Click here for a factsheet summarizing the Clean Hydrogen Policy Recommendations.
To mitigate climate impacts, major greenhouse gas emission reductions will be required across the United States economy. Rapid decarbonization will necessitate the development and deployment of new clean technologies, as well as low- and zero-carbon fuels as substitutes in emissions-intensive sectors. In particular, the petroleum refining, chemical, aviation, maritime, and heavy-duty long-haul trucking industries are limited in their ability to directly substitute emissions-intensive fuels and feedstocks with clean electricity. Many of these activities could benefit from the use of clean hydrogen as a versatile, low-carbon energy carrier which can be used as a primary input in the production of lower-carbon fuels and chemicals, store energy, combusted for industrial process heat, or passed through a fuel cell to create electricity. However, virtually all of the hydrogen used in the United States today is generated through an emissions-intensive processes that, while relatively inexpensive, emits significant volumes of greenhouse gases. Achieving emission reductions with clean hydrogen will require converting current hydrogen users to clean hydrogen and expanding demand in new sectors to replace polluting practices. To address this challenge, the Center for Climate and Energy Solutions (C2ES) formed a technology working group that convenes stakeholders from across the hydrogen ecosystem to examine the key technical, market, and policy solutions required to expand clean hydrogen demand. This brief offers a shortlist of five policy recommendations following the working group’s inaugural year.
Summary of Policy Priorities
| Category | Policy Priority | Lead |
|---|---|---|
| Demand-side Funding | 1. Provide additional funding for demonstration and commercial-scale projects under the Office of Clean Energy Demonstrations | L A |
| Transmission and Distribution | 2. Grant the Federal Energy Regulatory Commission the authority to regulate interstate hydrogen infrastructure and commerce | L |
| Creating Market Certainty | 3. Update the Renewable Fuel Standard | A L |
| 4. Enact a Federal Clean Fuel Standard | L | |
| 5. Enact federal economy-wide carbon pricing | L |
The column labelled “lead” indicates whether the policy falls under legislative (L) and/or administrative (A) purview.
Conclusion
The U.S. federal government has demonstrated a commitment to accelerating decarbonization using clean hydrogen as a versatile, low-carbon energy carrier and feedstock. Existing federal programs and incentives such as the Regional Clean Hydrogen Hubs Program, the Clean Hydrogen Electrolysis Program, the Clean Hydrogen Manufacturing and Recycling Initiatives, and the 45V Credit for Production of Clean Hydrogen are significant but policy must target sustained demand to meet the goals of the U.S. National Clean Hydrogen Strategy and Roadmap. Established users of emissions-intensive hydrogen have no financial incentive to procure clean hydrogen at current prices. Ineffective price signals that fail to account for climate impacts, nascent transportation and storage infrastructure, and a lack of large-scale technology demonstrations slow the maturation of prospective use cases in heavy-emitting sectors.
The following policy recommendations, developed through discussions with stakeholders across the clean hydrogen ecosystem, offer a potential path forward to addressing demand-side barriers to scaling clean hydrogen: (1) Provide further funding for demonstration and commercial-scale projects under OCED; (2) Grant FERC authority to regulate interstate hydrogen infrastructure and commerce; (3) Update the RFS; (4) Enact a Federal CFS; and (5) Enact federal economy-wide carbon pricing. Federal policy is essential to drive private sector demand for this critical-path technology. Strengthening existing programs and introducing new, market-focused initiatives will inject stability as the domestic clean hydrogen industry grows.