The Department of Energy (DOE) Hydrogen Shot Summit was held virtually from August 31 – September 1, 2021 and introduced the DOE’s ‘1-1-1’ goal, which is to lower the cost of green hydrogen to $1 per kilogram within 1 decade. In 2021, hydrogen production costs vary from $1/kg for grey hydrogen, to $3-$5/kg for green hydrogen, and $1.50-$1.75/kg for blue hydrogen.
The “Hydrogen Shot” is modeled after the successful DOE SunShot program of 2010, which set challenging stretch goals of reducing utility-scale solar costs to below 5-6 cents per kWh, the cost of electricity from natural gas at the time. The SunShot goal was achieved in 2017. The main lessons learned from SunShot are the hard goal became an organizing principle that inspired the whole eco-system to become globally competitive, it identified regulatory, manufacturing, technology, and scientific gaps, and it helped focus investing on the right problems.
The Biden Administration’s goal is to cut U.S. GHG emissions by 50 percent by 2030, to achieve 100 percent clean electricity by 2035, and to achieve net zero emissions by 2050. To achieve that goal, new efficiency and capital cost solutions need to be found for the hard-to-decarbonize areas such as industrial manufacturing, long-distance truck transport, shipping, and aviation.
There is an enormous economic benefit for the U.S. to lead on the clean energy technologies to speed the global net-zero transition, and two critical efforts in the decade to 2030 are required to achieve global net zero emissions. Firstly, available technologies that are already cost-effective such as wind and solar power must be deployed at a mind-boggling scale, with the installation every single day this decade of the equivalent amount of solar to the world’s biggest solar farm to replace fossil fuels. Roughly 50 percent of the emissions reductions needed to achieve net-zero by 2050 must come from emerging clean energy technologies that are not yet ready for commercial markets. Hydrogen is one of those technologies and much remains to be done to make it an affordable way to decarbonize the hardest sectors of the economy. The key obstacle to adoption of hydrogen fuel is the current cost of green hydrogen, which is where the ‘111’ goal comes in, and at $1 per kilogram, clean green hydrogen would be an affordable alternative to fossil fuels.
Every country understands it could play a role in the clean energy transition, and hydrogen will be a multi-trillion-dollar global market in the coming decades. Hydrogen’s versatility means it has a role in converting wind and solar electricity to chemical feedstock for industrial processes, or for direct use as energy for high-temperature industrial processes, for fuel cell vehicles, and to be converted to ammonia, methanol, or other liquid fuels to power ships and airplanes.
In July 2021 the U.S. Senate advanced from committee the bipartisan Energy Infrastructure Act. The Act includes $12 billion for carbon capture technologies, including direct air capture, and $9.5 billion for hydrogen, including $8 billion for regional hydrogen hubs to accelerate hydrogen production from all sources and facilitate its delivery across all sectors of the economy. Another $1 billion is for research and development to bring down the cost of electrolyzers.
Commercially attractive clean energy is the key to a clean energy future. Bill Gates has described the ‘green premium’, which is defined as the price premium or barrier that a clean technology has compared to doing it the old way. Clean hydrogen is an example of a very promising technology that has a high green premium. Without customers to drive the volume, you do not get the learning that drives all the small improvements, thousands of which come together to result in green price premium that is small or zero. No country or company will adopt clean fuels or buy green concrete or steel if they are significantly more expensive than the products they replace.
Gates believes that decarbonizing the global economy is the greatest opportunity for innovation the world has ever seen. Many parts of the economy have no good alternatives for decarbonization, such as the making of steel or cement, or making chemicals like ammonia. Hydrogen can also store electricity to deal with periods of bad weather for wind or solar power generation, and you could take a lot of the existing U.S. pipeline infrastructure and change that to move hydrogen around and take full advantage of it.
Sources:
Plenary presentations by Secretary Jennifer Granholm, U.S. Department of Energy; Secretary John Kerry, Special Presidential Envoy for Climate; The Honorable Joe Manchin, U.S. Senator (D-WV); Bill Gates, Founder, Breakthrough Energy Catalyst; Dr. Arun Majumdar, Stanford University SLAC
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