The U.S. Allocates $7 Billion Of Grants To Hydrogen Production Hubs

The U.S. Administration announced on Friday it had selected seven regional hubs for hydrogen production that would receive a total of $7 billion in grants to produce hydrogen, as part of President Biden's goal to boost the clean hydrogen economy and decarbonize industries.

Projects in the seven selected hubs will include several ways of hydrogen production, including the so-called green hydrogen from water electrolysis using renewable electricity, the 'pink' hydrogen using nuclear electricity for electrolysis, and the 'blue hydrogen' from natural gas with carbon capture and storage (CCS).

The hydrogen hubs include the Mid-Atlantic Hydrogen Hub which will produce hydrogen using renewable and nuclear electricity, the Appalachian Hydrogen Hub with access to low-cost natural gas, the California Hydrogen Hub, the Gulf Coast Hydrogen Hub, the Heartland Hydrogen Hub, Midwest Hydrogen Hub, and the Pacific Northwest Hydrogen Hub.

The hubs in the Appalachia, the Gulf Coast Hydrogen Hub in Texas, and the Midwest hub will produce hydrogen from natural gas plus carbon capture and storage, among other sources.

The projects involving many partners and companies in each hub will receive funding from the Bipartisan Infrastructure Law.

"Seven billion dollars of this program is going towards the development of the regional clean hydrogen hubs that will catalyze multistate hydrogen ecosystems that ultimately will expand and connect to form a national hydrogen economy," the White House said on Friday. 

"Up to $1 billion of the remaining funding will be used for demand-side support for the hubs to drive innovative end-uses of clean hydrogen."

Developers and producers of hydrogen from various sources are expecting guidance from the U.S. Treasury Department on which technologies are eligible to receive subsidies under the Inflation Reduction Act (Act). The guidance is expected to be issued later this year.

Last month, reports emerged that ExxonMobil is lobbying the Biden Administration to have hydrogen derived from natural gas with carbon capture be eligible for the generous tax credits under the IRA, which could reach $3 per kilogram of hydrogen.

By Charles Kennedy for Oilprice.com

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