electricity, natural gas reforming with carbon capture processes, methane pyrolysis, co-production with chlor-alkali, and even mining, as clean hydrogen can be formed geologically underground.
*Clean hydrogen results in a lifecycle emissions rate of less than 4 kilograms (kg) of carbon dioxide equivalent per kg of hydrogen produced.
Clean hydrogen production is on track to scale from less than 1 million metric ton per annum (MMTpa) today to 7-9 MMTpa by 2030. This includes roughly 3 MMTpa from DOE’s 7 Regional Clean Hydrogen Hubs, which have been selected and are in the process of being awarded.
To bring this production online, long-term offtake agreements must be signed. Offtake has been limited primarily due to clean hydrogen’s high production costs. Today, clean hydrogen costs between 2-7x more than unabated fossil-based clean hydrogen. State-level and federal incentives in the Bipartisan Infrastructure Law (BIL) and Inflation Reduction Act (IRA) help make clean hydrogen more cost-competitive with incumbent technologies for numerous applications. Additionally, some of the higher costs associated with clean hydrogen production, like financing costs, are expected to decrease over time.
In the current policy environment, commercial liftoff for clean hydrogen is expected to take place in three phases:
Cross-cutting solutions, including DOE H2Hubs, will accelerate market uptake:
Invest in the development of hydrogen distribution and storage infrastructure
initially through centralized hubs and later through distributed infrastructure. Dispersed infrastructure will unlock use cases for hydrogen where production and offtake are not co-located.
Catalyze supply chain investments
including in domestic electrolyzer manufacturing and recycling.
Develop regulations for a scaled industry
such as project permitting and siting reform and lifecycle emissions analysis across emerging feedstocks and production pathways. These policy and regulatory developments would take place across both federal and state agencies.
Standardize processes and systems across the clean hydrogen economy
like standard operating procedures (SOPs), certifications, and component interoperability (e.g., at refueling stations) in partnership with private sector organizations to accelerate project development.
Accelerate technical innovation through R&D
to bring down costs and mitigate bottlenecks in some technologies (e.g., platinum group metals for PEM electrolyzers). R&D is also needed to bring down the cost of carbon capture, utilization, and storage for reformation-based production as well as in end-use applications such as improving fuel cell durability.
Expand the hydrogen workforce
through the engagement of both companies with preexisting expertise in safe hydrogen handling (e.g., oil & gas companies, chemicals companies) and labor unions with the skilled workforce and relevant training programs.
Expand and accelerate the capital base
using mechanisms that manage price and volume risk (e.g., price discovery via a hydrogen commodity market, hedging contracts) and encourage long-term offtake. DOE has reserved a portion of its Clean Hydrogen Hubs funding to develop a demand-side support function to scale clean hydrogen demand.
The U.S. Department of Energy, in partnership with other federal, state, and local agencies, has tools to address challenges to commercial liftoff and is committed to working with communities and the private sector to build the nation’s clean energy infrastructure in a way that meets the country’s climate, economic, and environmental justice imperatives.