Three Keys to Accelerating Hydrogen’s Growth

Rachel Fox
Posted July 12, 2024

API and its member companies strongly believe in the potential of low-carbon hydrogen, including hydrogen made from natural gas with carbon capture and sequestration (CCS).

A recent article in the Financial Times, though it gives needed attention to U.S. hydrogen policy, throws too much cold water onto the idea. Some balance is needed.

First, the U.S. cannot reach ambitious climate and emissions reductions targets without low-carbon hydrogen of all types – including “blue hydrogen” made from natural gas and CCS. A recent BloombergNEF analysis estimated “blue hydrogen” would make up more than three-quarters of production by 2030. While hydrogen project announcements have grown over 60% in the past year, the U.S. still lags behind its 2030 hydrogen production targets.

Currently, the Biden administration is working to finalize rules for the production of clean hydrogen. Its approach so far provides far greater value to hydrogen production powered by renewable electricity than hydrogen production from natural gas and CCS, even though both methods can similarly achieve very low emissions. There are multiple methods of producing low-carbon hydrogen, and all methods will be needed to achieve the U.S. Department of Energy's goal of producing 10 million metric tons of hydrogen per year by the end of the decade. We should not limit our opportunity to let all technologies compete on a level playing field.

Selected by the Biden administration, America’s seven “Hydrogen Hubs” collectively would eliminate 25 million metric tons of carbon dioxide emissions – an amount roughly equivalent to over 3 million homes’ energy use for one year. Four of the seven hubs will use natural gas with CCS.

The growth of a hydrogen industry hinges on building the infrastructure of the future, with the Hydrogen Hubs playing a crucial role in laying the groundwork for its success. The most energy- and emissions-intensive sectors in the United States (steel, cement, transportation and power generation) are relying on solutions such as low-carbon hydrogen – and the hubs specifically – to meet demand, reduce emissions and stay competitive. 

Second, America’s oil and natural gas sector has been at the forefront of the hydrogen industry for decades as a producer, transporter and consumer in refinery operations. American energy companies are leading the way in reducing emissions in existing hydrogen production and are making investments along the entire hydrogen production value chain to reduce the emissions intensity of our products. 

Third, building a successful low-carbon hydrogen industry requires active engagement with local communities, labor groups and community-based organizations.

API and its nearly 600 member companies are committed to robust community engagement to understand and address safety and societal considerations and build on our industry’s social license to operate.

Development of the Hydrogen Hubs presents a real-world example of how this goal can be achieved. These projects are expected to generate hundreds of thousands of jobs. Meanwhile, the nearly $50 billion in expected private investment by the end of this decade will be one of the largest stakes in clean manufacturing and jobs in history, according to the Department of Energy (DOE).

Demand for energy is only going up for decades to come. A growing world population will need affordable, reliable and cleaner energy solutions. Our industry’s key role in DOE’s Hydrogen Hubs – and the significant role natural gas with carbon capture will play in four of the seven selected hubs – underscores the commitment the U.S. oil and natural gas industry is making to advance a lower-carbon future.