Political and industrial leaders behind a proposed Appalachian hydrogen hub selected for up to $925 million in federal support this month say blue is green.
There are warning signs that blue could leave the region in the red instead.
The Appalachian Regional Clean Hydrogen Hub, or ARCH2, is based on “blue hydrogen,” a fossil fuel-enabled approach to energy in which hydrogen is derived mainly from breaking methane into hydrogen and carbon dioxide.
Citing estimates that hydrogen produced by renewably generated electricity known as “green hydrogen” will be cheaper than blue by 2030, Institutional Shareholder Services, an international shareholder advisory firm, declared a “significant risk of stranded assets for blue hydrogen investments” in an analysis last year.
The Energy Transitions Commission, a global coalition of leaders aiming to reach net-zero emissions by mid-century, found in 2021 that green hydrogen production costs still above those of blue hydrogen could decrease drastically, while blue costs weren’t expected to fall significantly.
In its own 2021 analysis, global energy research firm Bloomberg New Energy Finance projected renewable hydrogen would be cheaper than blue by 2030, even in countries like the United States that had cheap gas at the time.
The U.S. Department of Energy, which selected ARCH2 as one of seven hydrogen hubs nationwide for which $7 billion have been allocated, has projected a time frame of seven to 12.5 years for projects to ramp up to operations. That projected time frame would push ARCH2’s launch past the date when analysts have said green hydrogen will sink below blue hydrogen in price.
Institutional Shareholder Services said in its analysis a case could be made that producing blue hydrogen serves to extend the lifetime of the gas industry rather than consistently reducing reliance on the industry. Scientists have said lessening that dependence on a much faster timeline is required to avoid the worst impacts of climate change.
“All things considered, there is a significant risk that blue hydrogen assets become white elephants,” Institutional Shareholder Services’ analysis cautioned.
There’s evidence that blue hydrogen is a liability rather than an asset in the fight to mitigate climate change.
Researchers from Cornell and Stanford universities found in a study published in 2021 that greenhouse gas emissions from the production of blue hydrogen are “quite high,” especially due to leaked methane.
Methane has a 100-year global warming potential 28 to 36 times that of carbon dioxide, according to the federal Environmental Protection Agency.
A report released last month by the Institute for Energy Economics and Financial Analysis, an Ohio-based market research firm that aims to accelerate the transition to renewable energy, said making hydrogen from natural gas “makes no sense.”
The report concluded that blue hydrogen is neither clean nor low-carbon. Funding of blue hydrogen projects by federal and state governments and investors could make global warming worse due to projects still emitting significant amounts of greenhouse gases into the atmosphere for decades, the report said.
Warnings that blue hydrogen could fail environmentally while becoming increasingly uneconomic haven’t stopped the region’s leaders from getting behind it.
“When you have a visionary and innovative thing like a hydrogen hub that has such a long future to it, this to me says to the next generation, you’re going to want to stay, be here and contribute,” Sen. Shelley Moore Capito, R-W.Va., said at an Oct. 16 celebration of ARCH2’s selection by the DOE for federal support.
“This represents economic opportunity for our state. In addition to jobs, it brings investment that will have a spin-off effect,” Marshall University President Brad D, Smith said at the celebration held at a National Renewable Energy Laboratory site in Morgantown.
The project will rely on its buildout and use of carbon capture technology unproven at commercial scale to support an energy solution in hydrogen for which energy experts say there often are safer and cheaper alternatives.
ARCH2’s key production nodes come in communities throughout West Virginia with high socioeconomic and environmental vulnerabilities, raising the stakes for achieving a large-scale, commercially viable hydrogen network.
Jim Kotcon, chair of the West Virginia Chapter of the Sierra Club, is among the many renewable energy proponents who predict the billions of taxpayer dollars being invested in hydrogen hubs will require billions more in follow-up support.
“The [DOE’s] goal is a zero-greenhouse gas emissions economy, and fossil fuels, even with carbon capture, simply cannot get us there,” Kotcon said.
Swiss Army knife eyed
Suzy Baker, the DOE’s engagement lead on hydrogen hubs, observed during a DOE-hosted virtual community briefing that hydrogen is often referred to as a “Swiss Army knife” among climate solutions.
Energy experts view hydrogen as especially valuable in lowering emissions from hard-to-decarbonize processes like production of ammonia fertilizer or improving low-quality gas oils in making jet fuel and diesel.
But energy is lost when hydrogen is made, stored and converted into end uses like electricity, which experts say makes electrification a more cost-effective energy solution.
A study by Princeton University researchers published last year in the peer-reviewed journal Nature Communications observed it was largely unknown how much hydrogen will leak in a more hydrogen-based economy because the hydrogen molecule is very small and hard to contain. Although hydrogen isn’t a greenhouse gas, it can impact atmospheric composition and allow an increase in greenhouse gases.
The researchers said that indirect greenhouse effect of hydrogen “calls for a detailed scrutiny of the global H2 [hydrogen] budget and the environmental consequences of its perturbation,” calling hydrogen emissions “far from being climate neutral.”
In its 2021 report, the Energy Transitions Commission noted hydrogen poses “significant storage and transport challenges” because of its small molecule size and extreme flammability. The report observed that although ammonia, as hydrogen-derived fuel, doesn’t face the same transport and storage challenges, it’s toxic and requires strict safety procedures.
The commission’s report noted hydrogen didn’t exceed 7% of projected 2050 final energy demand or 18% in four of five energy analyst forecasts, with projections of 6-7% in scenarios set by the International Renewable Energy Agency and the International Energy Agency.
The 9 million metric tons per year the DOE says ARCH2 intends to lower carbon dioxide emissions by represent 1.8% of the 495.9 million metric tons ARCH2 states West Virginia, Ohio and Pennsylvania emitted in 2021.
Pursuing that goal will create 3,000 permanent and 18,000 construction jobs, ARCH2 has said.
But many key ARCH2 project areas are in communities where heavy industry has contributed to or failed to prevent environmental health risks and socioeconomic challenges.
The area around the Chemours Company’s chemical facility in Belle is above the 95th percentile nationally in low-life expectancy and heart disease as well as flood risk, and above the 80th percentile in asthma, according to EJScreen, the EPA’s mapping and screening tool that combines environmental and demographic indicators. The area ranks above the 80th percentile in toxic releases to air and above the 90th percentiles in wastewater discharge.
The area around Chemours’ chemical facility in Washington is above the 90th percentile in heart disease and asthma, and above the 80th percentile in toxic releases to air, persons with disabilities, persons over age 64 and flood risk.
As part of ARCH2 and in collaboration with pipeline and storage facility operator TC Energy, Chemours is looking to develop two water electrolysis-based hydrogen production facilities at or near its manufacturing sites in Belle and Washington. Electrolysis is use of electricity to separate water into hydrogen and oxygen.
Although Chemours says its project won’t rely on natural gas for hydrogen creation and wouldn’t require carbon capture or sequestration, Chemours has worked with TC Energy to conduct hydrogen blend testing to demonstrate the feasibility of feeding a hydrogen-natural gas blend fuel to existing fired boiler equipment at its Washington Works and Belle sites.
The Fairmont area, where an ARCH2 spokesperson said Hope Gas will provide hydrogen blending and fuel cells to assist in powering residential customers in the region, ranks above the 95th percentile in low-life expectancy, heart disease, asthma and persons with disabilities, and above the 90th percentile in low-income population.
The North Point Pleasant area, where Houston-headquartered energy transition company Fidelis New Energy plans a hydrogen production facility in the ARCH2 network, ranks above the 90th percentile in heart disease and above the 80th percentile in toxic releases to air and asthma.
Fidelis New Energy’s hydrogen production plans demonstrate how much more skin taxpayers have in the game than just the $925 million maximum set by the DOE.
In August, the West Virginia Economic Development Authority approved a forgivable, performance-based loan for Mountaineer GigaSystem, a Fidelis subsidiary. Mountaineer GigaSystem subsidiaries have acquired the rights to buy four contiguous properties totaling over 1,000 acres in the area for the project.
Fidelis plans to locate a carbon-neutral hydrogen production facility in Mason County, with data centers to be powered by net-zero carbon hydrogen.
The loan from the Department of Economic Development is to be forgiven if Mountaineer GigaSystem meets preconstruction, employment and investment benchmarks.
Mountaineer will implement proprietary technology that enables hydrogen production with zero lifecycle carbon emissions from a combination of natural gas; carbon capture, use and sequestration; and renewable energy, according to state officials.
But Mountaineer indicated in a project fact sheet obtained by the Gazette-Mail it anticipated a $50 million ARCH2 grant allocation and was eyeing an investment of another $8.5 billion to 16 billion in investment indirectly enabled by federal tax credits for carbon oxide sequestration.
Carbon capture, use and sequestration is an umbrella term for technology that removes carbon dioxide from the atmosphere and uses it to create products or stores it permanently underground.
The potential for a regional carbon dioxide pipeline buildout has raised concerns due to risks of induced seismicity and carbon dioxide leakage during storage.
Heather Sprouse, Ohio River coordinator for the West Virginia Rivers Coalition, was disappointed the DOE didn’t respond to her organization’s question about how water quality impacts will be mitigated for those who live near hydraulic fracturing, or fracking, waste water storage sites.
“Frontline communities face the most severe health consequences of the fracked gas industry,” Sprouse said, “and the ARCH2 blue hydrogen hub means fracking.”
West Virginia’s gas and oil industry-linked cancer risks are among the highest in the country, according to a recent analysis of EPA data by Clean Air Task Force, an environmental nonprofit.
Katy Delaney, director of media relations for Battelle, ARCH2’s program manager and the prime recipient of DOE funding for the hub, said there’s enough natural gas being produced in the Appalachian region to not require activity to meet anticipated demand not already planned by operators.
Battelle is an Ohio-based applied science and technology company.
State officials teamed up with Battelle, Pittsburgh gas producer EQT Corp., Illinois energy research firm GTI Energy and Bridgeport energy technology consulting firm Allegheny Science & Technology last year to create ARCH2, which will be headquartered in Morgantown.
ARCH2 skeptic Sean O’Leary, senior researcher at the Ohio River Valley Institute, a Johnstown, Pennsylvania-based pro-renewable energy think tank, finds it implausible the hub isn’t likely to result in added demand for gas and fracking, given EQT is one of the main partners behind ARCH2.
The West Virginia Department of Environmental Protection has issued EQT Production Company, an EQT Corp. subsidiary, 16 notices of violation since the start of 2021 for infractions including water pollution control permit and water quality standard violations, off-lease drilling, not giving proper notice of aboveground storage tank system closure and a facility lacking a combustor to control vapors from storage vessels.
“We must ensure that the communities historically left behind by energy development will be first in line to receive benefits from these historic government investments,” Sprouse said.