In the absence of any guidelines defining green hydrogen, a debate is raging in the US over whether the federal government should counterbalance its generous green H2 subsidies with strict EU-style rules demanding additionality and temporal and regional matching of grid-sourced renewable power (see panel below).

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The situation has been exacerbated by continued delays from the Department of Energy (DOE) and Treasury to publishing its hydrogen guidelines, which will determine whether projects are eligible for the 45V tax credit of up to $3/kg.

And at the Hydrogen Americas Summit in Washington DC on Monday, the head of a green hydrogen developer targeting 1GW poured scorn on the view from some in the industry that the additionality and temporal correlation rules will slow the development of large-scale green H2 — and encouraged developers to bypass the grid, co-locate their electrolysers close to their projects and transport the energy as hydrogen.

But a senior executive from oil giant BP warned that there will not be enough sites or hydrogen transport infrastructure to make that an economic reality.

“Not unreasonable”

Sheldon Kimber, founder and CEO of renewables and hydrogen developer Intersect Power, took particular aim at critics in the industry complaining about the proposed additionality and temporal correlation rules for grid-connected projects.

Additionality, time-matching and geographic correlation

“Additionality” means that the green hydrogen would have to produced from new renewables projects, so that they do not utilise existing clean electricity facilities that would otherwise help decarbonise the power grid.

“Time-matching", or "temporal correlation”, relates to how frequently producers would have to prove that their electrolysers have been powered by 100% renewable energy — usually hourly, weekly, monthly or annually — and therefore to what extent they can use grid electricity at times when the wind isn't blowing and the sun isn't shining, and then send the same anount of renewable energy back to the grid at a later date.

"Geographic correlation" refers to how close the hydrogen-producing electrolyser is to the source of renewable energy it uses. Distances can be set to ensure that an electrolyser in, say, Texas, is not powered by solar panels in California through renewable energy credits, which in practice could mean that green power is sent to a grid that doesn't need it, with the electricity actually used by the electrolyser coming from fossil-fuel power plants.

All three rules would prevent fossil-powered grid electricity being used directly or indirectly to produce "green hydrogen".

“I don’t think it’s unreasonable to ask for time matching and regionality and additionality,” he said during a panel session, honing in on the guidelines’ proposed phase-in period that is expected to include a grandfathering clause allowing first-mover projects to benefit from less regulation for a period of time after commissioning.

“Let’s say you’ve got 2027 as the cut-off for when you commence construction: you can build something that comes on line in 2030 and you’ve got a ten-year grandfathering in the [production tax] credit,” he explained.

“By 2040 you can still be producing clean hydrogen from [power] that you bought from a wind farm in the Dakotas, with coal-power in Georgia. Come on, let’s just be honest about that. That’s not what is going to save the climate. That’s not really where we’re headed. You’ve got to pass the sniff test in terms of real decarbonisation.”

But fellow panellists from oil giant BP and industrial gas firm Linde both strongly objected, with David Burns, vice-president of clean energy at Linde, asserting that the rules would result in green hydrogen developers overbuilding electrolyser capacity to push up utilisation factors.

BP’s US vice president for hydrogen, Tomeka McLeod, agreed, adding: “If you want to get the industry off the ground, you’ve got to be reasonable about what it’s going to take. Being super restrictive is definitely not going to be the thing that is going to underpin that.”

Intersect has a 2.2GW solar portfolio across California and Texas, and is developing a reported 1GW in green hydrogen projects.

The company recently bagged a $800m corporate credit facility to finance the expansion of its renewable energy and green hydrogen ambitions. In 2021, it signed a memorandum of understanding with Bill Gates-backed electrolyser manufacturers Electric Hydrogen to use its proton exchange membrane (PEM) technology, but has made no further announcements on the partnership, despite pledging to work towards a firm supply agreement by mid-2022.

Dedicated capacity

Kimber claimed that it is a much better bet for green hydrogen developers to put their projects “behind the meter” [ie, not drawing from the grid] to avoid problems with what he called the US’s “broken” power transmission system, which is still far from being decarbonised and could struggle with new demand from green H2 installations.

“I’ve been working to decarbonise the grid for most of my career; we’ve got a long way to go,” he said. “Particularly in a lot of places where people want to export from and build big industrial facilities for green hydrogen.

“In order to decarbonise the grid and use the grid to get [power to]... electrolysers, the build-out is insane. You’ve got to encourage large behind-the-meter solutions.”

He pointed to Intersect Power’s green hydrogen project under development in Texas, which he claims will be able operate behind-the-meter without battery storage.

“But you’ve got to get that to the customer,” McLeod countered, adding that using existing gas pipelines could incur “a significant cost”.

“I hear you and in a perfect world in which everything lines up, that would be great,” she said. “If you’re talking about getting the industry off the ground, then you’re not going to have enough options to do that.”