Natural Gas For Longer -- A Green Hydrogen Update -- January 24, 2025

Locator: 44759HYDROGEN.

Green hydrogen, Dan Tsubouchi, link here:

RBN Energy's prognostication for 2025, link here:

Green hydrogen. At least in the short term, the future of US hydrogen production is blue. 

This prognostication title is our feeble attempt at a double entendre, of sorts.

Yup, the future of hydrogen is blue.

From one perspective, it’s blue because blue hydrogen projects — those producing hydrogen from natural gas with emissions mitigated by carbon capture — are expected to produce far more hydrogen than green hydrogen projects, which use electrolysis powered by renewable energy.

And from another perspective, the clean hydrogen outlook is blue, as in “It’s got the blues,” because progress on subsidies and tax breaks tied to hydrogen development has been painfully slow, with convoluted rulemaking casting doubt on whether the federal government’s hydrogen initiatives will happen at all.

Despite blue hydrogen dominating near-term capacity projections, with about two-thirds of potential output tied to such projects, challenges loom large. The CO2 emissions from these projects must be permanently sequestered — stored forever in deep underground formations. But progress has been hampered by long permitting delays and limited project approvals. There’s also much uncertainty around the 45V tax credit for clean hydrogen, the focus of heated debate since the Inflation Reduction Act (IRA) passed in August 2022. Final rules were expected by year-end but did not materialize.

And of course, who knows what will happen when President-elect Trump takes office. He has been skeptical of clean-energy initiatives in general and the IRA specifically, so 2025 looks to be a blue year for hydrogen, unless some of the big project developers succeed in lobbying for positive changes to the permitting process.