DOE Set to Accelerate Clean Hydrogen Technologies | Pillsbury Winthrop Shaw Pittman LLP

Hydrogen and related technologies are expected to play a key role in decarbonizing multiple sectors, and the IIJA introduced numerous legal and structural changes to promote hydrogen, including authorizing and funding: (1) the Regional Hydrogen Hub Program, (2) the Clean Hydrogen Electrolysis Program, and (3) the Clean Hydrogen Manufacturing Recycling Program.

Regional Hydrogen Hub Program. Under this program, the DOE will select up to four regional clean hydrogen hubs to demonstrate the production, processing, delivery, storage, and end-use of clean hydrogen. The hubs must demonstrate diversity in feedstock (source of underlying energy), end-use (eg electric power generation, industrial uses, residential and commercial heating, and transportation) and regional location. At least two hubs must be located in the regions of the United States with the greatest natural gas resources. The IIJA appropriates $ 8B for FY22 through FY26 to the newly created Department of Energy (DOE) Office of Clean Energy Demonstrations to carry out the program.

Clean Hydrogen Electrolysis Program. This research, development, demonstration, commercialization and deployment program is designed to improve efficiency, increase durability and reduce the cost of producing clean hydrogen using electrolyzers. The IIJA appropriates $ 1B to the DOE Office of Energy Efficiency and Renewable Energy to administer the program.

Clean Hydrogen Manufacturing Recycling Program. This program provides federal financial assistance to advance new clean hydrogen production, processing, delivery, storage and use equipment manufacturing technologies and techniques. The IIJA appropriates $ 500M to the Office of Energy Efficiency and Renewable Energy to administer the program.

While the IIJA provides a framework for these new hydrogen initiatives, the implementation details are in development, with the various administering offices working to establish program operations, administration, criteria, eligibilities, and rules.

In February, the DOE issued two Requests for Information (RFIs) soliciting input on program operations, requirements, and other priority topics. While providing industry and other interested stakeholders an opportunity to weigh in on the new programs, the RFIs also shed light on the agency’s strategy and current plans for administering the IIJA hydrogen initiatives. An overview of the RFIs follows.

Regional Clean Hydrogen Hubs Implementation Strategy

The Regional Clean Hydrogen Hubs Implementation Strategy RFI seeks to obtain public input on the solicitation process and structure of an upcoming DOE funding opportunity announcement (FOA) to fund regional clean hydrogen hubs. Responses to the Regional Clean Hydrogen Hubs Implementation Strategy RFI are due on March 21, 2022.

Stakeholders are asked to give input on four different categories of questions:

  • Regional Clean Hydrogen Hub (“H2Hubs”) provisions and requirements
  • Solicitation process, FOA structure and implementation strategy
  • Equity, Environmental and Energy Justice (EEEJ) priorities
  • Market adoption and sustainability of the hubs
  • Any other input or information that would be valuable in developing a Regional Clean Hydrogen Hub FOA

The RFI indicates that DOE envisions that the H2Hubs solicitation could be structured as a single, multi-year FOA with annual open and close dates for different “launches” over the FY 2022-2025 timeframe. Launches 1 and 2 would solicit, select, and deploy the H2Hubs, while Launches 3 and 4 would solicit and select new technologies, capabilities / end-uses, or partners that could be incorporated into and supplement the selected H2Hubs formed through Launches 1 and 2 .

RFI on Clean Hydrogen Manufacturing, Recycling and Electrolysis

The DOE’s Hydrogen and Fuel Cell Technologies Office (HFTO) seeks input on priority areas that will advance domestic manufacturing and recycling of clean hydrogen technologies such as fuel cells, storage equipment, and other hydrogen related components; and on priority areas that will advance electrolyzer technologies for affordable clean hydrogen production.

In support of these objectives, the DOE is seeking feedback from industry, academia, research laboratories, government agencies, community groups, labor unions and other stakeholders to facilitate the commercialization of hydrogen technology, with the goal of achieving a $ 2 / kg price for green hydrogen by 2026. Responses to this RFI are due by March 29, 2022.

The RFI is divided into three parts: Part I covers topics related to the Clean Hydrogen Manufacturing Initiative and Clean Hydrogen Recycling RD&D (research, development, and demonstration) Program; Part II covers topics related to the Clean Hydrogen Electrolysis Program; and Part III covers topics relating to new Buy American and related employment considerations that are broader in scope.

Clean Hydrogen Manufacturing Initiative and Clean Hydrogen Technology Recycling RD&D Program

Part I of the RFI seeks comment on eight specific areas of concern: increasing efficiency and cost effectiveness of the manufacturing process; supporting domestic supply chains; identifying and incorporating nonhazardous alternative materials for components and devices; operating in partnership with tribal communities; clean hydrogen technology manufacturing opportunities in economically distressed areas of major natural gas producing regions; increasing the efficiency and cost effectiveness of recovery of raw materials; addressing barriers to R&D and commercialization; and developing strategies to increase consumer acceptance of and participation in the recycling of fuel cells.

Clean Hydrogen Electrolysis Program

Part II of the RFI covers the Clean Hydrogen Electrolysis Program, and will involve comprehensive research, development, demonstration and deployment efforts. This provision expands on the DOE’s existing Program, and it includes efforts to improve electrolyzer efficiency and durability and to reduce hydrogen production costs. Respondents are invited to comment on specific electrolyzer technology such as how hydrogen storage may be needed for future electrolyzer installations and how hydrogen production could be integrated with nuclear power generation or other renewable power.

Buy American Sourcing Requirements

Buy American sourcing obligations in the IIJA require agencies that are funding infrastructure projects apply enhanced domestic content requirements starting on May 14, 2022. Under these new requirements, (and subject to limited waivers) iron and steel, manufactured products and construction material used in federally funded projects are required to be produced in the United States. In particular for iron and steel products, this will mean that all manufacturing processes, from the initial melting stage through the application of coatings occur in the United States. Given the wide-ranging impact of these new rules, the RFI asks respondents to identify whether any of the work for which they expect to apply for future DOE financial assistance involves the construction, alteration, maintenance, or repair of any major infrastructure projects, such as utilities or electrical transmission systems, which would be subject to the IIJA’s enhanced domestic sourcing requirements. If so, the RFI asks for respondents’ inputs on the likelihood of procuring iron, steel, manufactured product or construction materials, and labor domestically and any challenges this may pose.

Implications

The clean hydrogen programs established by the IIJA are brand new and without precedent. Given the novelty and scale of these programs, the information collected by DOE during the RFI period may prove crucial to shaping the final program.

For those energy industry stakeholders poised to take advantage of the new federal programs, a thorough understanding of program rules, incentives, process and other related points will be critical.

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