The Gulf Coast is a natural fit for the clean hydrogen industry

The Gulf Coast is a natural fit for the clean hydrogen industry.

The Gulf Coast currently produces 3.5 million tons (Mt) of hydrogen per year, which is one-third of all hydrogen produced in the United States. A major oil and gas region, the Gulf Coast has the largest hydrogen pipeline, opens a new network of interconnections in the country stretching over a thousand miles, and boasts three of the world’s six salt storage caverns.

The region around Houston, Texas has the nation’s largest renewable energy, opening up a market for new companies with 36 GW of wind power and 15 GW of solar power and strong growth expected in the coming years. It also has a highly qualified energy staff and a CO2 storage capacity of approximately 2.4 billion tons.

The region is home to major ports that already export energy products, including the Port of Corpus Christi and the Port of Houston, as well as some of the best refineries in the country.

Nikhil Ati, A partner in McKinsey’s consulting group said:

The Gulf Coast is the most attractive region in the world for hydrogen production; cheap raw material, existing infrastructure e.g. pipelines and storage, domestic consumption creating demand, existing expertise in large enterprises, etc.

Ati’s consulting firm focuses on strategy, oil and gas, and energy transformation.

“There are many reasons why we are confident that if there is to be a large-scale hydrogen industry, it will be in Houston.”

According to McKinsey research entitled “Unlocking Clean Hydrogen on the U.S. Gulf Coast: Here and Now,” clean hydrogen demand in Texas could reach 21 million tons per year.

According to McKinsey, approximately 30-60% of clean hydrogen projects planned in the region will be in poor and disadvantaged communities.

It says the industry could create about 180,000 direct, indirect and induced jobs and generate about $100 billion in additional GDP by 2050.

Government plans

The Gulf Coast HyVelocity Hub is one of seven regional hydrogen hubs, opening a new tab planned across the country under the Regional Clean Hydrogen Hubs (H2Hubs) program, and is expected to be one of the largest. The project will receive up to $1.2 billion from the Infrastructure Investment and Jobs Act (IIJA).

Once federal authorities decide on the definition, it opens a new clean hydrogen tab – expected later this year – the Inflation Reduction Act will also provide billions of dollars in tax credits for hydrogen production (45V), carbon sequestration (45Q) and renewable energy generation (Article 45).

HyVelocity has seven project sponsors (AES, Air Liquide, Chevron, ExxonMobil, Mitsubishi Power, Orsted and Sempra Infrastructure) working on nine projects focusing on four demand areas: ammonia, petrochemicals and refining, surface transportation, and energy and utilities.

Liz DaltonExecutive Director of HyVelocity Hub, said:

HyVelocity builds on many years of experience, decades of partnerships… takes the positive benefits of the existing ecosystem and infrastructure and develops them to achieve emissions reduction goals.

The hub is in the planning stage. Once permitted and constructed, the hub is expected to begin operations in the mid to late 2030s.

In line with DOE’s award milestones, the center’s team will work with communities to ensure the center best serves them.

“We want to know what their concerns are, what they want to learn more about, what their career interests are, what challenges they face and how we can make sure we deliver jobs and economic opportunity through these projects,” Dalton says.

However, until the definition of clean hydrogen is finalized later this year, Dalton fears that continued uncertainty will make it more difficult to begin building public trust.

In February, hub executives wrote a joint letter to the Treasury Secretary commenting on the narrow guidelines of the original 45V proposal, which they believed “could have far-reaching negative consequences for the entire domestic clean hydrogen industry.”

Ready to go

One group that says it is not reliant on government aid and is willing to focus on hydrogen production is Offshore Wind Power Systems of Texas (OWPST), a Dallas-based offshore wind and water desalination company.

Doug HinesGeneral Director and President of OWPST said:

We desalinate and then (deionize) water from the sea, pipeline it, send it to storage, send it to electrolysers and use the same renewable energy from the sea to power the entire system.

The company, which Hines said already has financing and insurance agreements in place but would draw financing from the Inflation Act if offered, could produce about 1,000 tons of hydrogen per day within 60 months of ordering. Approximately 24-30 months of this period will be enough to order the necessary electrolyzers, he says.

“It has taken us about 20 years to get to this point and we have shed blood, sweat and tears all the way. This makes us competitive without subsidies and we are bringing our product to market now,” says Hines.

He says one of the challenges for this group is political disagreements.

President Joe Biden has made a strong bet on environmentally friendly projects like the emerging clean hydrogen industry through major funding bills like the Inflation Act and IIJA, but deep political divisions over climate change mean many projects could be scrapped if will be ousted by Donald Trump in the November election.

These tensions, opens a new page, can already be felt at the local level.

Offshore Projects Wind projects along the Gulf Coast are currently being held up by the Texas Land Commissioner, who opposes efforts to auction the projects, claiming in a letter to the Biden administration that the White House is “force-feeding Americans who have failed in” green “politics”.

TO READ the latest information shaping the hydrogen market at Hydrogen Central

The Gulf Coast is a natural fit for the clean hydrogen industry. source