Hydrogen A Winner As Manchin Forces A Diverse Energy Transition Policy Approach

As this energy transition continues to move forward in a somewhat halting fashion, prodded along by energy and climate policy decisions, it is becoming increasingly apparent that displacing a substantial percentage of current fossil fuel usage on a global scale will require a far more diverse set of solutions than just more subsidies for wind and solar. Not that such subsidies are being abandoned, of course: Quite the opposite, in fact. Robert Bryce reported Sunday at Forbes that the Manchin/Schumer cornucopia of climate spending (cynically titled the “Inflation Reduction Act”) passed on a strictly partisan vote by the Senate would direct another $113 billion to just those two rent-seeking industries over the coming decade.

Fortunately, the bill also recognizes that subsidies for those two industries alone won’t do the trick. Manchin’s own statement on the huge tax and spending package recognizes that reality, stating that the legislation “…invests in the technologies needed for all fuel types – from hydrogen, nuclear, renewables, fossil fuels and energy storage – to be produced and used in the cleanest way possible. It is truly all of the above, which means this bill does not arbitrarily shut off our abundant fossil fuels. It invests heavily in technologies to help us reduce our domestic methane and carbon emissions and also helps decarbonize around the world as we displace dirtier products.”

As momentum continues to build around the scale-up of clean hydrogen across the United States, many stakeholders within the government and industry are working collaboratively to resolve some remaining technical issues to ensure a smooth transition to a clean hydrogen economy. One priority issue centers around the distribution of hydrogen, for which pipelines and natural gas will play key roles. A recent study by the University of Columbia Center on Global Energy Policy finds that pipelines, including both dedicated hydrogen pipelines and natural gas blending systems, are the most important systems for hydrogen delivery.

Recognizing this fact will be critical to the success of the Department of Energy Regional Hydrogen Hub Program. But some critics continue to use today’s technical issues facing the hydrogen industry as a means of creating doubt about its potential role in a net-zero future. The current scrutiny focuses on hydrogen leaks from pipelines and the potential consequences of those leaks.

A recent report by the Environmental Defense Fund (EDF) titled “Climate consequences of hydrogen emissions,” examines various hydrogen leak scenarios, ranging from what the group views as worst-case to best-case. The EDF’s worst-case scenario assumes a 10 percent hydrogen leakage rate and an additional three percent methane leakage rate for hydrogen produced from steam methane reforming (SMR) and carbon capture and storage (CCS). The result of this scenario shows renewable hydrogen would reduce the 20-year warming effects by two-thirds relative to fossil fuels. For SMR and CCUS hydrogen, the study states the 20-year warming impacts could increase by 25 percent. Neither outcome would do much to advance an energy transition, obviously.

For the best-case scenario, the outlook is much rosier. Assuming a one percent leak rate each for hydrogen and methane, renewable hydrogen cuts climate impacts compared to fossil fuels by 95 percent, while SMR and CCS hydrogen lead to a 70 percent reduction.

It’s fair to note that the EDF study does not rely on real-world data or demonstrations to back up the leak rates used. While the scenarios and modeling in the EDF study can be useful, relying on inflated assumptions like the 10 percent hydrogen leak rate does not present a real-world understanding of how these pipelines are maintained and operated. Few, if any pipeline operators could remain in business if they allowed 10 percent of the product to go into the atmosphere without intervention.

Stakeholders involved in the development of hydrogen should obviously strive to meet or even beat the EDF best-case scenario (1 percent leak rate). The University of Columbia Center on Global Energy Policy again offers a key insight. Pipelines in the study demonstrated a low risk of leakage with a roughly 0.4 percent leakage rate for hydrogen passing through a pipeline. So, EDF’s 1 percent leak “best-case” scenario is higher than the 0.4 percent leak rate from the Columbia study.

The Columbia Center study goes onto note that “Blue hydrogen production is believed to have a slightly higher risk of leakage due to the added complexities of its production system, including an additional separation process,” but notes that its “…leakage rate has been estimated to be approximately 1.5 percent based on a combination of natural gas leakage data and what is known about the correlation between hydrogen leakage properties and those of natural gas,” a small fraction of EDF’s worst-case 10 percent assumption.

Context and real-world demonstrations matter to ensure the hydrogen industry can mitigate risks. Luckily for those seeking to bring cleaner energy solutions to market, Congress appears to be open to letting industries compete, rather than continuing to pursue its myopic efforts to artificially pick winners and losers in the energy space. Big Wind and Big Solar won’t like it, but the reality of the situation dictates a more diverse approach.

For all its obvious faults and spending waste, the Manchin/Schumer bill at least makes some effort at establishing an inclusive policy framework that would be essential for innovators to create the solutions that would be required to actually meet any net-zero challenge. Hampering hydrogen’s development before it can make an impact would be irresponsible and will not lead to the clean energy vision that is supposed to be the goal in all of this.

Cooler heads seem to have prevailed in the Senate where energy diversity is concerned. But the bill now goes to the House of Representatives, not known in recent years to be a haven for cooler heads. Whether the energy diversity approach forced by Sen. Manchin on his senate colleagues can survive in the lower chamber remains to be seen, but the 50/50 partisan makeup of the Senate dictates that Manchin holds the stronger political hand.