Should taxpayers gamble on blue hydrogen and carbon capture?

Americans have an important decision to make: Do we fully embrace renewable energy, or do we divert scarce public funding to explore unproven technologies like blue hydrogen (hydrogen produced using natural gas ) and carbon capture that can double down on fossil fuel dependency?   

That question is at the heart of the 13th Clean Energy Ministerial, being hosted in Pittsburgh, Pa., this week. Politicians, CEOs and energy leaders will meet to discuss how to accelerate the clean energy transition. Featured prominently are several events that promote blue hydrogen and carbon capture and storage (CCS) technologies or carbon capture, utilization and storage (CCUS) technologies.  

In parallel to the ministerial, grassroots organizations have convened the Clean Energy Justice Convergence to warn against “clean” energy pathways that can perpetuate the reliance on fossil fuel industries. Members of the public are invited to visit communities living next to shale wells, compressor stations and pipelines or those next to the Shell petrochemical complex right outside Pittsburgh. A series of teach-ins and roundtables will discuss the choices of energy pathways in the Ohio River Valley region.   

These discussions reflect the dilemma confronting fossil fuel-reliant regions across America from the Gulf Coast to the Western states. The Infrastructure Act’s provision of  $8 billion in subsidies for four hydrogen hubs has set off a race among fossil fuel states to position themselves as the leaders for blue hydrogen and CCUS technologies.  

The vision is to produce hydrogen from natural gas and then use CCUS technologies to capture the carbon dioxide byproduct. The carbon dioxide would be transported via a network of pipelines either to be injected underground for storage or to be put to use in some form. The Inflation Reduction Act’s heightened financial incentives for CCUS have similarly spurred excitement about those technologies.  

Taxpayers need to ask the hard question: Do investments into blue hydrogen and CCUS have a reasonable chance of yielding financially viable enterprises without more demands for taxpayer subsidies?  

Hydrogen and CCUS do have their narrow applications in cutting greenhouse gas emissions.  

Hydrogen can serve as a fuel for long-distance heavy transportation, for which direct electrification is less feasible. The cleanest way to produce hydrogen is to pass electricity, generated using wind and solar, through water to make green hydrogen. As wind and solar prices decline, green hydrogen will become more competitive. In April, Bloomberg New Energy Finance reported that green hydrogen is already cheaper than grey hydrogen — hydrogen produced from fossil gas without the capture of the carbon dioxide by-product — in parts of Europe, the Middle East and Africa, with the high prices of natural gas. Another January report by Rethink Energy predicted that green hydrogen would become cost-competitive relative to gray hydrogen, with the expected decline in costs for wind and solar power and for electrolyzers.   

CCUS can serve to capture carbon dioxide from several hard-to-decarbonize industries such as steel and cement. However, it is not financially sound to look to CCUS to prolong reliance on coal or natural gas power plants.  

Already, Pennsylvanians’ electricity bills are becoming unaffordable as a result of rising natural gas prices. West Virginian ratepayers have been saddled with the costs of uneconomic coal plants. Adding CCUS technologies to coal and natural gas plants will only raise the costs of electricity generation even further. Indeed, such a scheme will be financed on the backs of ratepayers in Wyoming. By contrast, the portfolio of wind, solar, storage and demand response are already cost competitive relative to coal and natural gas in many parts of the United States.  

Advocates for blue hydrogen and CCUS technologies argue that these technologies can prolong the longevity of natural gas and coal, and therefore save jobs. However, putting hopes for stable jobs in financially risky ventures is imprudent. Rather, diversifying the economies of fossil fuel regions by deploying renewable energy and energy efficiency and beyond, would be more prudent.  

The Ohio River Valley region has learned that perpetuating reliance on fossil fuels does not guarantee employment for workers. The shale boom did not bring the scale of job creation promised by shale advocates nor did the venture bring net economic benefit, when health, environmental and climate costs were accounted for. According to a recent report, the Shell petrochemical complex secured $1.7 billion in tax subsidies, but provides only 600 permanent jobs number and is estimated to cause $16 million in health damages in its host county.  

The financial viability of blue hydrogen and CCUS are not the only concerns with these ventures. Blue hydrogen relies on natural gas extraction that has had adverse health and environmental impacts. CCUS requires the buildout of pipelines and underground storage, which bring health, safety and environmental risks. About 500 organizations have voiced their concerns on CCUS to U.S. and Canadian policymakers and called instead for more efforts to deploy wind, solar and storage and to build transmission lines.   

Before taxpayers accept the pitch for any blue hydrogen and/or CCUS project, we would be wise to scrutinize each gamble that we take.   

Shanti Gamper-Rabindran is a professor at the University of Pittsburgh and author of “America’s Energy Gamble: People, Economy and Planet.”