Unlock the US Election Countdown newsletter for free
The stories that matter about money and politics in the race for the White House
One of the Biden administration’s flagship projects to harness energy from hydrogen faces an uncertain future due to strong community opposition, underscoring the difficulty in rolling out a technology once hailed as the key to the green transition.
The Appalachian Regional Clean Hydrogen Hub (ARCH2), which spans the fertile Marcellus shale basin in West Virginia, Ohio and Pennsylvania, is designed to produce hydrogen by mid-2030 using primarily gas and carbon capture. But the $6 billion project, which includes fossil fuel companies EQT, CNX and Marathon Petroleum as developers, is facing opposition from local communities and green groups over its carbon footprint and doubts about its commercial viability.
Last month, more than 50 local environmental groups urged the Department of Energy in a letter to suspend negotiations on ARCH2 until there is more clarity about the project.
“This is just the latest reinvention of the [oil and gas] industry in an effort to stay relevant and reposition itself as a solution to a problem they created, the climate crisis,” said Tom Torres, hydrogen campaign coordinator for the Ohio River Valley Institute, and one of the signatories of the letter.
Clean hydrogen has been touted for its potential to green up hard-to-abate sectors such as shipping and cement production. America’s abundant cheap gas resources have made it an attractive destination for projects like ARCH2, which uses gas and carbon capture known as blue hydrogen.
But the rollout of blue hydrogen is controversial because it generates emissions and relies on carbon capture technology, which has not yet proven cost-efficient at scale. A study from Stanford and Cornell found that the emissions footprint of blue hydrogen was 20 percent greater than that of burning gas or coal for heat.
Green groups argue that blue hydrogen projects offer a lifeline to the fossil fuel industry and that funds should instead be focused on green hydrogen, which is produced using renewable energy sources.
Kat Finneran, a doctoral student in geography from Findlay, Ohio, the headquarters of Marathon Petroleum, warned that the hydrogen hub would “extend fracking operations for decades.”
“It not only extends them, it validates them and makes them green,” said Finneran, who also testified at a Department of Energy listening session with nearly 200 participants in March.
The US is expected to be the world’s largest producer of clean hydrogen by 2030, with blue hydrogen accounting for more than three-quarters of production, according to consultancy BloombergNEF. Green hydrogen, generated with renewable electricity, will make up the remaining fifth.
Shawn Bennett, project manager for ARCH2 and former deputy assistant secretary for oil and gas under the Trump administration, has defended the hub’s environmental credentials and commercial viability.
He said the hub would not cause any “news”. [gas] spud wells” and attributed the local opposition to a “misunderstanding” about the development phase of the project. ARCH2 was in negotiations with the DOE and had not yet identified final locations for its hydrogen facilities to begin serious community involvement, Bennett said.
“Instead of financing, it is very difficult. . . to make promises and commitments to communities,” said Bennett, who testified June 17 at a Pennsylvania House hearing on hydrogen hubs, where environmental groups and lawmakers raised concerns about blue hydrogen’s carbon footprint.
A spokesperson for the Department of Energy said clean hydrogen is “essential” for a strong green energy economy and that hydrogen hubs “will help unlock the full potential of this versatile fuel”.
The Biden administration has set a goal of producing 10 million tons of clean hydrogen annually by 2030, up from virtually zero now and on par with the “dirty” hydrogen industry, which is derived from fossil fuels and produces a significant amount of emissions.
Community opposition has plagued other hydrogen projects, with France-based CMG Cleantech relocating its $113 million renewable technology park in Osceola County, Florida, after locals opposed green hydrogen plans resists. The move delayed the project by 8 months.
Analysts say hydrogen projects are struggling to secure financing and customers, with BNEF estimating that only 6 percent of U.S. projects have secured binding supply agreements.
“There is a real lack of confidence that there will be a real hydrogen market with competitive prices,” said Elina Teplinsky, a partner at Pillsbury Law. “Many companies are waiting on the sidelines before making serious investments.”
The lack of final rules for the Inflation Reduction Act’s controversial clean hydrogen production tax credit has also hampered the sector’s rollout.
In February, all seven hydrogen hubs wrote a letter to the Treasury warning that “investments and jobs will not be fully realized unless the rules are “significantly revised”.
Climate capital
Where climate change meets business, markets and politics. Discover the FT’s reporting here.
Are you curious about the FT’s obligations in the field of environmental sustainability? Read more about our science-based goals here