California to receive $1.2B for hydrogen projects. Scientists warn it could raise emissions

The Department of Energy announced Friday it will give California $1.2 billion for clean hydrogen projects that the agency said will help decarbonize high-polluting industries such as power plants, public transportation, heavy duty trucking and port operations.

The long-anticipated subsidies have drawn recent criticism. University of California researchers warned the projects could lead to a “substantial increase” in carbon emissions, and environmental advocates called for more transparency as key details remain secret.

The $7 billion national “Clean Hydrogen Hubs” program is a core piece of the Biden administration’s sweeping climate and energy agenda created by the bipartisan infrastructure law. Six additional regions were selected for funding.

“The Biden-Harris Administration is laying the foundation for a new, American-led industry that will propel the global clean energy transition,” said U.S. Secretary of Energy Jennifer Granholm in a statement. Hydrogen “is crucial to achieving President Biden’s goal of American industry powered by American clean energy.”

California’s proposal to kickstart hydrogen production, which has not been released publicly, was proposed by a state-led public-private partnership called ARCHES.

Although the group has shared few details about its application, ARCHES said has identified “a number” of “shovel ready” projects up and down the state targeting hard-to-decarbonize sectors. It has said they would create 200,000 new jobs, 90,000 of them permanent, and $2.95 billion annually in health cost savings.

Six other regions were selected as ‘hubs’ for hydrogen development, including the Pacific Northwest, Appalachia, Midwest, Gulf Coast, Heartland and Mid-Atlantic.

California’s hydrogen hub is already raising more questions than answers — including what type of projects will be built where, and under what restrictions.

A group of more than a dozen University of California faculty warned in a scathing letter to Gov. Gavin Newsom last month that ARCHES’ plan for hydrogen subsidies “would drive substantial carbon pollution increases in California and the U.S.”

The program as is, they said, would burdening customers with high energy costs and undermining California’s decarbonization goals. Weak carbon accounting guidelines could allow for “sleights of hand” that enable hydrogen projects to use dirty electricity that is “only clean on paper,” driving carbon emission increases while receiving billions in taxpayer-funded subsidies.

The faculty members from a wide range of UC campuses reached their conclusions based on a set of August recommendations by ARCHES to the IRS on implementing federal clean hydrogen tax credits. They called for a stronger commitment to “honest and rigorous carbon accounting.”

As an energy source, hydrogen is widely considered to hold promise as a climate solution but has the potential to create more carbon emissions depending on what is used to produce it. Most existing hydrogen in the U.S. is made using natural gas, a fossil fuel, rather than renewable sources of electricity such as wind and solar.

In its application process ARCHES committed to producing hydrogen only from renewable energy and biomass, which involves burning organic material.

“We need renewable hydrogen to scale and decarbonize as many hard-to-decarbonize sectors as possible. How we do this is being discussed by many, but we all share the same fundamental goal,” said Angelina Galiteva, CEO of ARCHES, in response to the concerns from UC professors.

“Reducing the cost of clean hydrogen through scale and accelerated deployment is key to building a clean energy future in California,” she added, “and we’re concerned that some of the policy mechanisms and program concepts proposed would jeopardize our ability to realize that future.”

The DOE announcement of hydrogen hub funding recipients marks the start of a multi-year long process. The next stage of the program will be for planning, analysis and stakeholder engagement. Funding will roll out in four phases.

Newsom has long supported hydrogen projects such as SoCalGas’ Angeles Link. He also said he planned to establish a hydrogen workgroup to streamline project approval, and directed the Office of Business and Economic Development to develop a hydrogen strategy.

Environmental justice groups have criticized ARCHES for what they see as a lack of transparency and absence of community involvement. The group reportedly requires nondisclosure agreements as a precondition for learning more about the projects, and community engagement was not required in the application.

Groups such as the California Environmental Justice Alliance called on ARCHES to eliminate the nondisclosure agreement requirement, meaningfully engage communities affected by projects and include groups representing low-income communities of color on its board.

“The billions of dollars of state and federal funding earmarked for hydrogen have the potential to change the entire landscape of electricity production in America — a landscape that has exemplified environmental racism for many lifetimes,” said Ari Eisenstadt, energy equity manager at CEJA.

“Without leadership from frontline communities, this funding will almost certainly perpetuate the injustices we need to eradicate.”

This story was originally published October 13, 2023 at 11:27 AM with the headline "California to receive $1.2B for hydrogen projects. Scientists warn it could raise emissions."