U.S. Federal Government Invests $750 Million To Expand Green Hydrogen Production

Forbes reported on March 13, 2024, that the U.S. Biden administration is pushing ahead with efforts to make carbon-free hydrogen a cheaper and more widely available clean energy source by distributing $750 million in federal funds to help companies and universities, including Plug Power, GM, and Cummins, expand production of electrolyzers that make hydrogen and the fuel cells that use it.

Plug Power, vying to be a leader in green hydrogen made from water and electricity, is the biggest single beneficiary, receiving three grants totaling $89.9 million. According to Forbes, Norwegian electrolyzer manufacturer Nel followed, receiving $54.9 million for two U.S. projects. GM, startup Electric Hydrogen, Bosch, Cummins, and German Thyssenkrupp were among the major industries that also received substantial grants. The funding for this program is said to be based on the Infrastructure Act.

Hydrogen has a long history as a potential clean energy game-changer but has faced technical problems over the past 20 years. It is the most abundant element in the universe, but it’s not cheap to make it a carbon-free supply source, and it costs a lot to compress, store, and move.

The U.S. uses at least 10 million tons of fuel annually, virtually all of which is produced by steaming natural gas. According to energy researcher RMI, this is a very carbon-intensive process, with a minimum of 8kg of CO2 produced per 1kg of hydrogen. The federal program is working with companies to reduce the cost of hydrogen production in a way that emits little or no greenhouse gases, encouraging industrial users to switch from dirty varieties.

The U.S. Department of Energy stated that through this funding, it can produce 14GW of fuel cells annually, which is 15% of the medium and large trucks sold each year, and can supply power to 10GW of electrolyzers annually, producing an additional 1.3 million tons of clean hydrogen each year.

Earlier, the Biden administration announced it would support seven hydrogen “hub” projects across the U.S. with $7 billion in funding and pledged to provide an additional $43 billion in private funds to expand fuel production. In December 2023, it announced preliminary guidelines for federal tax deductions for clean hydrogen production, which could be up to $3 per kilogram. Plug Power, Cummins, and others criticized the proposed rules as overly strict, favoring electricity from new renewable power facilities.

Hydrogen is already used to power about 18,000 fuel-cell electric vehicles in California, selling at $36 per kilogram. Still, according to Forbes, most businesses and analysts argue that it is wiser to use hydrogen in heavy industrial applications, the production of ammonia for fertilizers, and long-distance semiconductors.