Biden Announces $1 Billion Investment in Clean Hydrogen “Demand-Side” Initiative
The U.S. Department of Energy (DOE) announced today plans to invest $1 billion in a clean hydrogen demand side initiative, aimed at helping the development of Regional Clean Hydrogen Hubs (H2Hubs) and mitigating the risk of investment for clean hydrogen development projects.
The announcement follows the release by the Biden Administration last month of its new U.S. National Clean Hydrogen Strategy and Roadmap, aimed at significantly ramping the production, use and distribution of low carbon hydrogen for use in energy intensive industries and supporting U.S. decarbonization goals.
Hydrogen is viewed as one of the key building blocks of the transition to a cleaner energy future, particularly for sectors with difficult to abate emissions, in which renewable energy solutions such as wind or solar are less practical.
The development of clean hydrogen capacity, such as green hydrogen, which uses renewable energy to power the process to extract hydrogen from other materials, will require massive investments in areas including infrastructure, electrolysis, transport and storage.
The Biden administration has set clean hydrogen as a significant component of its climate strategy, and one of its key initiatives is the development of clean hydrogen hubs, or regional networks of infrastructure-connected producers and consumers of clean hydrogen, allocating $8 billion from the Bipartisan Infrastructure Law for this project.
According to the DOE, the program announced today will help ensure that H2Hubs producers and users have the required market certainty in the early years of production to enable private investment. The initiative will help provide revenue certainty through mechanisms that could include pay-for-delivery contracts, offtake backstops, and feasibility funding to support analysis by offtakers, among others. The DOE has opened a request for information to gather feedback on the most effective measures to employ under the new initiative.
U.S. Secretary of Energy Jennifer M. Granholm said:
“Ensuring America is the global leader in the next generation of clean energy technologies requires all of us — government and industry — coming together to confront shared challenges, particularly lack of market certainty for clean hydrogen that too often delays progress. That’s why DOE is setting up a new initiative to help our private sector partners address bottlenecks and other project impediments — helping industry unlock the full potential of this incredibly versatile energy resource and supporting the long-term success of the H2hubs.”