On the snowy eastern shore of Lake Ontario sits a beige metal shipping container roughly the size of a mobile home. Inside, a machine called an electrolyzer is zapping tanks of freshwater with enough volts to split the hydrogen out of H2O to harvest the gas, which the U.S. government is banking on replacing fossil fuels.
Hydrogen, the lightest and most abundant element in the universe, has long been manufactured for use in fertilizers and oil refining. Virtually all the global supply today is produced through a chemical process that strips the hydrogen out of natural gas.
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Since hydrogen produces only water when burned, making the fuel instead with water and electricity that comes from a zero-carbon source offers something that functions like oil and gas without adding carbon dioxide to the atmosphere.
The trouble is that making hydrogen from electricity still generates far fewer molecules than using natural gas, making the clean stuff much more expensive. The industry uses a color scheme to describe how different types of hydrogen are made: “Gray” hydrogen costs less than $3 per kilogram to produce today, and sometimes drops below $1.
The price of “blue” hydrogen, which uses that same fossil method but captures the planet-heating carbon dioxide before it enters the atmosphere, maxes out below $5 and can be less than $2.
The “green” hydrogen needed to make a difference on climate change can go for as much as $12 and costs more than gray in every market that analysts surveyed this year.
That’s why the Joe Biden administration is spending billions of dollars to build a whole new American hydrogen industry from the ground up and bring the price of green hydrogen down to $1 by the end of the decade.
The president’s Bipartisan Infrastructure Law set up eight regional hubs across the country to develop hydrogen industrial clusters.
Meanwhile, the most lucrative subsidies in the Inflation Reduction Act, or IRA — Biden’s landmark climate spending law — offer companies that make hydrogen with clean electricity a $3 per kilogram write-off.
It looked like a windfall to the United States’ ailing nuclear power industry, whose shrinking fleet of reactors is increasing in value as the country struggles to meet electricity demands and provide a 24-hour supply of zero-carbon power without the fluctuations innate to wind and solar energy.
Late last year, Constellation, the biggest U.S. nuclear plant operator, began work with the federal government on a pilot project to generate clean hydrogen from its two reactors at Nine Mile Point Nuclear Station here in the rural lakeside college town in northwestern New York.
Hailed by the Energy Department as a historic “milestone,” it was to be the nation’s first-ever experiment in producing hydrogen from nuclear power — and, according to Constellation, the only major commercial effort in the world.
By March, the electrolyzer’s hum was vibrating the corrugated walls of its shipping container in a fenced-off area outside the nuclear plant’s main facility, pulling power from the reactors.
While the company declined to provide a dollar figure, Constellation said its homemade fuel was cheap enough for the power plant here to stop buying the hydrogen it uses in its own reactors from outside vendors, and made plans to keep the electrolyzer going permanently.
Looking beyond its own facility, the company started working with the state energy agency in Albany to produce more hydrogen to help keep New York’s lights on. Constellation now wants to go nationwide with its hydrogen.
The Baltimore-based utility giant announced a $900 million investment to build thousands of times as much electrolyzer horsepower at its LaSalle nuclear station in Illinois. In October, the White House gave the company its blessing.
All those plans may go up in flames as early as this week. That’s when the Treasury Department is expected to release its proposed rules for how companies can qualify for the clean-hydrogen tax credit, known as 45V.
It may turn out to be among the Biden administration’s most consequential — and controversial — climate policy decisions.
The debate — and resulting lobbying war — centers on whether companies need to build new power plants to guarantee that hydrogen is clean and not just cannibalizing the grid’s supply of zero-carbon electricity, driving demand to keep fossil fuel stations going.
Among those who say hydrogen is only clean if it comes from new green sources of electricity are the European Union, the world’s biggest hydrogen maker, environmentalists, and climate hawks like Sen. Sheldon Whitehouse (D-R.I.), who helped write the IRA legislation in the first place.
“Without safeguards, 45V risks creating a shell game in power markets,” the senator wrote in a letter to the White House, signed also by Sens. Jeff Merkley (D-Ore.) and Martin Heinrich (D-N.M.). “We cannot afford the hydrogen tax credit to serve as yet another subsidy for the fossil fuel industry.”
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