Hydrogen, and green hydrogen in particular, has become a topic for discussion and action across the United States, especially in the western state of California. The state, reputed for its commitment to clean and renewable energy has taken several initiatives over the past decade to move towards carbon neutrality. It has also come up with initiatives to promote the uptake of hydrogen, which is a key piece of the puzzle for reaching net zero emissions. At the virtual conference on Green Hydrogen US hosted by Global Transmission Report, with support from REGlobal, the Honorable J. Andrew McAllister, Commissioner, California Energy Commission, shared his insights into the progress of green hydrogen in the state of California, key market developments as well as the ongoing and planned initiatives. REGlobal presents excerpts from his remarks…
Hydrogen market development
Hydrogen has always been on the radar, but never quite at the center of focus. As we advance our thinking in clean energy, we consider how the systems we have at play will have to change to move towards zero carbon. Worsening climate change impacts highlight growing need to deeply decarbonize existing fossil fuel uses. Planned and sustained increase of renewable generation provides opportunities for electrolytic hydrogen production. We are quickly moving towards renewable energy in our electric systems and beginning to rely more on the electric systems to meet our de-carbonization goals. Electrifying a lot of our end-uses is a key strategy. We are working with the local jurisdiction in California and trying to leverage what’s happening internationally and build bridges so we can all find solutions together.
There is an existing grey hydrogen economy, from which we need to leverage the infrastructure. Then, we either jump over to green hydrogen or move through blue. We know that carbon capture and storage will be some part of the solution. However, it is a bit unclear what the trade-offs will be for directly moving towards green hydrogen. We may need quite a bit of each, blue as well as green hydrogen. This is part of the accelerating discussion about green hydrogen in California.
However, it is a bit unclear what the trade-offs will be for directly moving towards green hydrogen. We may need quite a bit of each, blue as well as green hydrogen. This is part of the accelerating discussion about green hydrogen in California.
Hydrogen and fuel cells
There is a focus on fuel cells in particular around the Los Angeles Intermountain power project and Los Angeles Department of Water and Power. Fuel cells are an enabling technology for transportation. If we can get the costs down by developing the elements of the supply chain and scale up, it will bode well for hydrogen as a solution.
We have already entered the hydrogen economy in California. Fuel cell vehicles are not very popular yet, but they are entering the market place. More focus has been on electric vehicles. The executive order that Governor Newsom promulgated last September set goals for 100 per cent passenger vehicles in the state to be zero emission by 2035. Fuel cells could play a much bigger role in that. Right now, the focus is on electric vehicles, which make up about 9 per cent of sales of new vehicles, with a growing share. Fuel cells would also have a chance to compete in this market place with more funding.
Near-term and future hydrogen potential
Long-duration energy storage is also something we’re looking more strongly at. We need long-duration storage, since it’s a huge gap in where we are today in terms of migrating to 100 per cent renewable energy. We really need solutions for this, so it could be that hydrogen is a solution. We are also looking at blending. Even though there are differing opinions on blending, for instance in countries like Germany which are not focusing on blending, we feel the need to research its potential for the near to medium term strategies to decarbonize our gas systems.
Hydrogen will play a key role in transportation and industry sectors. Industry thermal loads, where we need to get away from fossil gas, have relatively limited alternatives. Renewable gas, synthetic gas and hydrogen all are contending alternatives for natural gas. We’re just getting into looking deeply at our industrial sector through this lens. The question is how much of a role hydrogen can play in these sectors? We are yet to see how much of a role hydrogen can play in our power sector. We need to see how many sectors need to be involved in the hydrogen economy to make it viable, so that we can accordingly invest in new infrastructure to enable the hydrogen economy.
The problem: Scaling two markets
One of the key questions to address is how to scale two markets in parallel. This is a classic “chicken and egg” situation. We know that the state has a role in directing policy and certainly the state will have to put in some money to minimize risk and get experiences we can draw from. We do have limited resources and it’s going to take a lot of private sector participation in a coordinated way along with a policy direction that is clear and sustained, to figure out what the path for California would look like.
A key challenge is the volumetric storage of hydrogen as a gas, or extremely low temperatures for storing it as a liquid. There are also some questions about leakage through non-retrofitted gas infrastructure. Further, electrolytic hydrogen production is still very expensive to produce at scale. There is also a lot of unfamiliarity about customers and equipment manufacturers in the hydrogen market. Additionally, there is uncertainty with blending and its effect on existing gas uses in California. I thermal applications, hydrogen can have a hard flame to control. Embrittlement of existing pipelines is also an issue to consider.
Transportation is where California is the furthest along. It is the only state with hydrogen refueling infrastructure. California is also looking to other countries to guide that moving forward. The state is putting a lot of resources into zero-emission vehicles generally and a chunk of that is in hydrogen. These not only include smaller vehicles, but also larger and heavy duty vehicles. Maritime transport and aviation are also areas where hydrogen-based solutions may emerge.
Hydrogen in California
In the May revision of the California budget, the Governor has proposed some important initiatives, roughly $200 million for the industrial sector, which could involve hydrogen. The budget also has $110 million for green hydrogen research and development. The three elements that have been called out in the proposed budget are blending with methane gas, on-site production and applications in the transportation, industrial and agricultural segments. We have some pipelines and project proposals in all three of the sectors. $500 million has also been allocated for zero emission vehicle infrastructure, including hydrogen refueling. There are currently 45 hydrogen fueling stations and at least 134 more in development.
The gas utilities in the state, such as the Southern California Gas and San Diego Gas and Electric (SDG&E) are working towards achieving net-zero GHG emissions by 2045 and are starting to commit to projects. SDG&E has committed to two projects: H2 as a long-duration energy storage and methane fuel blending for electric generation turbines.
The energy commission is the state’s energy policy and planning agency, while the California Public Utilities Commission (CPUC) regulates the investor-owned utilities which cover about 75 to 80 per cent of the state. They cover almost all of the gas systems and about 80 per cent of the electric systems. On the gas side, they are considering proposals for hydrogen injection standards and get to some sort of equivalent of the renewable portfolio standard using hydrogen and other non-fossil resources. The gas utilities in the state, such as the Southern California Gas and San Diego Gas and Electric (SDG&E) are working towards achieving net-zero GHG emissions by 2045 and are starting to commit to projects. SDG&E has committed to two projects: H2 as a long-duration energy storage and methane fuel blending for electric generation turbines.
The Intermountain power plant in Utah, and LADWP have all the conditions to be able to demonstrate electrolytic hydrogen, or even thermal hydrogen at their power plant. They own transmission from that site, all the way to Los Angeles, they have water rights at that site and have a lot of space at that site. If they want to use solar to generate hydrogen, they have enough space to implement a solar project. The site is also in the middle of an area which has huge renewable energy potential. There are also underground salt caverns that are available for storing hydrogen. It’s a very unique site where you have all the conditions to be able to jumpstart the development towards the goals for going zero-carbon. Further, since LADWP is a municipal utility, it actually is independent from the Public Utilities Commission and thus has a little more flexibility to make long-term investments according to a vision that they control. Recently, an initiative called HyDeal LA was also announced. It is an initiative to achieve green hydrogen procurement at $1.50 per kg by 2028. For this a competitive, high volume supply chain will be developed.
Hydrogen efforts at CEC
There has been ongoing R&D at the energy commission including the development of a hydrogen research roadmap. Our research program overall has an investment of about $160 million a year and a part of that will be hydrogen. A large part of this comes from gas utility rate-payers and so that that can be invested in hydrogen projects. There is also a corporate proposal being examined to look at the effects of using hydrogen blend and use appliances for large commercial and industrial buildings. Since about the last ten years or so, a total of about $166 million has been invested in high demand for transportation refueling. So that has been a commitment that the state has made.
Hydrogen in the US and international efforts
In the hydrogen space, there is a lot going on in the US but then there is more going on in Europe. In the US, there is a Western States Green Hydrogen Initiative (WGHI), which is an initiative that a collective of states is working on. It is incipient, however there is now a forum for the western states to participate in a conversation and try to plan and reach some kind of a consensus on how hydrogen should move forward.
The US is talking actively with the various constituents in Europe to learn from them because their planning is further along. However, it is important to take note that their context is different. For instance, they can store a lot of carbon under the North Sea, they have some existing infrastructure that’s all the different from ours and they identified a backbone. China, Japan and Australia also have interesting initiatives on hydrogen going on.
We need to identify short-term investments and commitments. These can then guide our learning, leading to long-term understanding and commitment for our state resources and our public private partnerships. The policies that will be needed could include tax credits, incentives, and fast tracking permitting. We have experience in the solar and wind arena for all of these areas.
In California, we now have the technology in place that will get us to about 80 to 90 per cent. However, the last bit is going to take some creative thinking and some new development. Hydrogen can play a key role in that. The idea for our electric sector is to achieve, clean and a hundred percent renewable, firm power. This long-term view is compelling but it needs a short-term progression, to get there. Research can help reduce uncertainty with technology transition and expanded hydrogen applications. Further, investments must come from public-private partnerships to manage investment uncertainty and risk.