Key Hydrogen Provisions of the Bi‐Partisan Infrastructure Plan

August.13.2021

Despite its known value as an alternative energy source, the United States has lacked a comprehensive national policy with respect to hydrogen. The Infrastructure Investment and Jobs Act (the “Bill”), addresses this as it contains a number of provisions aiding in the advancement of hydrogen as an alternative energy source. The Bill authorizes $9.5 billion for the development of hydrogen as a clean energy source. These provisions are contained in Sections 40311 to 40318 of the Bill. Section 40311 describes findings of Congress, which amend or add to the existing provisions of the Energy Policy Act of 2005 (the “Energy Policy Act”).  While this Bill makes a much-needed advancement in the development of a national hydrogen strategy, it contains no tax incentives, which are expected to be included in the reconciliation bill to be taken-up in tandem by the House of Representatives. Orrick will provide further updates on the reconciliation bill once language becomes available; however, industry should consider engaging with Congress now while these policies are being formulated in reconciliation and crystalized in a house version of the Bill.

Section 40311—Congress’ Findings.

Congress finds that hydrogen plays a critical part in the comprehensive energy portfolio of the United States and hydrogen can be produced from a variety of domestically available clean energy sources.

Section 40313—Establishment of the Clean Hydrogen Research and Development Program.

The goals of the Clean Hydrogen Research and Development Program are to (1) advance research and development and commercialize the use of clean hydrogen in the transportation, utility industrial, commercial, and residential sectors; and (2) demonstrate a standard of clean hydrogen production in the transportation, utility, industrial, commercial, and residential sectors by 2040.  The program has 12 important activities that the Secretary of Energy, in partnership with the private sector, is required to advance and support, including the following 7 key activities:

  1. establishment of a series of technology cost goals oriented toward achieving the standard of clean hydrogen production;
  2. production of clean hydrogen from diverse energy sources;
  3. use of clean hydrogen for use as a fuel source for other residential, commercial, industrial and commercial comfort electric power generation, heating and hot water requirements;
  4. sale and efficient delivery of hydrogen or hydrogen-carrier fuels;
  5. advanced vehicle, locomotive, maritime vessel or plane technologies;
  6. storage of hydrogen or hydrogen-carrier fuels, including the development of materials for safe economic storage in gaseous, liquid or solid form;
  7. ability of domestic clean hydrogen equipment manufactures to manufacture commercially available competitive technologies in the United States; and
  8. use of clean hydrogen in the transportation sector, including in light, medium and heavy-duty vehicles, rail transport, available and maritime applications.

Orrick Commentary – the legislation is clear that the Secretary will be required to engage directly with industry and the private sector. Clients should consider and review these goals in their entirety in the Bill and determine the best approach for providing input and feedback on the goals / priorities of the Clean Hydrogen Research and Development Program.

Section 40314—Additional Clean Hydrogen Programs.

Section 40314 adds the following five important provisions to the Energy Policy Act:

  1. Regional Hydrogen Hubs - provides $8 billion over 4 years for the creation of Regional Hydrogen Hubs;
  2. National Energy Strategy for Hydrogen - requires the Secretary of Energy to develop a technologically and economically national energy strategy and roadmap to facilitate widescale production, processing, delivery, storage and use of clean hydrogen;
  3. Grants for Research and Development - provides $500 million over 4 years to award multiyear grants and contracts for research, development, and demonstration projects to advance new clean hydrogen production, processing, delivery, storage and use equipment manufacturing technology and techniques;
  4. Clean Energy Electrolysis Program – provides $1 billion to fund a grant program for the research, development, demonstration, commercialization, and deployment program for purpose of commercialization, and to improve the efficiency, increase the durability, and reduce the cost of producing clean hydrogen using electrolyzers. Grants will be awarded to eligible entities that can achieve the following goals of the program (i) reduce the cost of hydrogen produced using electrolyzers to less than $2 per kilogram of hydrogen by 2026; and (ii) any other goals the Secretary of Energy determines are appropriate; and
  5. Coordination of the National Laboratories - establishes a mechanism for the coordination of the work of the National Energy Technology Laboratory (NETL), the Idaho National Laboratory, and the National Renewable Energy Laboratory (NREL) and institutions of higher education, and research institutes.

Orrick Commentary – These above described grant programs will provide an opportunity for industry to obtain funding to advance the research, development and implementation of clean hydrogen technology. Once the details of these programs are developed Orrick will provide further industry guidance on grant opportunities and will be available to assist clients in interpreting these programs and requirements and how they be utilized to advance hydrogen energy projects across the United States.

Section 40315 —Clean Hydrogen Production Qualification.

The Bill defines “clean hydrogen” as hydrogen produced with a carbon intensity equal to or less than 2 kilograms of carbon-dioxide equivalent per kilogram. Within 180 days the Secretary of Energy, in consultation with the Administrator of the EPA and after taking into account input from industry and other stakeholders, as determined by the Secretary, shall develop an initial standard for the carbon intensity of clean hydrogen production that will support clean hydrogen production from a variety of sources and take into account technological and economic feasibility. No later than five years after the date under which the standard is developed, the Secretary in consultation with the Administrator of the Environmental Protection Agency, shall determine whether the definition of clean hydrogen should be adjusted and if so, the Secretary shall carry out the adjustment.

Orrick Commentary - This will present an opportunity for industry to interface with the Federal government in setting the initial standard for carbon intensity. Should clients wish to engage in such direct dialogue with the Secretary, please keep posted for future Orrick industry alerts which will provide details on how the Secretary will offer such engagement with industry and approaches / strategies on impacting this standard