On October 13, 2023, President Joe Biden and the Department of Energy (“DOE”) announced seven regional hydrogen hub proposals selected for up to $7 billion in funding, which is expected to catalyze more than $40 billion in private investments and eliminate carbon emissions by 25 million metric tons per year. The announcement marks another step forward in the Administration’s efforts to support a clean hydrogen economy and is expected to drive development of clean hydrogen producer, consumer, and connective infrastructure networks throughout the U.S. The selected regional hydrogen hubs span 16 states and involve hundreds of partner companies. The projects that successfully complete the negotiation phase will move into a four-phased development structure with a phased release of DOE funding.
Background
DOE has undertaken a number of recent initiatives driven by the Infrastructure Investment and Jobs Act (the “Bipartisan Infrastructure Law”) that President Joe Biden signed into law on November 15, 2021, intended to facilitate the growth of clean hydrogen.
The Bipartisan Infrastructure Law identified harnessing clean hydrogen as an important goal. Among other things, it required DOE to develop a national roadmap identifying strategies to facilitate the growth of clean hydrogen and one of the central strategies DOE prioritized in the final Clean Hydrogen Strategy and Roadmap document it issued on June 5, 2023 was a focus on investing in and scaling regional hydrogen hubs that would facilitate hydrogen market development.
As part of its efforts to support hubs bringing together a network of clean hydrogen producers, consumers, and connective infrastructure located in close proximity, DOE announced in September 2022 funding opportunities for hydrogen hub proposals, with full applications due in April 2023. DOE’s expectation was that Hubs would bring together multiple partners and diverse hydrogen technologies and would balance hydrogen supply, demand, and other factors.
On October 13, 2023, DOE announced its selection of seven projects, out of 79 initial proposals submitted, for award negotiation.
Seven Projects Selected
The seven projects selected for award negotiation with DOE are geographically diverse and cover the entire country, from the West Coast to the East Coast, through the Midwest and down to the Gulf Coast. The technologies to be used for hydrogen production include natural gas (with carbon capture and storage), electrolysis through renewable or nuclear energy, and biomass gasification. The end uses are also diverse between the projects and include heavy-duty vehicles, power generation, clean fertilizer production and improving industrial processes.
As part of the evaluation and selection process, DOE put a strong emphasis on the proposals’ community benefits, such as labor and workforce commitments. Each proposal was required to include a comprehensive Community Benefits Plan that was, among other things, informed by the local communities and demonstrated compliance with President Biden’s Justice40 Initiative (i.e., positively impacts disadvantaged communities that are marginalized by underinvestment and overburdened by pollution).
The expectation is that the regional hydrogen hubs will form the foundation of a clean hydrogen network that will contribute substantially to decarbonizing multiple sectors of the economy and help in achieving the Biden Administration’s goal to achieve a carbon-free electric grid by 2035 and a net zero emissions economy by 2050. The seven hydrogen hubs are expected to collectively produce three million metric tons of hydrogen annually, achieving nearly one-third of the 2030 U.S. production target set by the Clean Hydrogen Strategy and Roadmap. Collectively, the seven hydrogen hubs are expected to spur more than $40 billion in private investments, and each proposal detailed the proposed cost-sharing for the project. DOE required a minimum of 50% non-federal cost share.
A high-level summary of each of the selected projects is set out below.
Appalachian Hydrogen Hub
| Project Name | Appalachian Regional Clean Hydrogen Hub (ARCH2) |
| Location | West Virginia, Ohio, and Pennsylvania |
| Federal funding | Up to $925 million |
| Hydrogen production | Natural gas, together with carbon capture and storage |
| Midstream | Hydrogen pipelines, multiple hydrogen fueling stations, and permanent CO2 storage |
| End uses | Fuel cell electric mining vehicles, heavy-duty vehicles and heavy industry |
California Hydrogen Hub
| Project Name | Alliance for Renewable Clean Hydrogen Energy Systems (ARCHES) |
| Location | California |
| Federal funding | Up to $1.2 billion |
| Production | Electrolysis (renewable energy) and biomass gasification |
| Midstream | Freight network between California and the Pacific Northwest Hubs and hydrogen fueling stations |
| End uses | Backup power generation, heavy-duty vehicles, port operations and public transit |
Gulf Coast Hydrogen Hub
| Project Name | HyVelocity H2Hub |
| Location | Texas |
| Federal funding | Up to $1.2 billion |
| Production | Natural gas with carbon capture and storage, and electrolysis powered by renewable energy |
| Midstream | Development of salt cavern storage, hydrogen pipelines and hydrogen refueling stations |
| End uses | Fuel cell electric trucks, industrial processes, ammonia, refineries and petrochemicals and marine fuel (e-Methanol) |
Heartland Hydrogen Hub
| Project name | Heartland Hub (HH2H) |
| Location | Minnesota, North Dakota, and South Dakota |
| Federal funding | Up to $925 million |
| Production | Electrolysis powered by renewable energy and biomass gasification |
| Midstream | Development and use of open access storage and pipeline infrastructure |
| End uses | Production of clean fertilizer and use in power generation and heating |
Mid-Atlantic Hydrogen Hub
| Project name | Mid-Atlantic Clean Hydrogen Hub (MACH2) |
| Location | Pennsylvania, Delaware, and New Jersey |
| Federal funding | Up to $750 million |
| Production | Electrolysis powered by renewable energy and nuclear energy |
| Midstream | Expansion of hydrogen distribution infrastructure, upgrade bus mechanic depots and develop hydrogen refueling stations |
| End uses | Heavy-duty vehicles, including refuse and sweeper trucks, manufacturing and industrial process improvements, power generation and combined heat and power |
Midwest Hydrogen Hub
| Project name | Midwest Alliance for Clean Hydrogen (MachH2) |
| Location | Illinois, Indiana, and Michigan |
| Federal funding | Up to $1 billion |
| Production | Electrolysis powered by renewable energy and nuclear energy, as well as natural gas with carbon capture and storage |
| Midstream | Develop hydrogen refueling stations |
| End uses | Steel and glass production, power generation, refining, heavy-duty vehicles, and sustainable aviation fuel |
Pacific Northwest Hydrogen Hub
| Project name | PNW H2 |
| Location | Washington, Oregon, and Montana |
| Federal funding | Up to $1 billion |
| Production | Electrolysis powered by renewable energy |
| Midstream | Freight network between California and the Pacific Northwest Hubs |
| End uses | Heavy-duty vehicles, fertilizer production, ports, aviation, generators, peaking plants, data centers and refineries |
Next Steps
The DOE Office of Clean Energy Demonstrations (“OCED”) will commence negotiations with the selected projects. If a project receives an award after successful negotiations, the project will enter into a cooperative agreement with DOE OCED and move into a four-phased development structure:
- Phase I will be initial planning and analysis activities to ensure that each hydrogen hub is technologically and financially viable. As part of this phase, an Environmental Information Volume will be completed to support the DOE National Environmental Policy Act (“NEPA”) review to be completed in Phase 2.
- Phase 2 will be finalizing engineering designs and business development, site access, labor agreements, environmental reviews (including the NEPA review) and permitting, offtake agreements, and community engagement activities;
- Phase 3 will be beginning installation, integration, and construction activities; and
- Phase 4 will be ramping up the hydrogen hub to full operations and sustaining such operations, which is intended to demonstrate full commercial-scale design operations over an extended period (i.e., two to four years).
While the hydrogen hub proposals were required to submit plans for all four phases, DOE will only initially authorize funding for Phase I. Additional funding for subsequent phases will require successful completion of a DOE Go/No-Go review at the end of each phase. DOE anticipates that the funding awards for the selected proposals will span eight to twelve years in length, with projects that have already performed extensive analysis, planning, design, and community engagement advancing from Phase 1 to Phase 2 in under 12 months.
In recognition of the potential uncertainty in the early phases, DOE released a request for proposals on September 14, 2023, seeking an independent entity to administer a demand side initiative aimed at providing additional market certainty to support producers and end-users in the hydrogen hubs. Responses are due by October 26, 2023.
For further information, please contact:
Diana Jeschke, Linklaters
diana.jeschke@linklaters.com
