The Biden Administration Put $7 Billion Into “Hydrogen Hubs.” Critics Smell a Boondoggle.

This story was originally published by Yale E360 and is reproduced here as part of the Climate Desk collaboration.

In the fall of 2023, the Biden administration announced $7 billion in funding for seven hydrogen hubs, slated to be built across the country over the next eight to 12 years. If all goes as planned, one of those hubs, the Mid-Atlantic Clean Hydrogen Hub (MACH2)—a network of more than a dozen interconnected hydrogen production centers, storage facilities, pipelines, and new solar farms that will power these operations—will stretch from southeastern Pennsylvania and neighboring southern New Jersey into Delaware. Expected to receive $750 million in federal funding, MACH2 is projected to create roughly 20,800 jobs in the Delaware Valley region, of which 6,400 will be permanent.

The US Department of Energy (DOE) says that a sufficiently robust buildout of hydrogen production could power steelmaking, cement production, and other energy-intensive heavy industries, which account for more than a fifth of national carbon emissions and have been notoriously hard to decarbonize, as well as fueling ships, airplanes, and trucks. But some environmentalists and energy experts question whether investing so much money in hydrogen could siphon funding from more effective decarbonization strategies. Even a so-called “green” hub, which runs entirely on renewable energy, they say, might not provide the promised carbon-reduction benefits and could potentially even increase emissions.

And residents of potential host communities—particularly the hard-pressed city of Chester, Pennsylvania, where some of the MACH2 facilities are planned—are concerned that they will bear the brunt of the potential risks and health hazards that hydrogen production and transport could bring.

Scientists discovered how to extract usable hydrogen from water molecules using electrolysis in the 1800s, and as far back as 1874, novelist Jules Verne predicted it would someday be “the coal of the future.” Hydrogen is, after all, the most abundant element on the planet, and it produces no carbon emissions when burned. The United States already produces 10 million metric tons of hydrogen a year—but most of it is derived from natural gas and is largely used in petroleum refining and in making ammonia for manufacturing fertilizer. Every ton of ammonia produced generates 2.6 tons of lifecycle greenhouse gas emissions, according to a report published in Green Chemistry.

Still, scaling up low- or zero-carbon hydrogen production wasn’t considered financially viable until passage of the Bipartisan Infrastructure Law in 2021 and the Inflation Reduction Act in 2022, which offer substantial tax credits to producers of clean hydrogen.

Today, some proposed hubs are planning on producing “blue” hydrogen—that is, hydrogen created using natural gas but with the resulting carbon emissions captured and stored underground. Representatives of the MACH2 hub say that 82 percent of their production will be “green,” meaning powered by solar and wind; 15 percent will be “pink”—powered by the Salem and Hope Creek nuclear plants, in southern New Jersey; and the remaining 3 percent will be “orange”—powered by biogas, which is produced when organic matter decomposes in an anaerobic environment.

Despite MACH2’s commitment to using green energy, some environmental advocates and local residents have reservations. Will the production facilities and pipelines pose threats to the environment and human health? Will the development process be transparent? Will jobs for community members materialize?

A year after the official announcement, the hub has shared few details with the public—locations of facilities, potential environmental impacts, how the project would benefit communities—saying plans have not yet been finalized pending permit approvals from the Pennsylvania Department of Environmental Protection (DEP), commitments from private investors, and contract negotiations between the DOE and the companies that will operate as part of the hub, who are expected to provide investments to match their government-awarded funds. More information will be released in the project’s next phase, expected to begin in the coming year.

The lack of specificity has unnerved environmental and community groups. The Delaware Riverkeeper Network, an environmental advocacy nonprofit, is alarmed by what it sees as a lack of proper safety precautions. Part of MACH2’s plan involves repurposing old fossil fuel infrastructure to carry hydrogen. Like many aspects of the project, what that means isn’t yet clear.

MACH2 officials are currently creating an inventory of underutilized infrastructure, according to Matt Krayton, the communications lead for the hub. He says the hub would likely repurpose existing pipeline rights of way—every pipeline needs approval from landowners whose property would be crossed—and possibly the pipelines themselves, which would be re-sleeved with a hydrogen-safe polymer to prevent leaks.

Some 1,600 miles of hydrogen pipelines are already operating across the US, and Nick Barilo, executive director of the Center for Hydrogen Safety at the American Institute of Chemical Engineers, noted that all combustible fuels carry a certain amount of risk, and hydrogen is no more dangerous than natural gas. “The US industry has been using hydrogen for over a century,” Barilo said. “Safety knowledge and best practices for the production and transportation of hydrogen are well-established and mature.”

In some potential host communities, like Chester, Pennsylvania, assurances like Barilo’s fall flat. Fifteen miles outside of Philadelphia, the city once bustled with manufacturing and heavy industry. But after World War II, plants began to shutter, and the city entered a long decline. By 2020, its population was half its 1950 peak.

Today, a third of Chester residents live in poverty, and the city, which declared bankruptcy in 2022, is host to 11 industries classified by the DEP as hazardous, including one of the largest incinerators in the nation. Chester’s asthma rate is double the state level, according to an analysis conducted by the Center of Excellence in Environmental Toxicology, at the University of Pennsylvania. “These [industries] assault us every day,” said Zulene Mayfield of Chester Residents Concerned for Quality Living. “And it is sanctioned by the state.”

“These projects are often placed in areas that have less political power and representation,” said Kearni Warren, a local outreach coordinator for the Clean Air Council, an environmental health advocacy organization. “We should have the right of refusal when it comes to projects that put our health and safety at risk.”

When MACH2 finalizes its arrangements with the DEP and formally begins Phase 1 of the project, which includes a community engagement plan and detailed plans for building sites, residents may start to see if their skepticism is warranted. But the industry still faces headwinds over its potential costs and benefits.

Although burning hydrogen produces no direct greenhouse gas emissions, hydrogen that leaks into the atmosphere, according to a 2022 research paper published in Atmospheric Chemistry and Physics, increases concentrations of other greenhouse gases, like methane, ozone, and water vapor. “Any time you’re handling [hydrogen], producing it, transporting it, storing it — [the molecule] is so small that the risk of leaks is significant,” said Talor Musil, a field manager at the Pennsylvania-based nonprofit Environmental Health Project.

And according to a recent report published by Energy Innovation Policy & Technology, an energy and climate policy think tank, making green hydrogen to power short-haul planes and heavy-duty vehicles—two sectors often touted as ripe for adopting hydrogen—is neither economical nor efficient. Roughly 20 to 30 percent of hydrogen’s energy value is lost in the process of splitting water molecules, the report said, and another 15 percent may be lost during compression and storage. The Energy Innovation report ranked the potential end uses for hydrogen by their long-term viability and determined that it made the most financial and environmental sense for refining oil and producing ammonia for fertilizer, while also having value in steelmaking and long-haul aviation and marine shipping.

Energy experts agree on these high-value uses for hydrogren, but the Inflation Reduction Act guarantees a tax credit for the fuel, no matter what its end use, for 10 years. Given rapid advances in battery technology, said the Energy Innovations report, it will be hard to justify hydrogen’s expense in industries like trucking—which can operate far more cheaply using electricity—when the credit ends.

A recent study by a group of Harvard researchers estimated that depending on what it’s ultimately used for, green hydrogen may wind up being even less cost effective at fighting climate change than direct air capture of CO2, which the International Energy Agency estimated would have an operating cost, when scaled up, of between $230 and $630 per metric ton of CO2 captured.

And then there’s the matter of impact. The seven hubs combined are projected to reduce annual greenhouse gas emissions by 25 million metric tons of CO2 a year (not counting the emissions linked with hydrogen production). The total tonnage is not significant, some experts say—it amounts to less than half of one percent of total US CO2 emissions—considering the $7 billion in taxpayer support. But the Energy Department considers the hubs a catalyst, a way to “kickstart a national network of clean hydrogen producers, consumers, and connective infrastructure”; presumably, costs of hydrogen production will drop as the industry develops.

Unless the federal government implements strict rules on carbon capture and the use of green energy for the hubs, the industry could actually increase overall emissions, according to the National Resources Defense Council (NRDC). Last November, Rachel Fakhry, the NRDC’s policy director for emerging technologies, testified before the House Environmental Resources and Energy Committee that, for hydrogen to be truly sustainable, green hubs would need to abide by three main tenets: buying electricity from newly built renewable energy sources, rather than pulling existing renewables from the grid (a requirement known as “additionality”); matching their hourly use with the availability of green energy, which prevents hubs from dipping into fossil fuels and buying clean energy credits after the fact; and using clean energy that’s produced close to the hubs, ensuring that its delivery doesn’t lead to increased emissions. Legislators and industry groups are already indicating they will challenge a proposed additionality requirement.

As the federal government works to finalize how it will regulate the hydrogen tax credits, energy experts continue to grapple with the potential significance, and value, of the proposed hubs. “One of the big challenges in the broader field of serious, big systems decarbonization is we’re sort of talking about various imaginaries,” said Danny Cullenward, a climate economist and senior fellow at University of Pennsylvania’s Kleinman Center for Energy Policy. “We’re throwing money at the hubs. We’re throwing money through this tax credit at the production of hydrogen. But there isn’t really anything resembling a coordinated strategy for what’s the right use of hydrogen,” he said. “It’s actually a really weird thing, if you think about it.”