The Inflation Reduction Act (IRA) of 2022 included tax incentives for the production of clean hydrogen (clean hydrogen production credits). On December 26th, 2023 the IRS released a proposed rule for implementing these credits.
Why Is The Government Providing These Incentives? And To Whom?
The Inflation Reduction Act included funding to meet clean energy targets for the United States. “The Inflation Reduction Act’s hydrogen tax credit will help build a clean hydrogen industry that will be critical in reducing emissions from harder-to-decarbonize sectors like heavy industry and heavy transportation,” said John Podesta, Senior Advisor to the President for Clean Energy Innovation and Implementation. This legislation will foster emerging clean hydrogen production technologies and encourage broader use in order to lower carbon emissions from the energy and transportation sectors as well as heavy industry.
What Companies Are Researching Hydrogen Fuel Opportunities?
Energy Digital Magazine has reported that in the 2022 Carbonomics: The Clean Hydrogen Revolution publication by Goldman Sachs “that hydrogen can develop into a major global market.” Several companies, many with household names, have been researching opportunities for production, storage, and application of hydrogen fuels and fuel cells. These companies and many others could be in a position to take advantage of the IRA tax credits. Companies leading hydrogen fuel development and production include:
- Ballard Power Systems
- BP
- Chevron
- ExxonMobil
- First Hydrogen
- Siemens
- Toyota
Why Hydrogen for Fuel?
Among hydrogen’s advantageous chemical properties is that it is the lightest and most numerous element known to mankind. In addition, the products of combustion are water and oxygen making it a clean burning fuel at the point of use. Hydrogen fuels are derived from various sources such as natural gas, biomass, nuclear power, and renewable resources such as wind or solar. This diversity of source materials readily acquired domestically improves supply chain security.
However, hydrogen as a transportation fuel has some drawbacks including its flammability, and that most of the hydrogen produced by current technology, still comes from fossil fuels.
How is Hydrogen Fuel Produced?
Hydrogen production may be completed through the following processes:
- Thermal: The most common means of producing hydrogen. According to the Department of Energy, thermally produced hydrogen accounts for 95 percent of hydrogen fuel. Hydrogen is produced by reforming steam at high temperatures. The steam reacts with a hydrocarbon source to produce hydrogen.
- Electrolytic: The process utilizes an electrolyzer that separates water into oxygen and hydrogen molecules.
- Biological: Bacteria, microalgae, and other microbes are used to produce hydrogen through biological processes.
- Solar: Sunlight can generate hydrogen through several processes such as photoelectrochemical, photobiological, and thermochemical.
Once generated by one of the above methods, the hydrogen must be stored and be available for use. In the transportation industry, fuel cells store and convert hydrogen to energy.
How Does a Hydrogen Fuel Cell Generate Power?
A hydrogen fuel cell conducts an electrolytic process where the hydrogen atom is forced through the anode splitting off the electron and forcing it through a current to generate electricity. The positively charged molecule passes through a membrane to the cathode. The negatively charged electron, after passing through the current, recombines with the proton in the presence of air (O2) to produce water and heat. Fuel cells are scalable therefore the generation of energy can be tailored to its application.
Uses for Hydrogen as a Transportation Fuel
Hydrogen fuels are currently being tested in vehicles and on the road. Although, the development and adoption of electric and hybrid vehicles (EVs) as a clean energy alternative to fossil fuels is far more widespread than the use of hydrogen fuels. EVs, however, are not a solution in all cases due to limited ranges and long charging times. Hydrogen fuels bring the promise of rapid refueling, zero emissions, and lighter weight which will better serve long-haul trucking and heavy cargo transport. Shipping vessels, rail, and aviation may also favor incorporating hydrogen as a fuel alternative once infrastructure is in place and economies of scale lower costs.
Hydrogen fuel development is most rapidly accelerating in two (2) industries: energy and transportation. Hydrogen fuel technologies are proving to be more than twice as efficient as internal combustion in power plants. Beginning in 2023 the U.S. Energy Information Administration (EIA) reported that 205 operating fuel cell electric power generators were producing about 350 megawatts of electricity at 147 facilities in the U.S. The fuel sources for 144 of those facilities originate from natural gas pipelines. Two (2) facilities operate on biogas from wastewater treatment and one (1) is provided with hydrogen from landfill gas.
The benefits of hydrogen as a transportation fuel in the logistics industry include:
- Greater efficiency: 1 kg of hydrogen will provide 60 miles of travel versus 1 gallon of gasoline providing 25 miles of travel. Technology is pushing hydrogen efficiency upwards to 100 miles in the near future.
- Faster refueling times for long-haul transportation compared to battery recharging.
- Increased range and payload capacity for trucks and buses of up to 450 miles.
- Reduced emissions and quieter operation in urban and rural environments by emitting only water vapor.
Hydrogen as a transportation fuel also presents several challenges that must be overcome in order to be a reliable source of clean energy. Production and infrastructure costs are currently two of the largest obstacles. Currently, hydrogen costs $13 per kilogram. The Guardian delved deeper into the implementation of hydrogen fuel sources. According to David Cebon, a professor of mechanical engineering at the University of Cambridge, “If you use green hydrogen it takes about three times more electricity to make the hydrogen to power a car than it does just to charge a battery.” Hydrogen fuel proponents point to emerging technologies that will lower costs while improving safe storage and distribution.
Preparing for Hydrogen Fuel Opportunities
Ultimately, a variety of energy sources will be needed to meet aggressive climate and carbon reduction goals. As hydrogen fuel cell technology develops, Matlack Leasing, LLC will continue to provide insight on emerging fleet and transportation trends. Contact us today, to learn how Matlack Leasing gives your enterprise the edge and let us assist you with preparing your fleet for the future with tank trailer leasing.
Sources
- Birch, Kate. “Clean hydrogen use could result in 15% cut in GHG emissions.” Energy Digital Magazine, 12 February 2022,. Accessed 14 March 2024.
- “Hydrogen Fuel Basics.” Department of Energy. Accessed 13 March 2024.
- “Hydrogen’s Potential for Long-Distance Freight Transport.” BOSS Magazine, 18 January 2024. Accessed 13 March 2024.
- Jolly, Jasper. “Will hydrogen overtake batteries in the race for zero-emission cars?” The Guardian, 13 February 2024. Accessed 15 March 2024.
- King, Charlie. “Top 10: Hydrogen Companies | Energy Magazine.” Energy Digital Magazine, 19 July 2023,. Accessed 13 March 2024.
- “Use of hydrogen – U.S. Energy Information Administration.” EIA, 23 June 2023,. Accessed 13 March 2024.