Years ago, I attended a lecture featuring a leader of China’s energy program at the University of Hong Kong. The significant investment of time and resources in every energy technology and commitment to scaling solutions with reduced environmental impact was eye-opening, but also struck me as an inefficient approach.
It is now evident that the world must invest in an all-of-the-above method to meet our energy needs with reduced environmental impact.
Global demand for energy is projected to double due to a growing population; over half do not have adequate energy today, leading to poverty and premature deaths.
Currently, fossil fuel-derived energy is the only source available at the scale required to address the growing demand.
Even if the geopolitical issues around fossil fuels were magically eliminated, nature’s conversion of solar power to fossil fuels includes carbon. We now use energy at a rate that carbon emissions change the climate, which also leads to poverty and premature deaths.
We need more and better solutions at a large enough scale to matter.
Hydrogen is attractive because it promises to make intermittent renewable energy available 24/7 everywhere. Moreover, the global hydrogen market is more than $150 billion today, with major growth opportunities in the future grid and transportation sectors.
The growing demand for energy means a growth in jobs and profits. But there will be winners and losers even in the growing market.
Governments use incentives to support all energy today. Therefore, the integration of hydrogen into the political system is complicated. For example, the Department of Energy has a goal of developing the technology for producing hydrogen for $1/kilogram by the end of the decade. A kilogram of hydrogen has similar energy to a gallon of gasoline.
Recent research, however, showed that for a wind farm in West Texas, producing and selling hydrogen makes no economic sense unless the cost of hydrogen was about $3.50/kilogram, due to a production tax credit that rewards wind generated electricity delivered to the electric grid.
Hydrogen’s carbon footprint is high today, but we have the technology to produce it with a smaller carbon footprint. The U.S. is implementing a graduated tax credit to support the scale-up of cleaner hydrogen, no matter its feedstock.
We all lose if we make the perfect the enemy of the good. Fewer people suffer or die if we grow from good, to better, to best rather than sitting on good until best is easily achievable.
Our legacy governance impedes establishing a market where multiple solutions contribute. The system we built assumes the various components compete, not work as a team to meet the growing energy demand in an environmentally sustainable manner.
We count on our government to provide the required coordination. We must give them the tools and insights they need to do that job well for all of us.
For hydrogen, parochial perspectives are trying to influence which electrical grid feedstocks are clean enough to receive the full benefits of the 45V tax credit. This is a classic “perfect vs. good” situation.
Certifying hydrogen as clean when its feedstock comes from an independent and dedicated source is straightforward. However, hydrogen produced in Houston, TX, using grid power is near price parity with the conventional carbon-intensive means of producing hydrogen.
So, we can have cleaner hydrogen quickly. But the grid, while continually getting cleaner, has a carbon footprint that varies daily. Most prudent folks would say absent proof of greater damage, this approach should receive competitive tax credit today and enhanced tax credits as hydrogen gets cleaner in the future.
Decades of tax credits and offsets have led to wind and solar being niche suppliers. With its commercially mature massive storage capability, hydrogen might provide the tipping point technology to augment fossil fuels in meeting the growing demand.
No one solution on its own can meet the challenge. We need flexibility for energy production, conservation, and efficiency. We will prosper with a portfolio of outstanding contributors, not by waiting for an energy superhero.
Robert Hebner is the director of the Center for Electromechanics at the University of Texas at Austin.
Fri, 05/19/2023 – 21:40