Lower than a 12 months after announcing plans to ascertain a hydrogen-based aviation gas hub at Pittsburgh Worldwide Airport, Pennsylvania-based pure fuel producer CNX has quietly taken down the website on which it marketed the hub.
The transfer comes because the destiny of the much-vaunted hydrogen business—seen by the Biden administration as a option to energy America whereas lowering climate-altering emissions—is in upheaval.
Whereas a Biden-era rule dealt a blow to these within the fuel and oil business hoping to put money into hydrogen expertise and provided higher monetary incentives to the renewable power sector, President Donald Trump is exhibiting desire for fossil fuel-powered hydrogen. In the meantime, the fate of those Biden-era tax credits—whether or not for renewable power or fossil gas—is up within the air as Congress wades by means of the finances reconciliation course of.
Beneath Trump’s steering, the Division of Power has indicated it plans to kill Biden-era funding for 4 renewable-powered hydrogen hubs in primarily Democratic areas whereas retaining funds for fossil fuel-powered hubs in principally pink states, akin to South Dakota, Ohio, and Kentucky.
California, together with Oregon, Washington and different areas, are on the Division of Power’s “minimize” record, in keeping with Politico, which stated it obtained a spreadsheet of the initiatives.
If the suggestions are in the end adopted by the Trump administration, Pennsylvania would very a lot turn into a state divided. Whereas a proposed hub within the Appalachian area that may run on fossil fuels is marked for approval, a hub principally reliant on renewable power close to Philadelphia is marked for denial.
The seven Regional Clear Hydrogen Hubs have been a major plank of former President Joe Biden’s local weather agenda, a $7 billion effort to ascertain a nationwide community of hydrogen producers to gradual using the fossil fuels largely blamed for world warming.
However with 4 of the hubs eradicated, the envisioned nationwide hydrogen grid would turn into a patchwork, seemingly drawn alongside political strains and primarily powered by polluting sources of power.
“The hydrogen hubs program was supposed to spur improvements and demonstrations on how finest to advance hydrogen as a instrument within the clear power financial system,” stated Julie McNamara, affiliate coverage director for the Local weather & Power program on the nonprofit Union of Involved Scientists.
“Blatantly co-opting these funds to be used as handouts to political supporters and favored polluters can be shameful, and absolutely undermine this system’s capability to realize these goals.”
Whereas the Pennsylvania hub fueled by pure fuel would use methane to supply power for the manufacturing of so-called blue hydrogen, the opposite hub would use renewable power akin to wind and photo voltaic to provide what’s often called inexperienced hydrogen. By itself, the burning of hydrogen doesn’t produce carbon dioxide emissions.
CNX was initially concerned within the former hub, often called ARCH2, however informed the Pittsburgh Business Times in March that it had paused involvement within the venture due to the uncertainty surrounding federal funding. CNX’s title was additionally deleted from the ARCH2 web site.
CNX didn’t reply to requests for touch upon the standing of the hydrogen hub and the sustainable aviation gas website in Pittsburgh. A spokesperson for the airport stated it “is constant to maneuver ahead with its plans to turn into one of many first airports to have sustainable gas manufacturing on-site.”
CNX was initially certainly one of 15 firms enlisted within the hub, with plans to contribute “low carbon” pure fuel to energy hydrogen manufacturing, which entails utilizing steam to attract off the hydrogen atoms from methane molecules, an costly and power intensive course of.
However the firm’s evolving relationship with the hydrogen business seems to have soured when the Biden administration finalized a long-awaited federal rule on a tax credit score for hydrogen manufacturing known as 45V.
That closing rule, CNX argued, was “overly restrictive,” and failed “to create ample financial incentives” for the corporate to broaden its manufacturing of methane released from abandoned coal mines, which it stated was key to the rising hydrogen financial system. CNX pitched its involvement within the Sustainable Aviation Gas venture in Pittsburgh as being dependent upon the end result of the 45V rule.
“We noticed the fossil gas business view 45V as a profitable likelihood for revenue,” McNamara stated. “Not by really lowering emissions, however by introducing loopholes that made it simpler to qualify.”
CNX had beforehand lobbied for the intricacies of 45V to work out in its favor. A bit greater than a 12 months in the past, a CNX lobbyist pushed Pennsylvania Gov. Josh Shapiro’s workplace to foyer the federal authorities to make sure the Treasury Division’s hydrogen rule was profitable for coal mine methane—a request to which the Shapiro administration agreed, Capital & Main reported on the time.
The worth the rule gave to coal mine-derived pure fuel got here all the way down to a sequence of arcane specifics in a system that measures life-cycle emissions from starting to finish of the creation of a single kilogram of hydrogen.
CNX urged the Treasury Division to deal with coal mine methane as carbon-negative with the idea that it could in any other case leak into the ambiance from inactive coal mines, releasing a stronger greenhouse fuel than if it have been captured and burned, which might launch carbon dioxide. (Each are greenhouse gases, however methane is properly understood to be around 80 times more potent within the ambiance than carbon dioxide over a 20-year timeframe.) By ascribing to this captured methane a destructive worth, a tiny portion of it might be blended right into a pure fuel hydrogen feedstock and qualify for the very best tier of the 45V tax incentive, the identical degree as hydrogen produced with renewable power.
However the closing rule went in opposition to the pleas of CNX and firms prefer it, together with the ARCH2 hub itself, which urged the Treasury Division to move a methane-friendly rule in 2024, arguing it may “result in a lack of $6 billion in non-public investments” in any other case and have “far-reaching penalties” for the hydrogen business.
“It’s just like the Treasury Division went out of its option to say, ‘We hear what you’re saying. And the reply isn’t any,’” stated Sean O’Leary, senior researcher on the nonprofit assume tank Ohio River Valley Institute.
The ruling was seen as a win for environmentalists, who urged the Treasury Division to make sure that any initiatives receiving subsidies beneath the guise of being “clear” have been actually clear. They feared CNX’s proposal, and that of different fossil gas producers, would’ve given natural-gas primarily based hydrogen a tax enhance equal to that for renewable, emissions-free sources of hydrogen.
How and whether or not the rule might be upheld by the Trump administration—which has proven sturdy assist for fossil fuels and a normal disdain for renewable power—stays an open query, and certainly one of concern to environmentalists. Based on Bloomberg, the American Petroleum Institute, a nationwide oil and fuel commerce group, has lobbied the White Home to make sure fossil fuels can qualify for the very best tier of the hydrogen tax credit score.
O’Leary sees CNX’s obvious exit from ARCH2 as an indication of the hub’s strained economics. In October, O’Leary authored a paper by which he famous that the hub had misplaced 4 of its growth companions, whereas a handful of others have been exhibiting indicators of monetary stress. “This isn’t a resume that evokes confidence amongst potential traders,” O’Leary wrote. CNX’s reluctance to maneuver ahead indicators a broader development inside the business, O’Leary stated in an interview with Capital & Foremost.
“The wheels are coming off,” O’Leary stated. “Even after subsidies are taken into consideration, the economics nonetheless aren’t there to make many of those initiatives work.”
One other venture growth companion for ARCH2, KeyState Power, can also be exhibiting signs of uncertainty. In February, a major buyer for its blue hydrogen, Nikola Company, a transportation firm that had planned to make use of the hydrogen for a zero-emission truck fleet, filed for Chapter 11 bankruptcy. The corporate plans to promote its belongings.
KeyState CEO Perry Babb informed Capital & Foremost the corporate had pivoted from its power manufacturing venture with Nikola to a brand new ammonia fertilizer venture that has a dedicated buyer, and can nonetheless depend on hydrogen and obtain funds from ARCH2. The primary fee from the hubs program has been doled out and KeyState will bill for reimbursement quickly, he stated.
Babb stated he nonetheless meets usually with the remaining ARCH2 venture companions, who’re “all optimistic in expressing a means ahead.” However he famous that, for years, he’s weathered regulatory uncertainty; the ultimate 45V rule was the nail within the coffin for Keystate’s authentic plans to provide blue hydrogen beneath ARCH2. He stated the corporate has additionally put its participation within the Pittsburgh Sustainable Aviation Gas hub “on pause.”
“Final Could, I started to note dozens of hydrogen initiatives being canceled,” he stated. “I had thought that it was primarily as a result of the enterprise case wasn’t sound.
“With the continued uncertainty round tax credit by means of the top of the Biden administration . . . we stated, ‘That’s it. We’re executed. We’re going to go the place there’s a market that’s predictable.’”
Whereas failing to discover a companion within the Biden-era Treasury Division, CNX may quickly flip to the state, the place Gov. Shapiro is reupping a $49 million tax credit score for hydrogen manufacturing as a part of his “Lightning Plan,” a six-pronged portfolio of laws designed to hurry up the commonwealth’s clear power financial system.
Although supported by some state environmental groups, the plan caught the ire of others, like Karen Feridun, cofounder of the grassroots Higher Path Coalition, who stated in a statement that the Lightning Plan would “proceed and even broaden fossil gas manufacturing.” On March 11, a gaggle of Democratic senators and representatives launched 12 cosponsorship memos, six in every chamber, finishing up Shapiro’s plan.
“He’s going to do no matter he must do to attempt to hold [hydrogen] going,” Feridun stated of Shapiro in an interview with Capital & Foremost. “It’s a pleasant option to form of present cowl for having a continued fossil gas plan,” one which “sounds actually good to voters.”
Ought to ARCH2 unravel, Feridun fears grassroots environmentalists can be tasked with monitoring particular person initiatives, with out the cohesion of a hub providing steering. Even so, she stated there by no means was “a transparent map that outlined what the footprint of all of this was,” which left frontline communities at midnight.
Like O’Leary, Danny Cullenward, senior fellow on the Kleinman Heart for Power Coverage on the College of Pennsylvania, stated he now sees the hydrogen “hype” bubble starting to burst. Although he believes hydrogen has an vital, if area of interest, place within the clear power transition, its economics don’t make sense in all makes use of except closely sponsored.
“We mainly arrange a construction that stated, on the finish of this rainbow is a huge pot of gold. And all people stated, ‘We’d all like to try this. That each one sounds nice to us,’” he stated. “I believe now the chilly, laborious actuality of, ‘Does hydrogen make sense? And in what purposes wouldn’t it make sense?’ is changing into a bit bit extra actual.”
The whiplash of all this impacts Pennsylvania communities, many which might be former oil, fuel, and coal cities studying that main initiatives they’d as soon as deliberate for are now not.
“It’s immensely damaging,” O’Leary stated. “State and even county and municipal degree governments, they’re making financial growth decisions primarily based on these expectations.”
“The distraction impression of what’s occurring is simply staggering.”
This piece was initially revealed by Capital & Main, which studies from California on financial, political, and social points.
