Energy industry groups push back on strict clean hydrogen rules

By Team IO

Washington is once again feeling the heat from fossil fuel interests as energy companies mount an aggressive lobbying campaign against strict clean hydrogen rules proposed in the U.S. The Financial Times reports on this. Massive government subsidies for green hydrogen production have the industry on edge amid debates over what projects will qualify. With billions in investments at stake, oil majors have joined utilities in pushing back against stringent certification standards. The intense corporate pressure exposes the enduring influence of oil and gas as the U.S. attempts an energy transition. It also reveals the difficult tradeoffs between political compromise and rapid decarbonization needed to address the climate crisis.

The war over “clean”

At the centre of the debate is the definition of “clean” power sources for hydrogen production. The U.S. Treasury’s proposal, which calls for zero-carbon energy sources to be used for every hour of hydrogen production, has been met with stiff opposition. Industry lobbyists argue that such a stringent rule would force plants to shut down during periods when clean electricity is unavailable.

Instead, industry giants propose an “annual matching” system which allows producers to purchase credits for renewable electricity, making investment in U.S. hydrogen more attractive. This system, they argue, would provide greater flexibility and ensure the viability of hydrogen projects.

In this critical juncture for the green hydrogen sector in the U.S., the lobbying efforts of big oil companies and utility companies cannot be overlooked. Along with the American Clean Power Association, these entities have joined forces to push for less stringent rules, similar to those in the EU. Their influence underscores the enduring sway of oil and gas interests, even as the U.S. seeks to transition its energy mix.

Hydrogen: A green solution or a fossil fuel lifeline?

The hydrogen economy, once touted as the key to a clean energy future, is increasingly seen by some as more of a political dream than a viable path to decarbonization. Critics argue that the hydrogen industry, particularly the production of ‘not so green’ hydrogen, is being promoted by fossil fuel interests as a way to maintain the status quo and delay true climate action.

Is hydrogen the future energy or just smoke and mirrors?

Hydrogen has been touted by many as a key component of the energy transition. However, it has also faced fierce opposition.

Energy companies, including oil majors like BP and Shell, have been lobbying for subsidies for hydrogen projects, especially those classified as ‘blue’ hydrogen. These projects involve the production of hydrogen from natural gas, with the associated carbon emissions captured and stored or used. However, these practices have faced criticism for their potential to act as a ‘lock-in’ for continued fossil fuel use. Proponents of hydrogen argue that it can serve as a clean-burning alternative to fossil fuels, particularly in sectors that are difficult to electrify directly.

Indeed, recent studies have suggested that ‘blue’ hydrogen may have a worse climate impact than coal due to limitations in carbon dioxide capture during the production process and leaky natural gas infrastructure. Despite this, oil and gas companies continue to request decades of subsidies for blue hydrogen projects, claiming it will be inexpensive to produce.

Hydrogen: A political reality?

There is no denying that hydrogen plays a significant role in the political landscape of energy transition. Governments around the world, including the Biden administration and the UK government, have endorsed hydrogen as part of their plans to decarbonize their economies.

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However, this endorsement has been met with skepticism from energy economists and engineers, who question the viability and efficiency of hydrogen projects compared to other alternatives. They argue that the push for hydrogen may have more to do with political motives and the influence of fossil fuel lobbies than with the merits of hydrogen as a fuel source.

While hydrogen may play a role in the decarbonisation of certain sectors, there are concerns that the focus on hydrogen could distract from more direct and efficient routes to decarbonization. For example, battery electric vehicles have shown to be more energy-efficient compared to hydrogen fuel cell vehicles, raising questions about the emphasis on hydrogen in the transport sector.

While hydrogen’s role in decarbonization remains uncertain, the intense lobbying efforts by fossil fuel interests continue to constrain politicians, preventing the unfettered pursuit of climate solutions.