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Are Hydrogen and Carbon Capture Energy Tech Ready to Be Scaled?

Clean hydrogen and carbon capture have for years been the next big thing, on the verge of revolutionizing the energy sector and providing a lifeline for fossil fuel producing economies like Texas.

(TNS) — Clean hydrogen and carbon capture have for years been the next big thing, on the verge of revolutionizing the energy sector and providing a lifeline for fossil fuel producing economies like Texas.

But six months after the Biden administration staked its plan to get the U.S. power grid to net zero emissions by 2035 to the technologies' rapid build out, it is facing a chorus of criticism from power utilities and grid operators, including the Electric Reliability Council of Texas, Berkshire Hathaway and the Edison Electric Institute, the power sector's largest trade group, as well as a former energy secretary during the Obama administration.

In a report published this week, former Energy Secretary Ernest Moniz's nonprofit, the Energy Future Initiative, wrote that the Environmental Protection Agency's proposal "faces major implementation challenges," considering the tens of thousands of miles of hydrogen and carbon dioxide pipelines that would need to be built and the high costs of the technology, which they said were likely to prove far more expensive than the EPA estimated.

ERCOT, in its comment to EPA, said the technologies were not "demonstrated to be physically or commercially viable" and it was unclear whether gas plants could blend in hydrogen fuel the way the administration proposed.

"If these technologies do not develop on the timeline anticipated by EPA, existing generators that provide critical functions such as dispatchability and grid inertia will be forced to retire, and customers could face severe power shortages in future years," Woody Rickerson, vice president of system planning and weatherization at ERCOT, wrote.

Warren Buffett's Berkshire Hathaway, which owns power assets across the United States, wrote that EPA's timeline was "a best-case scenario — one that is unrealistic and highly unlikely to occur."

Under proposed regulations released by the Environmental Protection Agency in May, wind and solar farms would need to expand many times their current capacity and coal- and natural gas-fired power plants would either shut down or install carbon capture equipment on their smokestacks or utilize clean hydrogen fuel, with deadlines for compliance beginning in just seven years.

Underpinning the regulation are tens of billions of dollars in tax credits for hydrogen and carbon capture created under last year's Inflation Reduction Act.

An EPA spokesperson defended the proposed regulations as building on "decades of technology advancements" and "the largest climate investments in history" under the Biden administration.

"The proposals would to give companies ample time to plan, and provide flexibility to companies and grid operators to make sound long-term planning and investment decisions," the spokesperson said in an email.

While there are modest amounts of clean hydrogen being produced and some carbon capture systems in operation, there is only one operating power plant in the United States with carbon capture — NRG's Petra Nova project at the WA Parish coal plant outside Houston and no plants in the United States blend hydrogen to run their turbines.

And it's increasingly unclear whether the tax credits will be enough to advance the technologies to commercial scale. An analysis by Moniz's group shows carbon capture costs exceeding the value of the tax credit by 18% to 42%, meaning companies would have to pay to store carbon dioxide with no law on the books requiring them to do so. The Energy Future Initiative put the cost of clean hydrogen production at $2.70 per kilogram, more than five times what the EPA estimates.

"They're not even in the right ballpark," said Sam Thernstrom, a former staffer at the Council on Environmental Quality in the George W. Bush administration who now heads the Energy Information Reform Project, a conservative group advocating for clean energy. "I'm in favor of decarbonization, but EPA's assumptions about the technology and the pace things can scale up are frankly heroic."

Still, clean hydrogen and carbon capture are new technologies, and with massive corporations such as Exxon Mobil, Occidental Petroleum and Air Liquide investing billions of dollars in bringing them to market, much is unknown about how the technology will develop over the next decade.

Numerous carbon storage and clean hydrogen projects are in the works along the Gulf Coast. Exxon, for instance, has already signed deals to store chemical companies' carbon dioxide in Louisiana and has plans to build what it says will be the largest clean hydrogen plant in the world using natural gas.

And construction on many more clean hydrogen projects is likely to begin soon, once the Treasury Department releases guidance explaining how tax credits from the Inflation Reduction Act will be awarded, said Frank Wolak, president of the Fuel Cell and Hydrogen Energy Association.

"The amount of hydrogen that could be made available and the buildup of the infrastructure hinges on how flexible the guidance is," he said. "Right now, out of the box, I see it's hard to shift your whole game plan to a yet-to-be-developed supply of energy. But down the line, when there is hydrogen available, the power plant operators will be in a better position to retrofit their turbines to make them hydrogen ready."

A spokesman for the Carbon Capture Coalition, a coalition that represents environmental groups and companies including Air Liquide and Occidental, declined an interview request but referred to comments on EPA's proposal from August, which claimed there were currently 35 carbon capture projects under development at U.S. power plants.

"Carbon management is not science fiction. Carbon capture, transport and storage technologies have been proven at commercial scale in the United States for decades," the statement read.

But even among the companies developing the technology, there is an acknowledgement that building out clean hydrogen and carbon capture technologies to the point they can make a substantial dent in greenhouse gas emissions is likely decades off.

In its comment to EPA, Exxon expressed confidence that the technology would eventually prove out, but also expressed worry about the administration's plans to get everything up and running in a decade's time, considering how much infrastructure would need to be built and government permitting reviews that can stretch for years in the United States.

"We are concerned that the ability of the regulated entities to meet the proposed compliance timeframes may be difficult," Matthew Crocker, senior vice president of Exxon Low Carbon Solutions, wrote. "EPA's compliance timelines should be based on realistic assumptions and in light of this uncertainty, EPA should provide off-ramps for the proposed compliance deadlines."

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