Pennsylvania Legacies #208: Getting Hydrogen Right

Pennsylvania Legacies #208

Two of the seven proposals selected for federal funding to develop clean hydrogen “hubs” have a footprint in Pennsylvania. The state has several key components of hydrogen production already in place, including huge quantities of natural gas that can be processed into hydrogen needed to decarbonize key industries. But harvesting hydrogen from methane without releasing even more greenhouse gases is easier said than done — and the alternative, water electrolysis, will require a gargantuan buildout of nuclear and renewable energy sources. What will it take to get hydrogen right in PA? Sam Bailey of Clean Air Task Force has answers.

Last fall, the U.S. Department of Energy identified seven proposals selected for negotiation to become regional “hydrogen hubs.” The U.S. plans to spend $7 billion to build the hubs, and offer another $100 billion in tax credits for clean hydrogen production. The government is interested because hydrogen fuel could be the key to decarbonizing industries that can’t readily be switched over to clean electric power, such as steelmaking and aviation. It’s also an important feedstock for refining and manufacturing.

The terminology around “clean hydrogen” can be a little misleading, however. Strictly speaking, hydrogen itself is about as clean as a fuel can get — its only byproduct when combusted is water, and there’s a virtually inexhaustible supply of hydrogen atoms all around us. But here’s the catch: it’s very difficult to produce useable H2 molecules without emitting even more greenhouse gases than the energy sources they’re meant to replace.

Selected Regional Clean Hydrogen Hubs Map Blue_0
Pennsylvania is the only state with more than one successful bid to develop regional “clean hydrogen” hubs.

So it really matters how, and where, that fuel is to be produced — that’s the reasoning behind the idea of hydrogen hubs. Two of the seven proposals selected by DOE include projects in Pennsylvania, the only state with more than one successful bid. 

There are several reasons for that. One is the presence of vast natural gas reserves that could be converted to so-called “blue” hydrogen through a process known as methane reforming, as well as potential for underground storage of carbon captured in the process. Geologic storage capacity is crucial because any scenario in which the use of natural-gas-derived hydrogen results in fewer overall greenhouse gas emissions will require not only capturing virtually all of the released carbon on-site, but also finding someplace to stow it. Moreover, it’ll require massive reductions in upstream methane emissions from natural gas production — and that’s a whole other story.

hydrogen hub graphic (CATF)
To be “clean,” H2 has to be produced near both energy sources and end-use sites. (image: Clean Air Task Force)

Another reason Pennsylvania got the nod is the amount of infrastructure and skilled labor already in place that could be applied to production and end-use of clean hydrogen, and the potential to massively scale up electric power generation with nuclear and renewables. That’s also important, because the leading alternative to blue hydrogen, color-coded “green,” relies on electricity for its production — LOTS of electricity. And for that hydrogen to be considered “clean,” again, the electricity used has to be carbon-free.

So, while the potential is vast and the funding plentiful, there’s also a risk of getting hydrogen badly wrong.


Josh Raulerson (02:35):
Today we’re asking: how can Pennsylvania get it right? Throughout the hub selection process. Clean Air Task Force has been advising states and the federal government on the promise and pitfalls of clean hydrogen. CATF Regional Hubs Manager Sam Bailey, testified before the Pennsylvania General Assembly on the subject back in November. Sam’s presentation was so lucid and so thorough that we requested an encore performance for our podcast listeners. He graciously accepted and joins us now for a little primer on hydrogen. Sam, welcome to Pennsylvania Legacies. Thanks for being here.

Sam Bailey:
Thanks, Josh. Appreciate you having me.

Josh Raulerson (03:12):
I just said a little primer and it’s, it’s gonna be a little bit more involved than that. We’ll try to keep it within reasonable time constraints, but this is a big topic with a lot of layers and a lot of angles. So we’re gonna do our best to kind of elucidate, starting off with just the basics. What’s important for us to know about hydrogen as a fuel, as as a material that’s used in industrial applications? How is hydrogen produced currently and how is it used?

Sam Bailey (03:38):
Sure. I think it’s important to first talk about the properties of hydrogen. Hydrogen is the most abundant element in the universe. But that doesn’t mean on earth that it exists, you know, naturally in just giant clouds of hydrogen. So when you think about hydrogen, you know, some of the properties it exists as a gas at normal temperatures and pressures. And you also mentioned I think hydrogen as a fuel. So when I like to think about hydrogen, I kind of break it down into two categories as a fuel and as a chemical feed stock a fuel somewhat implies that, that you’re consuming hydrogen either through combustion or through a fuel cell to generate electricity or heat. And then as a chemical feedstock, hydrogen is used in a, a wide variety of applications Today the main current end uses for hydrogen is in the refining sector, the ammonia sector, as well as methanol.

Sam Bailey:
And when you think about the, the production pathways in which that hydrogen is produced today, the majority of that hydrogen is produced through fossil fuels or from fossil fuel feed stocks. Those processes in the US are typically the reforming of natural gas to produce hydrogen. And then when you look more broadly outside of the us there’s also a lot of coal gasification, which essentially means taking coal and turning that into hydrogen with CO2 that’s emitted into the atmosphere. So currently the majority of hydrogen that’s produced emits CO2 into the atmosphere and is not considered clean. The US Department of Energy has a goal of having a domestic hydrogen production capacity of 10 million metric tons, and that hydrogen would not only be used to displace existing uses of hydrogen, but to decarbonize new industries that I’m sure we’ll be talking about.

Josh Raulerson (05:32):
We, yeah, we certainly will. Let’s look at the big picture again. If we’re looking at an all-of-the-above strategy, which is a phrase that we like to use at PEC, where does hydrogen fit into that? And why is it so important to get the details right at a policy level?

Sam Bailey (05:47):
Yeah, great question. At CATF, I think we call it something a little bit different. We call it optionality, which essentially means when you look at the broad spectrum of different tools that we need to decarbonize to meet climate goals, you wanna have a lot of options because if you kind of put all your eggs in one basket or you make a bet on this technology and it doesn’t pan out, it would put you in a bad spot. So hydrogen is one of those tools that we can use to decarbonize and really hydrogen should be used in hard to electrify sectors.

Josh Raulerson (06:19):
Walk me through the breakdown of priorities for end uses. Which are the most important or the most critical applications that would make the most sense to use hydrogen for in the near term?

Sam Bailey (06:31):
Yeah, and and if you think about in the Pennsylvania context, a lot of what I’m gonna say will probably ring a bell in terms of having those industries present. The reason being that you wanna prioritize your end uses of hydrogen is because hydrogen is an intensive molecule to produce. So there’s that, there’s energy that needs to go into that production. And so at CATF, we’ve broken down priority end use sectors. And the way that we’ve done that is thinking through, okay, which sector does it make sense to use hydrogen based on the potential for emission reduction, decarbonization, et cetera. And are there other options in that toolbox that, that can be used for those sectors? The first priority that we’ve identified is existing uses of hydrogen. So this is where hydrogen is produced in areas like refineries or pmo production or methanol production where they currently produce hydrogen from natural gas and all the CO2 is emitted.

So that’s, that’s the first priority end use of where you’d want to use clean hydrogen. The second priority end use is, I would say newer applications or applications that, that don’t currently use hydrogen. This could be, for example, in sustainable aviation fuel production, it could also include heavy duty and long haul trucking and transportation. And then there’s other applications like marine shipping and ports. And for the third end use priorities, ones that we would refer to as niche or as needed sectors like power generation or seasonal energy storage where there’s other potential decarbonization options. And you also have to consider things like if you’re generating electricity from hydrogen, what does the cost to rate repairs look like?

Josh Raulerson (08:15):
Okay, so going back through those in reverse order, the, those niche applications would be things that are not currently using hydrogen typically, but could — there wouldn’t be any reason to most of the time, but you could imagine situations where it would make sense. And then the second order is stuff that is currently not running on hydrogen, but that needs to be in order to decarbonize. So like aviation and shipping, you said. And then going back to the first one, the first order priorities. and the top of the list was refining and, and petrochemicals. Not to be too obtuse, but if we’re using a lot of energy to make hydrogen and then using the hydrogen to produce more fossil fuel products, essentially you… I mean, you see the problem, right?

Sam Bailey (09:00):
You Sure. I mean, i, I, I think it’s important to consider the products that we use in everyday life. A lot of these products are sourced from fossil fuels, from oil feedstocks. So there’s, there, there are ways to do that sustainably. And I think we, a refinery is a really complex industrial piece, and there’s a lot of components that you can do to decarbonize a refinery and also think about a lot of those products or even pharmaceuticals and things that go towards the health of our population. So there’s other technologies that will also need to be used along with hydrogen to decarbonize refineries and other petrochemicals, whether that’s carbon capture or industrial electrification. So those are definitely important to consider.

Josh Raulerson (09:42):
Yeah, yeah. I mean, you don’t hear it mentioned often, but even in, in a future where we’re not burning any fossil fuels, there’s still gonna be a need for plastics and materials produced from petroleum. But talking about how we get to that point, right? In order to replace fossil fuels, ultimately for these end-use applications, you’re talking about the production of hydrogen itself has to be radically decarbonized, and that’s really kind of the meat of this. How do you set up a, a nationwide system for producing clean hydrogen? What is clean hydrogen? Can it realistically ever be truly zero carbon or what, what would the requirements be for that to be true?

Sam Bailey:
Yeah, great question. When it comes to substituting low or zero carbon hydrogen or essentially dirty hydrogen, that’s, that’s used today in industry, you can do one of two things generally. The first is install carbon capture to capture the CO2 that’s coming out of the reforming process. The second would be to substitute that hydrogen with hydrogen produced via a different pathway. There’s some color terms that are often used to refer to different production pathways of hydrogen, what I just talked about with natural gas reforming. When carbon capture is applied to that process, that’s typically referred to as blue. When hydrogen is produced via water electrolysis, which is essentially the splitting of a water molecule into its components of hydrogen gas and oxygen gas, that is considered green when powered with zero carbon electricity and renewables. So think about wind and solar, and then it’s called pink when produced with nuclear electricity.

Sam Bailey (11:26):

But one thing to keep in mind is, you know, the colors are great and they do give the listener or someone who sees a project in that context, it gives them a good idea about the production pathways that it’s produced. But one issue with that is it does not give a good sense of the carbon intensity or the emissions that were emitted in the production of that hydrogen molecule. I think it can give a sense generally like a, a range, but, but then it would vary project to project. So it’s really important to understand the carbon intensity that’s associated with each kilogram of hydrogen that’s produced.

Josh Raulerson (12:02):
Okay. Let’s, let’s look at that then. Starting with these two methods that you’ve outlined, electrolysis and methane reforming. And by the way, these are not the methods by which most hydrogen is currently being produced, correct? You mentioned coal gasification or other approaches before. These would essentially be brand new technologies.

Sam Bailey:
In, in the US greater than 95% of hydrogen is produced by steam methane reforming without carbon capture. So when you install carbon capture, it becomes, could become low carbon, hydrogen or blue as some people refer to it as. Right.

Josh Raulerson:
Okay. So starting with what’s sometimes called green, green hydrogen, which is produced by water electrolysis, again, powered by renewable sources or non emitting sources. Sounds great. Devil’s in the details. What, what would it take to make green hydrogen or something like it viable on a national scale? What are the costs? What are the risks? What are the things that really have to be considered carefully?

Sam Bailey:
Yeah, great question. I think this is really tricky and complex question to navigate, but the Department of Energy has their, what they call their earth chuckle, which is $1 for one kilogram and one decade of hydrogen produced. It’s a lofty goal, and a lot of the cost of hydrogen right now is in the electricity component, which is often not clean. If you think about what’s available on the grid, the DOE also has recently published a pathways to commercial liftoff report, which I would recommend to any listener to check out if you want to dive into the nitty gritty technical and cost details. But right now I think they estimate the cost of hydrogen to be around $4 per kilogram, give or take. I think it’s really a little bit higher than that. And then if you think about, you know, how do we lower the costs, you really need a build out of renewables and excess renewables, which is challenging in Pennsylvania. There’s also not a lot of new nuclear available, and we can get into YMZ new in a little bit, but the federal government also has passed incentives like the 45 V production tax credit in order to make some of these production projects more economical. And CATF really believes in strong climate beneficial requirements for long-term clean hydrogen production incentives. 45 V was intended really to incentivize hydrogen production that’s actually clean. And so when we think about hydrogen production from electrolysis, that’s actually clean, it needs to follow what we call the three pillars.

Josh Raulerson (14:33):
Yeah. Let’s look at the three pillars then, and starting with, since, since you were talking about the amount of input, energy input required to produce green hydrogen, it really bears emphasis that we’re talking about a massive buildout of renewable infrastructure in order to meet this need. Right. And that’s kind of, as I understand it, what the, the, the first of the three pillars additionality is meant to address. Have I got that right?

Sam Baile:

Yeah. When we think of additionality, what that really means is that the electricity that the electrolyzer is using to produce the hydrogen, this needs to be new or additional to existing electricity that’s, you know, already serving other loads. Without additionality, you’re essentially diverting low carbon electricity from these other loads causing the grid to ramp up or to causing these projects to utilize the grid mix, which is predominantly unabated fossil fuel with obviously, depending on where you are, a nuclear portion

Josh Raulerson:
And maybe a few you know, solar farms and windmills sprinkled in there, but not —

Sam Bailey:

Josh Raulerson (15:36):
Not a lot. So, and, and again, not to get too far off track here, but there’s a whole separate conversation about how much, you know, not just sources of electricity production need to be scaled up, but the grid that delivers those electrons where they need to go. All of this infrastructure needs to be built up if we’re gonna decarbonize all these other sectors. PEC has a whole separate emphasis on decarbonizing power generation. So when we talk about building renewables to power the production of clean hydrogen, we’re talking about a whole other thing on top of all of that.

Sam Bailey:
Yeah. You know, there’s certain project considerations where you might have space to build renewables, but the amount of renewables that you need for substantial hydrogen production, just taking for an example, a refinery, you think about how much hydrogen they consume, it’s a lot. How much renewables would you need to replace that hydrogen? It’s a lot of renewables. And is that land readily available? Probably not. And so you either have to think about scale of hydrogen or getting those electrons from somewhere nearby, essentially, because there are grid limitations to electron delivery, essentially. So let’s just give an example. There’s someone that wants to produce clean hydrogen in Pennsylvania. They can source their electricity from the grid and use what we call an energy attribute credit where when that electron is produced, it has some information that goes along with it, the time of production, the location of production. And if that energy attribute credit was generated in Texas, is that actually getting delivered to Pennsylvania? Likely it’s not what we call geography matching, which is the second three pillar would, you know, incentivize the actual demand for electricity to be served by new buildout in the region.

Josh Raulerson (17:25):
And then I think you also were starting to allude to the third of the three pillars, with temporal matching.

Sam Bailey:
Yes, yes. The, the third pillar temporal matching, this one is tough to conceptualize sometimes even for me. But the way that this works is it’s a requirement that the electrolyzer really needs to consume electrons that are produced around the same time when they’re generated. And the reason being for this is if you think about when the wind’s not blowing or the sun’s not shining, you know, you don’t have renewable electrons available unless you have battery storage or, or something that allows you to achieve production and consumption at those off times. And if you don’t, you’re gonna be using electricity from the grid grid essentially.

Josh Raulerson (18:08):
Okay. And so what’s the mechanism whereby then one demonstrates, you know, during this hour of this particular day, the electricity we were using came from this wind turbine, for example? How is that actually enforced?

Sam Bailey:
Yeah, sure. So in the, in the recently released guidance from treasury around 45 E, which describes how to comply with the three pillars, they’ve defined what they call a qualified energy attribute credit registry or accounting system. My understanding is that it’s more broad and kind of defines what that system needs to be. But I, like I previously mentioned, each energy attribute credit that’s generated from a renewable resource has information on, on when it was produced, where it was produced, and the type of generation asset from which it was produced. There is, I don’t know if it’s a company or an organization called MREs, M-R-E-T-S, and they have a system that actually is ready to provide hourly energy attribute credits nationwide, essentially as soon as hydrogen projects are ready. So my understanding is that, you know, it’s not yet, but it’s, it’s soon. So I think those types of tracking organizations are ready to scale up once projects are trying to apply for 45 B.

But to give you an example of maybe why it would be challenging to decarbonize a single sector at large scale using only renewable powered hydrogen, if you consider the jet fuel consumption in Pennsylvania at primarily the Pittsburgh and Philadelphia airports, the state consumes more than 400 million gallons of jet fuel a year. And that’s like almost an unfathomable amount for the normal person <laugh>. It certainly is for me. But if you think about the direct energy contained within that fuel, and you think about the equivalent amount of hydrogen that also contains that same amount of energy, this would require about 40 gigawatts of solar and wind and other types of renewable installation in Pennsylvania just to account for that amount of hydrogen produced that amount. 10 gigawatts is around the total power currently installed of renewables in Pennsylvania and New York and New Jersey combined. So I think that gives you a really, a really good picture of <laugh> exactly how much renewables build out you would need if, you know you were gonna substitute jet fuel out for hydrogen on an energy for energy basis.

Josh Raulerson (20:30):
And and that’s just for airports, air travel in Pennsylvania!

Sam Bailey:
Just for airports. Yeah, exactly. And so, you know, going back to the point is that the land use and infrastructure challenges of this additional renewable build out is gonna be really tough, and that that kind of tells us, you know, we have to look for other ways to produce hydrogen in the near term, and this includes hydrogen made from fossil fuels with carbon capture and with other requirements to ensure that the projects are environmentally sound.

Josh Raulerson (20:56):
So that seems like a good point to segue into the other major pathway for production that you mentioned earlier, which is methane reforming. And again, in the context of clean hydrogen, this has to come with carbon capture. Explain I guess first how methane reforming works, how it would be done in combination with carbon capture and storage as a clean technology, as a clean hydrogen production pathway.

Sam Bailey:
Yeah, so current, currently methane reforming in the US is typically done through steam methane reforming, which uses steam and natural gas in a chemical reaction, uses heat from the steam to produce sometimes used to produces gas, but can be used directly to produce hydrogen and emit the CO2, that that obviously needs to be captured to produce low carbon hydrogen. There’s also the auto thermal reforming process, which does not use steam and it uses kind of the heat to, to do that reaction to produce hydrogen and carbon monoxide in CO2.

Josh Raulerson:
So if, you know, again, if it’s gonna be low or zero carbon hydrogen production, what kind of threshold of effectiveness does the carbon capture technology need to be at, and how close are we to that today?

Sam Bailey</strong:
So when you, when you think about the production of hydrogen from natural gas, there’s a couple things that need to be considered in order to ensure that that hydrogen is actually has a low carbon intensity associated with it. The first of those is that the upstream leak rate of the methane needs to be absolutely minimized. This actually also includes electricity consumption and other CO2 emissions that are associated with natural gas processing. So those need to be considered. Second, very high rates of carbon capture need to be employed on those processes, and we’re talking greater than 95% of the CO2 captured and stored and sequestered. And then lastly, the capture process and the reformer. That process consumes some amount of electricity so that electricity needs to be sourced from zero carbon electricity sources. And to answer your question on carbon capture technologies, you know, carbon capture itself has been in use since the eighties. And really there’s a wide variety of technology providers that offer commercial offering for this. So think about air laki, think about A BB Mitsubishi heavy industries, these companies all have technologies that can be installed at a facility or licensed to capture CO2. In addition, there’s new technologies being developed. There’s different novel types of carbon capture. There’s advanced cryogenic carbon capture and, and all these are being improved.

Josh Raulerson (23:46):
So, okay, methane reforming could work, but it has to be carbon captured in in the production. And really importantly, upstream methane leaks have to be brought to as close to zero as possible. And that’s another one where that’s a whole separate problem of its own that already exists, but it seems as though we’re at the moment stuck with these two pathways, methane reforming and water electrolysis, and they both have very high hurdles to clear in order for it to work as a, you know, clean energy technology. Are there other possibilities? And again, acknowledging that decisions being made now, policy being made now and infrastructure being built now is gonna lock in a lot of this for the future, but what can we maybe anticipate down the road by way of new technologies or new applications of existing technologies that could change the equation? You, you mentioned hydrogen occurring naturally sometimes. Could that be a source of clean hydrogen?

Sam Bailey (24:41):

Yeah, so I think if you think about, or or actually if you go on the DOE’S website, you can see all types of different hydrogen production technologies that they’re funding and investigating that, that, you know, that could show some promise in the future. You mentioned natural hydrogen there, there seems to be a buzz around this topic now, and I think there’s some exploratory projects in the US where there exists natural hydrogen deposits deep in the subsurface that could be extracted and used in the ways that we’re talking about after it’s purified. I don’t know what the potential for that is in Pennsylvania, so that’ll be something to, you know, keep your eyes peeled in the news for. But when you think about, you know, other technologies, there’s tons of novel types of water electrolysis, there’s membrane lists, water electrolysis, there’s novel types of membranes that are being developed in the RD lab by tons of different companies, you know, all the time these types of technologies are being developed and improved. So I think we have a lot to look forward to, and I am hoping that this goes hand in hand with reducing the cost of hydrogen.

Josh Raulerson (25:46):
So going back to this idea of optionality and not putting all your eggs in one basket, in your testimony to the Pennsylvania General Assembly last fall, one of the recommendations you gave was that all of these pathways, or at least more than one of them, should be developed kind of in parallel, at the same time, on the understanding that they’re not all gonna pay off necessarily, and better to have… Better to have options, right? The question from there, it seems like, is where do you prioritize investments? Because there are gonna be some, some inequalities inevitably in how resources are invested. There’s an argument for starting with blue hydrogen because we have natural gas in Pennsylvania and a lot of the infrastructure that would be needed, so we should start there and then shift over to green hydrogen production later. And then others would say, you’ve got it completely backwards, we should start from the get-go with renewables. How do you come at that sort of dichotomy? Is there a correct answer here? What’s the, what’s a useful way of thinking about how to prioritize investments?

Sam Bailey (26:44):
You know, this is a tough question and I, I really don’t think there’s a one size fits all answer. That being said, I, it definitely depends on a, on a project basis. And what does your industry look like in the region? What sectors are you looking to decarbonize and how much hydrogen is required to do that? Are there other decarbonization technologies like energy efficiency, industrial electrification, et cetera, that that could lend to reducing the need to produce hydrogen? We did talk about some of the challenges associated with scaling up zero carbon, hydrogen mainly being renewable build out is currently slow and there’s grid connection issues among other things. New nuclear in Pennsylvania doesn’t seem like it’s coming quickly, although, you know, hopefully that’s, that’s remedied soon. But really at the end of the day, I think prioritizing the end use of low and zero carbon hydrogen in hard to electrify sectors is gonna be really important and really impactful in terms of slowing emissions of greenhouse gases from the commonwealth. That being said, I think, you know, all new hydrogen projects need to make sure that they’re, you know, doing a thorough environmental impact analysis. These projects also should consider and frankly need to bring benefits to the communities that they’re gonna be cited in. And that have been, you know, historically impacted projects need to prove that they’re producing low carbon hydrogen

Josh Raulerson (28:09):
And those kind of environmental justice considerations that’s built into the IRA and IIJA, you know, policy that’s underpinning all of this. Correct,

Sam Bailey:
Yeah, there is the Justice 40 commitment from the Biden administration that requires 40% of benefits, not necessarily monetary benefits, but 40% of the benefits to flow to disadvantaged communities. And then through specific funding programs like the Hydrogen Hub program, there are, you know, stipulations where projects have to develop a community benefits plan and, and actually define in more detail what those benefits are and how they’ll affect environmental justice communities, disadvantage communities and communities that have historically been neglected.

Josh Raulerson:
So looking at the hydrogen hubs, since that’s your special area of expertise, and we’re having this conversation because of all of the proposals that were selected by DOE to become potentially hydrogen hubs, Pennsylvania is the only state that had more than one of them selected. Why is that? Why Pennsylvania?

Sam Bailey:
Yeah, great question. Pennsylvania has a huge opportunity here for quite a number of reasons. I mean, I, I think there’s an opportunity to leverage the existing organized labor that we have. We have a lot of emissions associated with industry and heavy duty transportation. There’s a fair amount of EJ communities in Pennsylvania. There’s also coal communities in Pennsylvania and Pennsylvania, you know, is a, a highly effective natural gas producing region. So I think one of the reasons why Pennsylvania was selected was to, you know, take advantage of all these different things. A quick anecdote, when you look at the facility level emissions in Pennsylvania, you know, some of the refineries have shut down over time in the last 10, 15 years, but we still have a fair amount of emissions from the chemicals, metals, refining and petrochemicals. And so, you know, hydrogen is one potential solution to address those.

In terms of the hydrogen hubs in Pennsylvania, Pennsylvania was actually the state with the most applicants for hydrogen hub funding. The DOE had $7 billion for, you know, directly for hydrogen hub awardees, and then there’s an additional 1 million for a demand side initiative. The four hubs in Pennsylvania were the arch two hub, which was selected for funding. This is the Appalachian Regional clean hydrogen hub based out of West Virginia, but with Pennsylvania components there is the Mach two hub, which was also selected for award negotiations. This is based out of the Philadelphia region with components in New Jersey and Delaware. And then the two unselected hubs, which I think are worth mentioning for a couple different reasons. But the decarbonization network of Appalachia, which is led by Team pa and that project still plans to proceed in some capacity. We don’t exactly know what that means yet. So I think that’s something to keep an eye out for. And then finally, there was the Great Lakes Clean hydrogen Hub, the GLCH hub, and they, you know, they could proceed. They might not.

Josh Raulerson:
Is that an encouraging sign for at least the economic piece of this, that at least one of these proposals could go forward even without the federal support or maybe with different support? Yeah,

Sam Bailey:
know, it depends what their project is, who their end users are. I think we’ll, we’ll know more as time goes on, but there are some concerns like do those projects still need to follow the community benefits requirements that the hub funding stipulated? But you know, I think there’s significant opportunity for those hubs to produce low carbon hydrogen and hopefully use it in hard to decarbonize sectors.

Josh Raulerson (31:46):
When we’re looking at the PA hydrogen hubs, or rather the hubs that have projects sited in Pennsylvania, where are those sites? What would be going on there and what would the economic impact be locally in statewide?

Sam Bailey (31:58):
Yeah, let, let me start with the ARCH2 project, and I, you know, I can’t speak for the economic impact. That’s not public information at this time, and I frankly don’t know it. In terms of Pennsylvania projects in ARCH2, there’s really three major projects. First being the Key state project, which is cited in northern central Pennsylvania. This is a project fossil based project to produce hydrogen from natural gas, also producing ammonia from that hydrogen for markets in the northeast and potentially even an export market as well as urea which is a, essentially a solid fertilizer in the western part of the state. There’s some other projects for arch two. There’s the EQT and GTL project, which is planning to produce hydrogen via auto thermal reforming using natural gas. And this hydrogen would be used to produce sustainable aviation fuel. And then the leftovers would be a project with air laki for the mobility sector.

Moving on to the MACH2 hub in the eastern part of the state. So most of the hub infrastructure in Pennsylvania is in the greater Philadelphia region. Think about projects at Philadelphia gasworks, PGW, SEPTA, the Southeastern Pennsylvania Transit Authority. SEPTA actually has 10 hydrogen buses, 10 hydrogen fuel cell buses on order. And this hub funding, you know, hopefully will allow ’em to get more and reduce some of those particulate matter emissions in disadvantaged communities. There’s also the Monroe Energy Refinery in Trainor, Pennsylvania, which I think is looking to use some hydrogen to decarbonize sustainable aviation fuel for Delta. And then lastly, the Hilco redevelopment site, which is the former Philadelphia Energy Solutions refinery. And you know, MACH2 has published some maps with connective infrastructure, but I think honestly, we’re really early and it’s hard to, to understand if these plans are final or, or what. So I think look out for community engagement opportunities and, and hopefully we’ll learn more soon. So

Josh Raulerson (34:07):
When we look at what makes Pennsylvania potentially well suited for, for something like this, I mean, you talked about the fact that we’ve got the natural gas already, we’ve got an industry and a workforce around it. Another big component of this, and this goes back to carbon capture and storage, is the storage, right? What, what’s gonna be necessary by way of storage capacity for sequestered carbon and what does Pennsylvania bring to that? How much space do we have potentially? And you know, what do we know and what do we still need to find out about that?

Sam Bailey :
Yeah, yeah, I think, you know, going back to the fact that Pennsylvania is a natural gas producing state, I think it’s worth at least mentioning that the Department of Energy directed at least two hubs, you know, had to be cited in a natural gas region. So I think Pennsylvania certainly qualifies for that. And generally the Appalachian basin is considered to be a low on the lower end of the methane leak rate. So it’ll be be great to see, I think what what comes of that when you compare it to other, other natural gas regions, perhaps were able to achieve lower carbon intensities of a fossil based hydrogen that’s produced. Moving on to the geologic storage question, <laugh>, there’s kind of a lot to, to unpack there. If you think about the value chain of carbon capture and storage, essentially what that means is that CO2 is captured at a industrial emitter.

So think about like a power plant flue gas stack that right now just currently emits CO2 or a hydrogen production facility that just emits CO2. So you can capture that CO2, you can purify it to some of the purification happens before the actual capture, and then you’ll compress the CO2, hopefully you can sequester it on site with minimal pipelines. But if the geology under that emitting facility isn’t great for some reason, you might have to transport that CO2 to a storage site. When we think about, you know, what does a storage site mean, we’re thinking about saline aquifers that Pennsylvania does have, but there’s a question about, you know, what’s the actual CO2 storage capacity in those saline aquifers? There has been a history of work to understand what that storage capacity is in Pennsylvania, and there’s different estimates, you know, that are thrown around in terms of what that capacity is.

And I’m not gonna make a guess at what that would be because I think that would be a little, a little rash. But what I can tell you is that, you know, there are some promising formations, we just don’t have the data to say, is CO2 able to be injected into those formations at a commercial rate? Generally, the western part of the state is considered to have better geology for sequestration. And so certainly there are some target formations in the western part of the state that would be good candidates for further characterization and further testing to understand what that potential is.

Josh Raulerson (36:53):
Well, I know that the Pennsylvania Geological Survey is doing that research at some level as best they can, but I, I wonder is any of this provided for in any of the federal money that’s out there that’s driving all of the hydrogen activity, does that legislation make any funding available or direct any research into storage capacity?

Sam Bailey:
That’s, that’s a great question. Recently, DOE actually did fund a project in Pennsylvania, the DCNR’S Central Appalachian Partnership for Carbon Storage is what that’s called. And I believe it was a million dollar award or maybe a little bit more, which focused on kind of compiling a lot of existing data from different sources and having that in a publicly available format online. So that’s, I think, one step in the right direction. And I’d like to just put a plugin for an upcoming CATF report that we’re gonna be putting out soon that focuses on storage in Pennsylvania, essentially. So what, what are the prospects for CO2 storage in the state? What are some potential policy options that could enable that storage? Whether that’s, you know, funding for additional test wells in those regions that have potential capacity that I mentioned et cetera. So look out for that soon.

Josh Raulerson (38:03):
So again, looking at what makes Pennsylvania kind of unique in this context, another one of the pieces that you’ve called out is infrastructure. Can you kind of expand on that point? What, what we will need by way of physical infrastructure to make all this happen and what Pennsylvania again brings to the table?

Sam Bailey:
Right. Our general, our general thinking is there’s gonna be some level of infrastructure build out that’s gonna be required to meet our climate goals, whether that’s CO2 pipelines, which would transport captured CO2 to sequestration sites, and those, those could be intrastate, they could be interstate pipelines. One of the reasons I say that is if you think about the geology prospects in the eastern part of the state, there’s not, there’s not a whole lot of potential for storage there. And in fact, there’s a fair amount of emissions in the eastern part of the state. So what are you gonna do with CO2 that’s emitted and captured in the eastern part of the state? You have to transport it to storage somewhere, you know, or you lose your industry, which no one wants. And we wanna retain those jobs. So transporting that CO2, maybe to the western part of the state, maybe to, you know, another location that’s identified, you know, I think there’s likely gonna be benefits of reusing existing right of ways the conversion of existing infrastructure, whether it’s for CO2 infrastructure, hydrogen infrastructure, I think the reuse could potentially eliminate some impacts on environment and communities if the alternative is a new build out.

But it’s important to caveat that I think safety is a key component here, and we wanna make sure that all infrastructure is built, you know, in a safe manner following all the different federal and and state level regulations and requirements. You know, I would add that engaging communities early and often is really important, especially when you think about build out of new infrastructure. You’ve probably heard the term nimbyism a lot. So thinking about, you know, who’s gonna be impacted? Let’s, let’s actually work with those people to understand, you know, what their concerns are and do this kind of in a, in a collaborative way. I do know that it’s quite complex to cite a pipeline in Pennsylvania, so it’s equally important for lawmakers and regulators to work together on common sense development in the state.

Josh Raulerson (40:13):
What are some of the other important differences between the two Pennsylvania proposals, ARCH2 and MACH2? Apart from what you’ve been talking about with siting and and infrastructure, these are two different production pathways that they’re proposing, right?

Sam Bailey:
Yeah, that’s correct. The ARCH2 project based out of West Virginia, but has some project cited in central and Western Pennsylvania. The majority of their plans is to produce hydrogen using natural gas and utilizing carbon capture and hopefully low leak rates of methane and all those things that we talked about. They also do have some renewable projects. It’s unclear if those are cited in the state or not. And then if you think about the MACH2 project their production pathways mostly electrolysis powered by my understanding is new renewables and some new nuclear. And they also have one waste methane reforming project, which is from a wastewater facility in Philadelphia.

Josh Raulerson (41:10):
So obviously the federal government’s kind of driving the bus here, at least as regards hydrogen hubs. What is the role of the state, the general assembly, DEP, whoever else, in implementing this and seeing that, you know, these resources and assets are developed in a way that benefits Pennsylvania? What are, I mean, since you spoke recently to, to our General Assembly, what should those decision makers, policy makers, lawmakers be thinking about? What, what should be foremost in their minds?

Sam Bailey:
So I think a good first step was taken by passing the Edge tax credits through Act 108 in 2022. And essentially what this did is it provided additional tax incentives for, in-state projects that purchase clean hydrogen and natural gas for use in their facilities. That’s one first step, but it’s, I think, unclear, you know, who’s gonna take advantage of that? Is it gonna be MACH2 projects? Is it gonna be ARCH2 projects? And then the second thing, now that we know that hubs are gonna be cited in Pennsylvania, lawmakers certainly have an opportunity to encourage low carbon hydrogen production and that that low carbon hydrogen is consumed in hard to decarbonize sectors. There’s an incentive there for helping those types of hard to abate industries to reduce their emissions. That being said, you know, projects in Pennsylvania are still subject to state and local permitting and safety regulations. So I think there should be a focus in making sure that projects are also meeting those, and also some of those don’t exist yet. So common sense, common sense frameworks and legislation is something that needs to be forefront. And then, you know, lastly, the state really should ensure that these types of infrastructure and clean energy developments are built on a timeline that makes sense for Pennsylvania, which frankly includes meeting environmental challenges and ensuring that the projects are conducted safely.

Josh Raulerson:
Well, there’s so many things to consider here and so much to learn. I’m still learning <laugh>, as you can tell. I really appreciate your patience and your expertise and insight in this conversation. Thank you so much for being on Pennsylvania Legacies.

Sam Bailey :
Thanks, Josh. It was great to be here and chat with you.