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Tina Casey headshot

Pennsylvania Places Bet on Gas-Powered Hydrogen, Not Green Hydrogen

By Tina Casey
green hydrogen

As the hydrogen economy heats up, renewable energy stakeholders in the U.S. are banking on green hydrogen from renewable resources to meet the demand. Meanwhile, fossil energy stakeholders are trying to carve out space for continuing to produce hydrogen from natural gas. Whether or not they succeed could come down to Pennsylvania, where policymakers are laying plans for a major new hydrogen hub.

Green hydrogen vs. clean hydrogen

The modern global economy relies on hydrogen for a wide range of goods and industries. In recent years that includes a growing interest in hydrogen for fuel cell vehicles, industrial processes and power generation, leading to a long-term surge in demand for hydrogen.

That should be good news for fossil energy stakeholders, because natural gas is the main source of the global hydrogen supply, along with coal to a lesser extent. 

However, more sustainable pathways have emerged. Most of the activity is centered on green hydrogen, meaning hydrogen gas pushed from water with an electrical current supplied by renewable energy.

Green hydrogen was not commercially feasible until the cost of wind and solar power began to fall. Now that the green hydrogen market is maturing, the cost of electrolysis systems is also falling. 

Green hydrogen has become an attractive pathway for decarbonization, but fossil energy stakeholders are attempting to hold onto a share of the hydrogen market by attaching carbon capture systems to conventional hydrogen production and dubbing it “clean” hydrogen.

The Pennsylvania hydrogen test

It is difficult to see how “clean” hydrogen from natural gas can attract manufacturers and other businesses along the supply chain, when they are straining to shake off their relationships with fossil energy. It would seem that green hydrogen has an unbeatable advantage, but natural gas advocates still have a powerful advantage, and policymakers in Pennsylvania are about to put that to the test.

Under the Bipartisan Infrastructure Law (also known as the Infrastructure and Jobs Act, or IIJA), last February the U.S. Department of Energy (DOE) launched an $8 billion, competitive grant program aimed at establishing at least four “clean hydrogen hubs” in the U.S. Pennsylvania has put in for a slice of the pie, leveraging its considerable natural gas resources.

“My administration has been working closely with energy, labor and industrial stakeholders across all sectors to develop the public-private partnerships needed to address the challenges of industrial sector decarbonization and develop the necessary conditions for the commonwealth to be a leader in deploying clean hydrogen and carbon capture technologies,” Pennsylvania Governor Tom Wolf emphasized in a May 16 press release.

To make it clear that the “clean” hydrogen referenced by Governor Wolf involves natural gas, the press release also notes that “Pennsylvania is well-known for its bounty of natural resources and is an East Coast leader for natural gas production.”

The fix is in for natural gas

Given the force of the green hydrogen trend, it is tempting to view the Pennsylvania hydrogen hub proposal as a non-starter. However, by law the $8 billion allocated for new hydrogen hubs must include at least two located in gas-rich regions of the U.S.

Aside from the legislative carveout in the Bipartisan Infrastructure Law, natural gas stakeholders have another advantage in Pennsylvania. The state’s tepid renewable energy profile places green hydrogen stakeholders at a disadvantage.

The trade group American Clean Power (ACP) currently ranks Pennsylvania down at number 27 among the 50 states for installed wind, solar and energy storage capacity. Meanwhile, other states where green hydrogen hubs have been floated include Texas at (number 1 on ACP’s list), California (second, via ACP) and North Dakota (13 on ACP’s list)

More opportunities for green hydrogen hubs

On the other hand, a high ranking does not seem to be a prerequisite for green hydrogen activity. Utah (26 on ACP’s list) has emerged as an early adopter of integrated green hydrogen infrastructure. Proposals have also surfaced in Missouri (24) and Mississippi (44).

Perhaps the most ambitious plan of all is a newly announced multi-state green hydrogen consortium that joins New York State (20) with New Jersey (35), Connecticut (43) and Massachusetts (29). Although none of the four states are currently ranked particularly high, they will begin to tap into their powerful offshore wind resources within the next few years.

All of this green hydrogen activity gives rise to a good question. If Pennsylvania does win funding for a gas-powered hydrogen hub, will it succeed commercially?

After all, just a few years ago gas stakeholders were buoyed by the false promise of a new petrochemical hub for Pennsylvania and the Appalachian region. Promoted by the DOE in 2019, the plan initially called for five new petrochemical facilities in the area. Shell developed the first one, but the others never followed. 

Last month, Yale Environment 360 rendered a gloomy outlook for completion of the vision.

“Obstacles including global overproduction of plastic, local opposition to pipelines that feed such facilities, and public concern about the tidal wave of waste choking oceans and landscapes mean that even the region’s second proposed ethane cracker may never materialize,” Beth Gardiner wrote. “Additional plants look even less likely. The question mark over the industry’s once-grand hopes for Appalachia reflects larger doubts about its plans for dramatically increasing worldwide plastic production.”

That line about overproduction of plastic should send up red flags to policymakers keen on building a gas-powered hydrogen hub in Pennsylvania, considering the potential for competition from green hydrogen hubs elsewhere in the U.S.

A bottom-line twist to the hydrogen tale

So far, the relatively high cost of green hydrogen has provided natural gas stakeholders with a powerful advantage. However, that selling point is likely to evaporate more quickly than energy observers have anticipated.

Last week, the renewable energy industry news site ReCharge News was among those reporting that Bloomberg NEF global head of strategy Kobad Bhavnagri expects that a “tenfold reduction in the cost of hydrogen electrolysers coupled with ever-cheaper renewable energy” will result in a cost advantage for green hydrogen compared to hydrogen from natural gas by 2030.

Hydrogen hub or not, the improved outlook for low-cost green hydrogen could help kickstart more activity in Pennsylvania.

One sign of interest in the state is a proposal by two leading firms, Plug Power and Brookfield Renewable Partners, to leverage an existing hydropower facility on the Susquehanna River for green hydrogen production.

In another interesting twist, Pennsylvania’s nuclear energy industry could also come into play at some point in the future. With five nuclear power plants, Pennsylvania is the second-highest state for nuclear capacity in the U.S. 

The DOE has been exploring systems that deploy thermochemical reactions as an alternative to electrolysis, and they have already identified waste heat from nuclear power plants as a good candidate for thermochemical green hydrogen production, which could put Pennsylvania in the catbird seat.

Pennsylvania may win DOE funding for its gas-powered hydrogen hub, but that may turn out to be a hollow victory after all.

Image credit: Addy Mae via Unsplash

Tina Casey headshot

Tina writes frequently for TriplePundit and other websites, with a focus on military, government and corporate sustainability, clean tech research and emerging energy technologies. She is a former Deputy Director of Public Affairs of the New York City Department of Environmental Protection, and author of books and articles on recycling and other conservation themes.

Read more stories by Tina Casey