Policy issues related to renewable hydrogen and electrofuels

Is use of renewable hydrogen in the public interest?  If so, how?

Producing clean fuels from renewable electricity serves multiple public interests:

  • Other than electricity for battery electric vehicles, the Northwest imports all of its fuels from outside the region- producing them locally-
  • Keeps the huge flow of money going out of the region now here, and
  • Increases the resiliency of the Northwest energy economy by reducing reliance on imports from outside the region.
  • Reduces the severe impact health costs from internal combustion engines that by some estimates are roughly the same as the cost of the fuels on a dollars per gallon basis. Hydrogen transportation has zero emissions other than clean water.
  • Puts the region on a path to not only 100% carbon emission-free electric generation, but decarbonizing parts of the energy economy that may not be easily electrified otherwise.

What are the key public policy issues for renewable hydrogen?  Are there policies that currently impede renewable hydrogen development?  Are there key policies that could expedite the creation of a renewable hydrogen industry?  Are there state or even local initiatives that could accelerate development?

Policy support as of early 2021 is relatively meager as renewable hydrogen infrastructure is not eligible for production or investment tax credits. Crucially important decarbonization targets have not yet been established that would highlight renewable hydrogen as the least cost alternative to decarbonize many sectors. Electrification mandates for example zero emission vehicle mandates) often overlook hydrogen-fueled vehicles altogether.

Key policies for supporting the industry include:

  • Binding decarbonization policies.
  • Carbon emission caps or carbon taxes.
  • Low carbon transportation fuel standards.
  • Low carbon gas pipeline standards.
  • Low carbon power plant fuel standards.
  • Requiring transportation electrification plans to include hydrogen vehicles
  • Production and/or investment tax credits for producing, transporting, and distributing renewable hydrogen.
  • Hydrogen vehicle fueling infrastructure commitments.
  • Ready access for dispatchable loads to the wholesale market place and discounted retail electricity tariffs that properly reflect the value of dispatchable loads to grid operations.
  • Allowing large dispatchable loads to participate in energy imbalance and day ahead power markets.

Have there been policy successes internationally in launching renewable hydrogen industries?

The leaders in hydrogen from electricity have tended to be the leaders in renewable electricity (perhaps with the US being a notable exception), due to the connectedness of surplus renewable electricity and the economic incentive to use the electricity. The main policy driver has been reduction in carbon emissions. British Columbia has been looking hard at using its renewable electricity to create hydrogen for export and its newly adopted renewable gas standard (including hydrogen) for its pipeline gas is expected by some to provide a comparatively large market for renewable hydrogen there.

Commitments to meeting carbon emission reduction targets in Europe and Asia have resulted in plans to invest tens of billions of dollars in green hydrogen production. These pledges are likely the reason that major electrolyzer manufacturers are being bought up by large corporations and announcing major manufacturing capability expansions.

 

Renewable portfolio standards (RPS) have been effective in driving the deployment of renewable electricity in many US states.  Is there international experience in using of renewable portfolio standards for gas or similar policy tools, like feed-in tariffs to jump-start a renewable hydrogen industry?

The most dramatic international actions have been announced plans for hydrogen infrastructure spending. British Columbia has adopted a renewable gas standard (including hydrogen) that appears to have the potential to spur development of renewable hydrogen there.

 

What current policies are in place at the US federal level to incentivize renewable hydrogen development?

The federal response to renewable hydrogen has mainly centered on research and development of new technologies. Given how far and fast we need to act to meet the 2030 IPCC carbon emission reduction targets, it is unlikely that research and development of new technologies will be at scales large enough to help significantly by 2030. The US needs infrastructure development policies—for example, a “hydrogen highway” plan and funding. National carbon intensity standards for vehicles and pipeline gas. The one policy that does exist in some form is federal money for low emission buses, that could be structured to be more friendly to hydrogen bus fleets.

 

Would (or does) carbon pricing help expedite renewable hydrogen deployment?

Would and, to some extent does in the form of the low carbon fuel standard legislation for vehicles.