By Richard Kessler
Recharge, Jun. 23, 2022
Texas could build a $100bn hydrogen economy and create 180,000 jobs along its Gulf coast, transforming the network of oil and petrochemical industrial complexes currently in operation there into a national H2 export superhub competitive with emerging global market players, according to a new report.
Among the advantages cited in the study, based on research by McKinsey & Company for a cadre of business advocacy bodies, are: abundant renewable power generation and low-cost natural gas, existing hydrogen production and transportation capacity, favourable geological formations for CO2 storage, and local demand drivers in the second largest US state economy.
Others highlighted are a developed maritime infrastructure that includes deep-draft ports in an east-west arc from Orange and Port Arthur to Brownsville near the border with Mexico, and “top-calibre” academic research and industry-led innovation.
The report, published the Houston Energy Transition Initiative, a collaboration of advocacy groups Center for Houston’s Future and Greater Houston Partnership, with research and analysis from McKinsey & Company, is a “baseline view” of potential sector development.
In that scenario, Texas would be producing 21 million tons a year of clean hydrogen (45% for export) versus the present 3.6 million tons of grey hydrogen from conventional process routes, which would represent 220 million tons of CO2 abatement, said the authors of the report, Houston as the Epicenter of a Global Clean Hydrogen Hub.
The report acknowledges that current economics of clean hydrogen production and distribution do not support large-scale adoption by customers to replace lower cost, higher carbon intensity alternatives.
“Regional hydrogen hubs have the potential to accelerate the scaling of hydrogen through concerted development of demand, supply and infrastructure,” said the report’s authors. “But policy interventions will be required to drive down costs and incentivise the adoption of clean hydrogen.”
The so-called “cross-cutting enablers” at the federal level cited by the report to make clean hydrogen cost-competitive at scale and increase demand are direct incentives, government commitments, and regulatory frameworks. Texas should also implement state-level policies to accelerate progress toward achieving the 2050 vision.
The future hydrogen economy will also require further infrastructure development including fuelling stations, electricity transmission, a mature chain for critical minerals, and water purification and transportation, the report found.
The authors said the report will lead to a subsequent phase to develop a “demand-centric” road map for 2022-2030. This will identify the sectors that are ready to respond to net-zero-driven demand signals for clean hydrogen and projects that can meet demand.
President Joe Biden views clean hydrogen as crucial to achieving his goals of a carbon-free electric grid by 2035 and net-zero emissions across the US economy by 2050.
Earlier this month he authorised use of wartime legislation to allow the Department of Energy (DoE) access to a $545m emergency fund to build US manufacturing capacity in key clean energy sectors, including electrolysers.
DoE also finalised a $504.4m loan guarantee to support construction of the country’s largest green hydrogen project located in Utah sponsored by Mitsubishi Power Americas and Magnum Development. It will employ 220MW of wind- and solar-powered alkaline electrolysers to produce 36,500 tonnes of renewable H2 per year.
DoE is also reviewing applications for its $8bn Regional Clean Hydrogen Hubs (H2Hubs) initiative, the biggest federal financial commitment to date for the sector, with funding awards for four hubs announced as early as late summer.