US Department of Energy plans for hydrogen commercialisation

This week the US Department of Energy released the “Pathways to Commercial Liftoff” report for clean hydrogen.

The ~100 page report goes into great detail about the challenges and opportunities facing the industry in the US.

The “liftoff plan” for clean hydrogen has three distinct phases:

1. Phase 1: Near-term expansion (2023-26): This first phase will replace existing hydrogen production with clean hydrogen (mainly in ammonia production and oil refining). The “first-of-a-kind” projects will likely be regional clean hydrogen ‘hubs’ which will be driven by $8BN in funding and Production Tax Credits.
2. Phase 2: Industrial Scaling (2027-34): Driven by economies of scale and technology, hydrogen production costs continue to fall. A large focus on “midstream distribution and storage” will drive demand and adoption of hydrogen in new sectors.
3. Phase 3: Long term growth (2035+): Self-sustaining commercial market once production tax credits expire driven by economies of scale and low-cost clean energy.

One of the key takeaways from the report is that the success of clean hydrogen is directly linked to the success of the renewable energy sector.

There is also a big cost to transporting hydrogen, which is why “regional hubs” are an important factor in building the hydrogen economy.

Here is what a domestic hydrogen transport industry could look like:

With the cheapest form of hydrogen transport being pipeline transport, however this requires permitting and high upfront capital investment.

This is why region hydrogen ‘hubs’ will likely be the hydrogen strategy from the outset, with supply capacity increases as more infrastructure is built out.

The report goes into detail on the likely end users of clean hydrogen, with the darker green section the area that hydrogen has the greatest potential to decarbonise - mainly in iron and steel production:

While hydrogen production tax credits create a supply-side production incentive, the hydrogen industry will need a demand-side pull in order to scale.

This pull can be driven by industry and governments working together to encourage hydrogen production.

Ultimately, the hydrogen industry will need to break out of the “chicken or the egg” dilemma, driven by government incentives and private industry working together.

There is a lot more information in this report: https://liftoff.energy.gov/wp-content/uploads/2023/03/20230320-Liftoff-Clean-H2-vPUB.pdf