With one-third of its economy tied to energy production, Wyoming isn\u2019t a state that plans to sit back and watch the energy transitions pass it by, taking its longstanding livelihood with it. But standing up a new industry in a relatively small state is no easy task, according to Glen Murrell, executive director of the Wyoming Energy Authority.<\/p>\n
\u201cIt\u2019s all about a competition for capital,\u201d he said. But bigger states with bigger balance sheets can offer various incentives to lure in private businesses; Wyoming’s options are limited.<\/p>\n
The federal infrastructure bill could very well change that. Among the myriad of funding opportunities for projects such as large-scale carbon capture pilots, the infrastructure bill allocated $8 billion to be divided among four new \u201chydrogen hubs\u201d<\/a> in regions to be selected by the U.S. Department of Energy. And while Wyoming isn\u2019t about to put all its eggs in one basket \u2014 funding for carbon capture or other demonstration projects certainly wouldn\u2019t hurt \u2014 the scale of the hub funding, Murrell said, represents a \u201conce in a generation\u201d opportunity.<\/p>\n \u201cIf you consider how frugal the approach has been historically with respect to various buildouts, one cannot look at the infrastructure bill and say it\u2019s not enough,\u201d Murrell said. \u201cIt\u2019s 10 times, maybe even 20 times more than anything that has happened in the last 10-20 years.\u201d<\/p>\n Wyoming, of course, isn\u2019t the only state to take notice of the feds\u2019 $8 billion offer. At the Electric Power Research Institute, Jeffery Preece, director of research and development for low-carbon resources, said he\u2019s had conversations with some 15 regional groups seeking help with their applications to become hydrogen hubs \u2014 even though the DOE has yet to release specific selection criteria.<\/p>\n The sense that the first regions to make significant investments in hydrogen will reap the greatest economic rewards is justified, Preece said. But while it could be easy to point to states like Ohio, California and Texas, where investment in hydrogen has already begun<\/a>, as the likely hydrogen hubs of the future, Preece doesn\u2019t think the decision will be that straightforward. To win hub designation, he said, is going to require more than the mere ability to create hydrogen \u2014 hubs will need to secure offtakers, ensure needed infrastructure is in place, and train a massive new workforce.<\/p>\n But even with all those pieces in place, the future of hydrogen is uncertain, Preece said. Selecting diverse hydrogen hubs \u2014 each with its own specialty \u2014 may be the best strategy for success.<\/p>\n Most conversations around hydrogen continue to focus on how it will be made, but potential production capacity likely won\u2019t be the limiting factor in the creation of future hydrogen hubs, Preece said. The real challenge, he said, will be ensuring production can connect with potential applications \u2014 particularly given the DOE\u2019s interest in financing projects that are ready to begin operating almost immediately.<\/p>\n \u201cThe big issue in this is not going to be the supply of hydrogen,\u201d said Brett Perlman, CEO of the Center for Houston\u2019s Future. \u201cThe real driver is going to be the demand side\u2014we have to go where the customers are.\u201d<\/p>\n This is also one of the Houston area\u2019s strongest selling points as it pursues hydrogen hub designation. Houston already produces about a third of the nation\u2019s hydrogen, and that means most of the largest users and needed infrastructure are already located there, Perlman said.<\/p>\n \u201cHydrogen today is all used in feedstocks, and so 95% of the petrochemical industry is on the Texas Gulf Coast,\u201d he said. \u201cThese are massive plants, worth trillions of dollars of investment, that can\u2019t be just anywhere. \u201d<\/p>\n Hydrogen in the region currently is produced using steam methane reforming to split natural gas into its component elements \u2014 which means the present-day hydrogen industry is carbon-intensive. So the question that is top of mind for hub planners in Texas, Perlman said, is which users will be the early adopters willing to pay a premium for green hydrogen, generally produced by using electrolysis to divide water into hydrogen and oxygen.<\/p>\n They\u2019re still working out the answers to that question, Perlman said, but industries with higher margins such as specialty chemical manufacturers seem likely candidates, and Texas does have an ample supply of low-cost wind and other forms of renewable energy to drive electrolysis.<\/p>\n Murrell, in Wyoming, agrees with Perlman and Preece about the importance of securing potential customers for their hydrogen. But this is an area where Wyoming\u2019s application could struggle. The state has all manner of options to create the alternative fuel \u2014 ample natural gas for conventional techniques,\u00a0experience in carbon capture to mitigate emissions, extensive wind resources, and nuclear presents an option for emerging technologies.<\/p>\n \u201cThe problem in Wyoming is in respect to consumption,\u201d Murrell said. \u201cWe can produce massive amounts of hydrogen, all clean. But Wyoming is a very small state, and being able to complete the demand chain was our big challenge.\u201d<\/p>\n To address this shortcoming, Wyoming signed an agreement in late February with the states of Utah, New Mexico and Colorado that proposes the creation of a four-state hydrogen hub region in the Mountain West. Wyoming and New Mexico, with their wind, solar, and natural gas resources, could focus on production while supplying offtakers in the larger, more urbanized states of Utah and Colorado.<\/p>\n \u201cThat will be a tough challenge for other hubs, to have all the pieces in place, and this interstate region has all the pieces checked off,\u201d Murrell said. \u201cAnd simple geography is good for us \u2014 we\u2019re in the central part of the country, and many of the other hub concepts are on the coast. If we want to build a national infrastructure, a hub in the middle creates a strategic piece.\u201d<\/p>\n Murrell\u2019s perspective on how a hydrogen hub would evolve in the Mountain West differs from the vision in Texas. Instead of large industrial customers, Murrell believes demand would first develop in the transportation and utility sectors \u2014 beginning potentially with the Intermountain Power Project<\/a> in Utah.<\/p>\n Located in central Utah, the Intermountain Power Project is a coal plant currently undergoing renovations so that it can deliver clean energy derived from burning hydrogen in gas turbines to communities in Southern California. It aims to begin operations in 2025, starting with a blend of natural gas and 30% hydrogen, and progressing to 100% hydrogen as 2050 approaches. The project, which hopes to have a hydrogen supply contract in place by the end of this year, is currently listed on the DOE\u2019s H2 Matchmaker<\/a> website as one of the largest potential hydrogen offtakers in the nation.<\/p>\n Needing to export the majority of its hydrogen out of state does pose a question of storage and transportation, but Wyoming should have this covered, with access to existing natural gas pipelines extending all the way to the West coast, Murrell said. There\u2019s also the potential for research and development jobs to flourish as the industry seeks answers to additional questions around storing and transporting hydrogen. And at the same time, Murrell said, he\u2019d love to see the development of smaller offtakers \u2014 fuel cells used as backup generators for hospitals, and the conversion of shipping fleets to hydrogen fuel, with fueling stations built along major shipping corridors such as I-80.<\/p>\n \u201cOur biggest pitfall perhaps is we\u2019ll get out muscled, out politicked, outspent by other regions in the country who have more political mass behind them,\u201d Murrell said. \u201cThat is the biggest risk I think.\u201d<\/p>\n Infrastructure to connect hydrogen producers with customers is also top of mind in the Los Angeles-area, where Southern California Gas has already proposed the construction of a 100% hydrogen pipeline equivalent<\/a> to 25% of the company\u2019s existing natural gas network.<\/p>\n \u201cThe key prerequisite of hydrogen at scale is affordability,\u201d Yuri Freedman<\/a>, senior director of business development for SoCalGas said. \u201cBut you need to have it at a cost that is affordable to people, and the only way to bring hydrogen to any location at low cost is by pipeline.\u201d<\/p>\n But while critical, Preece said, offtakers and infrastructure won\u2019t be enough to clinch a hub designation alone \u2014 there\u2019s also the question of how applicants will find the massive workforce needed to install all those projects. A proposed hydrogen road map<\/a>, produced by a group led by the Fuel Cell & Hydrogen Energy Association, estimated that the transition to a hydrogen economy would create 3.4 million new jobs by 2050, with 700,000 workers needed by 2030 compared to the 200,000 jobs in hydrogen production today.<\/p>\n This is why Freedman believes the hubs will most likely develop around existing centers of natural gas production: while many of the jobs that will enable a hydrogen economy do not currently exist, some of the skills needed to get the ball rolling are already used in the natural gas industry.<\/p>\n \u201cIf we really intend to diminish our use of natural gas, then it stands to reason to take the workforce now focused on natural gas and gradually transition to hydrogen service,\u201d Freedman said. \u201cThat to me is the logical transition.\u201d<\/p>\n Preece, however, is unconvinced that every future hub will have a background in natural gas. There are so many potential technologies for making, using and transporting hydrogen \u2014 including many that are currently still ideas in research laboratories \u2014 that it\u2019s not clear which concepts will ultimately win out.<\/p>\n Rather than focusing on the odds that an individual hub will succeed, Preece said, \u201cI think the portfolio that the DOE chooses at the beginning could likely be fairly diverse, to ensure that risks associated with this type of transition are spread out.\u201d<\/p>\n There\u2019s also the question, Preece said, of how the DOE will implement its expressed interest in equity and environmental justice, and how to ensure the $8 billion has the greatest impact in a field where some prospective hubs are already well on their way to becoming a reality. Houston, Perlman said, \u201cis a hydrogen hub already.\u201d Federal funding might accelerate the transition there, but Perlman believes it will take place whether or not Houston is selected.<\/p>\n But for smaller communities in Wyoming, the future is more precarious. Not getting hub designation, Murrell said, \u201cwould slow down our progress, our transition, and manifest in terms of the communities in Wyoming that would suffer for it.\u201d<\/p>\n This item was originally posted here: Read More<\/a><\/p>","protected":false},"excerpt":{"rendered":"