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To support the development of clean hydrogen technology as part of a national energy strategy, the Infrastructure Act includes multiple amendments, modifications, and additions to existing statutory provisions.

Definition of clean hydrogen

Section 803 of the Energy Policy Act of 2005 (Energy Policy Act) is amended by adding the definition of clean hydrogen as “hydrogen produced with a carbon intensity equal to or less than 2 kilograms of carbon dioxide-equivalent produced at the site of production per kilogram of hydrogen produced.”

Hydrogen hubs

A new Section 813 Regional Clean Hydrogen Hubs is added to the Energy Policy Act to establish a program to support the development of at least four regional clean hydrogen hubs. The term ‘regional clean hydrogen hub’ is defined as a network of clean hydrogen producers, potential clean hydrogen consumers, and connective infrastructure located in close proximity. The Secretary of the Department of Energy (DOE Secretary) shall select regional clean hydrogen hubs using the following criteria:

  • Feedstock diversity – to the maximum extent possible, at least one regional hydrogen hub shall demonstrate the production of clean hydrogen from fossil fuels, one from renewable energy, and one from nuclear energy
  • End-use diversity – to the maximum extent possible, at least one regional clean hydrogen hub shall demonstrate the end-use of clean hydrogen in the electric power generation sector, one in the industrial sector, one in the residential and commercial heating sector, and one in the transportation sector
  • Geographic diversity – to the maximum extent practicable, each regional clean hydrogen hub shall be located in different regions and shall use energy resources that are abundant in that region
  • Natural gas-producing regions – to the maximum extent practicable, at least two regional clean hydrogen hubs shall be located in regions in the United States with the greatest natural gas resources
  • Employment – priority shall be given to regional clean hydrogen hubs that are likely to create skilled training and long-term employment to the greatest number of residents in the region

Funding in the amount of USD 8 billion is authorized for this hub program.

Hydrogen strategy and roadmap for the United States

A new Section 814 National Clean Hydrogen Strategy and Roadmap is added to the Energy Policy Act. The goal is to develop a technologically and economically feasible national strategy and roadmap to facilitate expanded production, processing, delivery, storage, and use of clean hydrogen. Not later than 180 days after 15 November 2021 (or 14 May 2022), the DOE Secretary shall submit this strategy and roadmap to Congress. The strategy and roadmap shall focus on identifying:

  • a standard of hydrogen production that meets stated goals
  • production and use of clean hydrogen from natural gas, coal, renewable energy sources, nuclear energy, and biomass
  • barriers to the transition to a clean hydrogen economy
  • economic opportunities related to clean hydrogen that exists in the major shale natural gas-producing regions of the United States and for merchant nuclear power plants operating in deregulated markets
  • environmental risks associated with the deployment of clean hydrogen technologies and ways to mitigate those risks
  • approaches that reflect the geographic diversity across the country and the economic impacts in regional economies
  • opportunities to use, and barriers to using, existing infrastructure for clean hydrogen deployment
  • the needs for and barriers to developing clean hydrogen hubs
  • priority activities that improve the Department of Energy’s ability to maximize efficiency in providing services related to hydrogen and other energy services
  • points of interaction among Federal agencies and potential regulatory obstacles in order to support the deployment of clean hydrogen
  • geographic zones or regions in which clean hydrogen technologies can be efficiently and economically introduced

Hydrogen manufacturing and recycling initiative

A new Section 815 Clean Hydrogen Manufacturing and Recycling is added to the Energy Policy Act to support the clean hydrogen supply chain. This section requires the DOE Secretary to award multiyear grants to enter into agreements for the research, development, and demonstration projects to:

  • advance new clean hydrogen production, processing, delivery, storage and use equipment manufacturing technologies and techniques
  • create innovative and practical approaches to increase the reuse and recycling of clean hydrogen technologies

Funding in the amount of USD 500 million is authorized for this supply chain initiative.

Hydrogen electrolysis program

A new Section 816 Clean Hydrogen Electrolysis Program is added to the Energy Policy Act to assist with the reduction in the cost of clean hydrogen produced from electrolyzers. This section requires the DOE Secretary to establish a research, development, demonstration, commercialization, and deployment program to improve the efficiency, increase the durability, and reduce the cost of producing clean hydrogen using electrolyzers. Funding in the amount of USD 1 billion is authorized for this electrolysis program.

Laboratory management

In order to carry out the clean hydrogen initiatives under the Infrastructure Act, a new Section 817 Laboratory Management is added to the Energy Policy Act requiring the National Energy Technology Laboratory to coordinate with the Idaho National Laboratory, the National Renewable Energy Laboratory, other national laboratories, educational and research institutes and other researchers and to act as a clearinghouse to collect and distribute relevant information.

Prospects for Hydrogen Projects in the United States

While relatively modest, the clean hydrogen targets and priorities in the Infrastructure Act jump-start the clean hydrogen industry in the United States. The energy industry views this as a necessary initial step to ensure that the United States can remain competitive in the global market for clean hydrogen with Europe and Asia Pacific, where government support and incentives for clean hydrogen have been on the rise for a number of years.

With improved clarity as to the clean hydrogen requirements in the United States, private investments into clean hydrogen will enjoy a greater degree of certainty and this will boost prospects for a number of hydrogen projects in early stages of development. The US clean hydrogen industry is now awaiting the DOE Secretary issuance of the hydrogen strategy and roadmap. This strategy should further refine investment decisions for the capital intensive hydrogen production, transportation and storage projects.

In today’s market, private capital competes for high-quality energy transition opportunities. The Infrastructure Act clean hydrogen support initiatives will further boost what is expected to be rapid growth of the US clean hydrogen projects pipeline in the near and medium term.

Author

James P. O’ Brien chairs the Firm’s Global Projects Practice Group. He serves as counsel in major project and infrastructure transactions such as power generation and waste recycling facilities. Both on behalf of project sponsors and lenders, Mr. O’Brien has led moving complex projects through development, project financing and operation. He has also been lead counsel on limited recourse project financings, using traditional bank debt, leveraged leases and Rule 144A capital markets issues. And during project development, he has successfully managed complex siting, permitting and transaction issues.

Author

Stan is a partner practicing primarily in the areas of infrastructure projects and finance. He serves as counsel in a broad range of complex transactions with both sponsors and lenders on all aspects of energy and infrastructure projects' development, project financing, investments, joint ventures, operations, asset management, acquisitions, divestitures and corporate structuring. Stan has been trained as a lawyer under common law and civil law systems.

Author

Matthew Martin is a partner in Baker McKenzie's Projects Group. Matt advises clients on the development and construction of energy, mining, infrastructure and other construction projects. He has advised on projects sited all around the world, particularly across the US, the UK, the Middle East and Sub-Saharan Africa.
Matt has been recognized in Law 360's Top Attorney's Under 40 and by Legal 500 as a lawyer who is "hands on [and] . . . into the legal detail," with "a deep commercial understanding of projects." He has practiced in the Firm's Chicago, London, Mexico City, Moscow and Toronto offices, and is admitted in Illinois, New York and England and Wales. Matt is a member of Baker McKenzie's Africa Advisory Board and the North American lead for the Africa Hub Strategy.

Author

Rebecca Matey is an associate in the Chicago office of Baker McKenzie and a member of the Transactional Practice Group. During law school, Rebecca served as Media & Symposium Editor of the Global Studies Law Review.

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