Green Hydrogen Made From Renewables Is A Step Closer Because Of The Inflation Reduction Act

The Inflation Reduction Act is now the law, and it will kick in $369 billion for 21st Century energy and climate projects — ones that will benefit the hydrogen economy and domestic wind turbine and solar panel production.

Renewable energy is the recipe for green hydrogen. It produces no pollution, only steam. In its Hydrogen Economy Outlook, Bloomberg New Energy Finance says that green hydrogen could supply 24% of the world’s energy demands by 2050 while cutting CO2 levels by 34%. Ramping up clean energy production helps the United States get to net zero.

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“With the passage of the Act, we expect a boom for our electrolyzer and green hydrogen business,” Andrew Marsh, chief executive of Plug PowerPLUG
, said in a conference call. “All applications that use grey hydrogen today, such as fertilizer manufacturing, will now be able to buy green hydrogen at a competitive price.” Natural gas reforming today makes 99% of hydrogen, referred to as grey hydrogen. The goal, though, is to create it from renewables using electrolysis.

While market forces are making headway, they are not enough to hold back climate adversity. The International Renewable Energy Agency says that electricity costs from onshore wind has fallen by 15% while offshore wind has dropped by 13%. Meantime, rooftop solar PV has declined by 13%, all since 2020. That’s why renewables have supplied 80% of the installed electric generation capacity in four years.

IRENREN
A Director-General Francesco La Camera told this writer that renewable energy is saving money: about $55 billion worldwide compared to the current price of fossil fuels. He said that globally we need to triple the investments in renewables — from the existing installed base of 260 gigawatts to more than 800 gigawatts by 2030. That would create 85 million new jobs. Right now, green energy makes up 14% of the global energy portfolio.

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Scaling Up and Driving Down Costs

Critics say that Congress should put more energy into developing domestic oil and natural gas. They also oppose more government spending. However, they applauded the Trump administration when it spent $2 trillion to fire up the American economy during the height of Covid19. So they are not against allocating money to achieve a positive result — only new monies targeted to green technologies.

The Inflation Reduction Act is good for the United States, which is a party to the Paris climate agreement. To that end, green hydrogen and its derivative green ammonia will play a prominent part especially for heavy industry and the transport sector.

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Indeed, that’s what Fortescue Future Industries (FFI) is doing with German polymer-maker Covestro. FFI will supply up to 100,000 tons of green hydrogen equivalent annually, starting as early as 2024. Under its chairman, Andrew Forrest, FFI wants to grow it to 15 million tons of green hydrogen annually by 2030 and ultimately expand that to 50 million tons annually. FFI is also building one of the largest electrolyzer factories in the world in Australia — the traditional way to split hydrogen and oxygen. The company wants to show that the decarbonization of heavy industry is doable.

Hydrogen is widely used today in oil refining and the production of fertilizers. However, it must expand into transport, buildings, and power generation to make an even bigger footprint.

“Green hydrogen and its derivatives play a key role for the chemical industry, both as an alternative feedstock and a source of clean energy,” says Markus Steilemann, chief executive of Covestro.

But priming the pump will take time, says Siemens. It is spending $33 million on electrolyzers in Germany, and that will help build economies of scale — the kind that could drive down the cost of hydrogen produced from wind and solar and make it comparable to natural gas. Hydrogen produced from wind and solar is now at least $2.50 a kilogram. But it must fall to between $0.8 and $1.6 a kilogram to advance.

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“We need ‘green electrons’ and ‘green molecules’ if we want to achieve the proclaimed climate protection objectives,” adds Klaus-Dieter Maubach, chief executive of Germany-based Uniper SE, which is developing two green hydrogen projects: one will convert green ammonia back to hydrogen, and the other will use an electrolysis plant. “Large-scale hydrogen production facilities are to be built (in Germany) for the purpose of decarbonizing steel production.”

Green hydrogen is closer than ever because the cost of wind and solar energy is falling — something the Inflation Reduction Act will hopefully expedite. If the law succeeds, it will go a long way to decarbonize hard-to-abate sectors. That, in turn, will allow the U.S. economy to cut CO2 emissions by 40% by 2030.