State leaders and a range of prospective fuel producers, industrial consumers, trade unions, utility companies and several Southwest Washington tribes collaborated on a joint pitch for the billion-dollar slice of federal money.
By Tom Banse / oregoncapitalchronicle.com / October 13, 2023
Oregon and Washington scored big Friday in a fiercely contested national competition to grab a share of $7 billion to kickstart the production and use of “green” hydrogen, viewed as an important fuel source for cutting pollution from heavy industry.
President Joe Biden and Energy Secretary Jennifer Granholm announced that the Pacific Northwest bid was among seven winners of roughly $1 billion each in Regional Clean Hydrogen Hubs grant funding.
Oregon and Washington state leaders and a range of prospective fuel producers, industrial consumers, trade unions, utility companies and several Southwest Washington tribes collaborated on a joint pitch for the billion-dollar slice of federal money.
The details of what projects in the Northwest would be subsidized were kept mostly secret during the competition and remain fairly vague as of today. The U.S. Department of Energy said the Pacific Northwest hub proposal was expected to create more than 10,000 direct jobs – 8,050 in construction and 350 permanent positions.
“With this historic investment, the Biden-Harris Administration is laying the foundation for a new, American-led industry that will propel the global clean energy transition while creating high-quality jobs and delivering healthier communities in every pocket of the nation,” Granholm said. She and Biden are planning to appear in Philadelphia on Friday for a formal announcement about the grants.
Over the past year, West Coast governors and Biden administration officials have talked up low-emissions hydrogen as a promising means to meet their climate goals, specifically to decarbonize sectors like shipping and steel-making that are proving difficult to convert directly to clean electric power.
During a media briefing prior to the president’s announcement of the winners, Department of Energy officials said an element they liked about the Northwest bid was how it would demonstrate use cases for clean hydrogen such as making fossil fuel-free fertilizer.
The Pacific Northwest proposal for hydrogen hub funding envisions that producers will make “green” hydrogen by splitting water molecules with an electric current. This process (known as electrolysis) is energy intensive and must use renewable electricity exclusively for the resulting hydrogen to be considered green.
In an emailed statement Friday, the Washington State Department of Commerce said no new wind and solar projects were specified in the region’s hydrogen hub proposal. The statement went on to say that the participating hydrogen producers “are working closely with renewable electricity project developers to ensure a stable, growing supply of clean energy is available to meet hydrogen production needs.”
A skeptical Lewis County Commissioner, Lindsey Pollock, questioned out loud this week where the electricity would come from to operate a large hydrogen factory proposed to be sited beside the soon-to-close Centralia coal power plant.
“They don’t know, or aren’t willing to say. The problem we have is that we’re going to be short approximately 240 megawatts of electricity when the coal plant comes offline,” Pollock wrote in an op-ed published by the Centralia Chronicle. “We all know what happens to prices when something becomes scarce.”
Unpacking the winning Pacific Northwest bid
Washington State Department of Commerce Assistant Director Chris Green said the hydrogen hub plan contemplates eight production and consumption “nodes” spread across Washington, Oregon and western Montana. Green said more information would become available after the project sponsors finalize the official grant contract with the federal government.
“Once we conclude negotiations with the Department of Energy, we will be able to share more about the locations and will start or expand work with local communities and regulators on project siting and permitting,” Green wrote in response to emailed questions.
“It’s important to note that during negotiations, some aspects of the planned Hub’s scope and scale may be modified. Therefore, the projects that will be part of the hub are not yet certain, so we’re limiting the information we share publicly about our projects at this point,” he added.
The Pacific Northwest Hydrogen Association did release a list on Friday of the major industry partners selected to participate in the hub. The list includes Australia-based Fortescue Future Industries, the prospective developer of the large hydrogen fuel production plant proposed in Centralia. Large volume users of the resulting hydrogen on the list include Amazon.com, heavy truck maker PACCAR and the Northwest Seaport Alliance, which comprises the ports of Seattle and Tacoma.
Another confirmed participant aspires to be a large producer and consumer of clean hydrogen at the same location. Atlas Agro has proposed a $1 billion green fertilizer plant near Richland, Washington. It would use clean hydrogen as a primary feedstock from which to make zero-carbon nitrogen fertilizer. A news release sent by Atlas Agro on Friday said its unspecified share of the hub funding would be spent on “planning, detailed design, environmental permitting, and procurement of long-lead equipment.”
“We’re super grateful for the support of the Department of Energy,” said Dan Holmes, president of North American operations for the multinational fertilizer company, in a follow-up interview. “Their support de-risks these first-of-a-kind projects.”
Left off the hub participants list, but still eager to collaborate on the Northwest hydrogen hub project, is solar energy developer Obsidian Renewables. The Lake Oswego, Oregon-based company advanced to the semi-final round in the national funding competition with an independently-developed proposal for a regional hydrogen hub, but was ultimately passed over in favor of the state-led submittal.
The Energy Department said the $1 billion for the Pacific Northwest hub will be disbursed in phases over a span of years as the participating states meet project milestones. The first payout is expected to be relatively small to support design and planning. More money is expected during a subsequent engineering, permitting and financing phase. The biggest dollar flow will occur when the hydrogen hub moves into the construction phase. A final phase allows for an operating subsidy during the production ramp-up.
Washington and Oregon’s biggest utility companies, Puget Sound Energy and Portland General Electric respectively, celebrated their inclusion, too. PGE said it was studying the feasibility of repurposing the site of its demolished Boardman coal plant in northeastern Oregon to produce clean hydrogen. That hydrogen could be stored and then used when needed to generate clean electricity at times of peak demand.
Puget Sound Energy said Friday it has already started testing the blending of hydrogen with natural gas in its own equipment. The goal would be to lower the carbon footprint of natural gas-fired power generation or gas burned in consumer appliances.
Beyond the Northwest
Clean hydrogen has been kicked around as an alternative fuel for several decades but has been hindered by its extremely high cost compared to traditional fossil fuels. The $7 billion investment in regional hydrogen hubs is not the only public subsidy the Biden administration is rolling out. The Democratic administration is also finalizing a hydrogen production tax credit to make the gas more viable. It remains to be seen if the combination, along with economies of scale, will be enough to make hydrogen cost-competitive for private-sector users.
The other winning bids selected for federal hydrogen hub funding included a proposal from California with a strong component for converting trucks and port operations to hydrogen fuel cell power. Three other winning regional bids from the Midwest and Northeastern U.S. rely at least partially on nuclear power to make their green hydrogen.
A Gulf Coast hydrogen hub, centered in the Houston area, was the largest selected for funding. The Gulf Coast hub plans to achieve large-scale hydrogen production using both natural gas with carbon capture and renewables-powered electrolysis.
The seven winners were selected from among 33 semi-finalists, which were whittled down from around 80 initial hydrogen hub proposals submitted by states, multi-state regions and private industry nationwide.
When fully built out, the Energy Department said the seven regional hydrogen hubs would together cut 25 million metric tons of carbon dioxide pollution from end-users each year — an amount the agency said would roughly equal the combined annual emissions of 5.5 million gasoline-powered cars.
Congress approved the money for the hydrogen hubs program as part of the bipartisan infrastructure bill in late 2021. The federal Energy Department said its grant awards would spur at least double or triple that amount in state and private matching money, if not more in several cases.
FEATURED IMAGE: Artist’s rendering of the hydrogen production plant proposed in Centralia, Washington, by Australia-based Fortescue Future Industries. The soon-to-close Centralia coal power station can be seen at left rear. (Courtesy of Fortescue Future Industries, 2022)