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Washington state: green hydrogen competitive with SMR by 2025

In a report, the Washington State Department of Commerce finds that displacing hydrogen produced via steam methane reforming with electrolysis will be cost-effective by next year in the state.

The Washington State Department of Commerce claims that green hydrogen produced via electrolysis will be cost-competitive with SMR hydrogen as soon as next year.

In a report published last week, the agency assesses opportunities and challenges to advancing green hydrogen and hydrogen-derived fuels in Washington, and provides detailed modeling of anticipated demand for green hydrogen as part of the state’s path to a net-zero economy.

The report emphasizes the near-term need to replace fossil-derived hydrogen at the state’s five refineries and other chemical production facilities, representing .024 EJ of demand by 2027, with use in petroleum refining tapering off in the 2030s.

The agency adds that electrolytic hydrogen can be competitive with SMR hydrogen by next year, but only if the full $3/kg federal IRA hydrogen incentive is received.

Overall, demand for green hydrogen and renewable fuels in Washington is projected to reach 0.224 exajoules (EJ) by 2030 and 0.27 EJ by 2050, indicating a strong market for these resources. This demand includes not only hydrogen gas but also renewable fuels like Fischer-Tropsch liquid fuels and ammonia​​.

As it stands, the PNWH2 hub, one of seven selected to receive federal grant funding, is negotiating with DOE and final details of any final award and production levels are still being determined, the report says.

In addition to displacing gray hydrogen production, the agency anticipates demand from the following end markets:

  • Production of renewable liquid fuels for use in on-road, maritime, and aviation transportation (0.211 EJ by 2030 and 0.174 EJ by 2050);  
  • Production of ammonia, predominantly for use as a maritime fuel (0.057 EJ by 2050);
  • Direct use of hydrogen in fuel cell electric vehicles, specifically heavy-duty vehicles, freight rail, and marine fuel cells (0.021 EJ by 2050);  
  • Other direct uses of hydrogen gas in electricity production, industrial heat, and pipeline gas blends (These uses combined reach 0.013 EJ by 2050). 

According to the report, Washington will establish 800 MW of electrolysis capacity, producing 200,000 metric tons of hydrogen by 2030. In addition, significant electricity capacity will be needed for the production of renewable Fischer-Tropsch liquid fuels, with projections of 500 MW by 2030 and 2.5 GW by 2035. To support this expansion, an increase in in-state renewable electricity capacity is expected, estimated at 3.4 GW by 2030 and 36.8 GW by 2050​​.

Siting and permitting processes pose significant challenges for green hydrogen production and the supporting renewable energy infrastructure. The 2021 State Energy Strategy initially envisioned using excess renewable generation for hydrogen production, but the current level of production requires new transmission and generation capacity​​.

Washington may import approximately 70% of its green hydrogen and renewable fuels by 2050, leveraging the abundance of renewable resources in neighboring states. While this approach minimizes demands on electric power transmission capacity, it also presents risks similar to those associated with imported fossil fuels​​. To mitigate these risks and meet emission targets, the report suggests focusing on in-state hydrogen production, supplemented by clean energy generation and transmission capacity​​.

The specific recommended actions outlined in the 2023 Green Electrolytic Hydrogen Report for advancing green hydrogen and renewable fuels deployment in Washington State are as follows:

  • Accelerate In-State Green Electrolytic Hydrogen Production:
    • Set a state target for in-state green electrolytic hydrogen production of 4.5 GW by 2035, with an ambitious goal of reaching this target by 2030.
    • Facilitate access for green hydrogen producers to the 45V Production Tax Credit.
    • Utilize existing incentives and consider new ones to support electrolyzer production and usage in Washington​​.
  • Targeted State Support for Strategic End Uses:
    • Clearly identify and direct state and federal investments and incentives to strategic end-use sectors.
    • Fund pilot and demonstration projects in these sectors.
    • Provide technical assistance to support market development in strategic sectors.
    • Support access to the DOE H2Hubs Demand-side Initiative as part of H2Hubs implementation.
    • Collaborate with refineries to replace fossil-derived hydrogen with green electrolytic hydrogen.
    • Evaluate policy options to accelerate production and use of renewable Fischer-Tropsch liquid fuels and reduce statewide transportation emissions.
    • Focus hydrogen initiatives and investments for on-road hydrogen use on the most strategic vehicle types and corridors​​.
  • Consistency with GHG Reduction and Net-Zero Economy:
    • Support increased renewable electricity capacity and transmission infrastructure to supply hydrogen and other economy-wide loads.
    • Address and control greenhouse gases (GHGs) from imported hydrogen within the context of the state carbon cap.
    • Monitor and reduce hydrogen leakage to minimize indirect greenhouse gas impacts​​.
  • Expedited and Equitable Siting and Permitting Practices:
    • Collaborate with the Washington State Department of Ecology to develop an effective and equitable Programmatic Environmental Impact Statement (PEIS) for green hydrogen.
    • Develop a process to evaluate preferred geographic locations for hydrogen infrastructure.
    • Promote local or on-site hydrogen and renewable fuel production where appropriate.
    • Conduct additional activities to support efficient and effective siting and permitting for green hydrogen production and use.
    • Support efforts to site and permit renewable electricity and transmission infrastructure​​.
  • Promote Equity and Environmental Justice:
    • Develop an environmental justice tool for hydrogen projects.
    • Support the implementation and oversight of the PNWH2 Community Benefits Plan.
    • Support analysis and recommendations regarding hydrogen combustion and nitrogen oxides (NOx) generation to avoid air quality and health burdens​​.
  • Support Positive and Equitable Economic Impacts:
    • Evaluate workforce impacts and opportunities related to hydrogen and renewable fuels.
    • Increase resources for workforce development opportunities with equitable benefits.
    • Evaluate the tax and fiscal impacts of hydrogen deployment​​.

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