Bloom Energy : Energy Department seeks to cut hydrogen cost 80% in bid for clean and versatile power

The Department of Energy will push to cut the cost of producing low-carbon hydrogen by 80% in the next decade to tap into the versatile energy resource's ability to curb emissions in the hardest-to-abate sectors.

Hydrogen is the first focus area of the Energy Department's new Energy Earthshots Initiative that will marshal the agency's scientific expertise and resources to accelerate breakthroughs in nascent clean energy technologies.

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The agency said it aims to cut the cost of producing zero-carbon hydrogen from roughly $5-per-kilogram to $1-per-kilogram by 2030. By doing so, the Energy Department said it could prompt a five-fold increase in the demand for clean hydrogen produced with excess renewable energy, nuclear power, or natural gas with carbon capture.

'Clean hydrogen is a game-changer,' said Energy Secretary Jennifer Granholm in announcing the new initiative. 'It will help decarbonize high-polluting heavy-duty and industrial sectors while delivering good-paying clean energy jobs and realizing a net-zero economy by 2050.'

The Biden administration and industry have taken an interest in hydrogen because of its versatility as a zero-carbon fuel. For example, hydrogen can help decarbonize long-haul transport such as heavy-duty trucks and shipping, serve as a replacement fuel for manufacturing plants, and store energy similar to a long-duration battery to balance a low-carbon grid.

However, the cost to produce low-carbon hydrogen is still too high for it to be widely commercialized.

'Cost of operations are absolutely a concern of our customers,' said Traci Kraus, director of government relations for Cummins, a corporation exploring hydrogen for use in heavy-duty trucking, trains, and industrial applications. 'If they have a fuel that is more in line with their operating costs, that will absolutely help accelerate deployment' of hydrogen.

The Energy Department is kicking off its hydrogen Earthshot by seeking information on demonstration projects, in line with President Joe Biden's proposal in his infrastructure plan to fund 15 'decarbonized' hydrogen projects.

While Kraus and others in the hydrogen industry say those projects would be a good first step, they stress the Biden administration should craft a national hydrogen strategy similar to those implemented in Europe, Japan, and other countries.

For example, the European Union has set an aggressive goal of deploying 40 gigawatts of electrolyzers, used to split water into hydrogen and oxygen, by 2030.

'I think the Earthshot initiative is kind of laying the groundwork for that,' said Paul Wilkins, vice president of federal policy for fuel cell and electrolyzer manufacturer Bloom Energy, of a possible U.S. national hydrogen strategy.

Wilkins said he'd love to see the Biden administration set 'some really ambitious goals' similar to Europe's and implement incentives to expand the industry's scale and a regulatory structure to ensure hydrogen developers can get their product to market.

A national strategy could also help address some of the other hurdles keeping hydrogen from scaling up, including the need to retrofit and build pipelines to transport the fuel.

A key piece on infrastructure will be understanding the regulations and requirements for hydrogen pipelines and how natural gas operators can blend hydrogen into their natural gas to begin deploying hydrogen for energy production, said Neil Beup, head of global government affairs for Linde, an industrial gas company.

Hydrogen producers and users are looking to Congress to provide incentives for producing clean hydrogen that can further drive down the cost. Biden backed a production tax credit for hydrogen in his infrastructure plan.

Last month, Sen. Tom Carper, the Delaware Democrat who chairs the Senate Environment Committee, introduced legislation that would create a tax credit for low-carbon hydrogen production. The incentive doesn't single out any one production method but allows any low-carbon hydrogen producer to qualify. The cleaner the production method, the greater the incentives a producer receives.

The Senate Finance Committee included Carper's bill in a broader clean energy tax package approved on party lines in May. Kraus and Wilkins both said the level of credit Carper's bill offers would be enough to help early adopters of hydrogen move forward with projects and accelerate deployment more quickly.

It is also possible that some measure of support for hydrogen could end up in any bipartisan infrastructure proposal.

Sen. Mitt Romney, a Utah Republican who is part of a group of senators hashing out an infrastructure plan, told reporters they are considering several energy provisions, including support for hydrogen. Sen. Bill Cassidy, a Louisiana Republican helping to lead those bipartisan talks, is also a strong supporter of hydrogen.

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Wilkins of Bloom Energy said hydrogen enjoys broad bipartisan support because it can be used in many places, including those with heavy manufacturing, natural gas production, nuclear power plants, and significant renewable energy generation.

'Every policymaker in Congress can look at their district and see a way that hydrogen can fit,' he said.