New Opportunities for the U.S. Green Hydrogen Industry

The global green hydrogen industry has attracted interest from investors and governments around the world seeking to decarbonize steelmaking, shipping, and other hard-to-decarbonize industrial activities. That can open up new export opportunities for green hydrogen producers in the United States. 

New research from the energy transition think tank RMI, for example, indicates that the European Union will need to import green hydrogen to meet its near-term decarbonization goals. But the sudden shift in federal energy policy has presented U.S producers with new hurdles to overcome.

Hurdles for green hydrogen

Modern industrial economies run on hydrogen, using it mainly for methanol and ammonia fertilizer along with oil refining and metals. In recent years, the use cases grew to include food processing, toiletries, and health supplements as well as energy storage, fuel cells for electricity generation and synthetic e-fuels. 

Meanwhile, green hydrogen is emerging as a more sustainable alternative to conventional hydrogen, which is extracted from natural gas or coal. Green hydrogen can be extracted from biomass, but much of the investor activity is directed towards extracting it from water in electrolysis systems, deploying electricity from renewable resources.

As a new global industry, green hydrogen has resisted scale-up. High costs, immature supply chains, and a lack of buyers are among the factors leading some ventures to fail. Despite the obstacles, policy makers in the EU are among those vigorously supporting green hydrogen, as both a decarbonization pathway and a means of reducing fossil fuels imported from Russia.

Resetting targets for green hydrogen deployment

As outlined in a recent report by RMI (formerly Rocky Mountain Institute), the EU’s near-term goals for green hydrogen production are unrealistically high. That is partly because policymakers want to apply green hydrogen to a wide range of uses, but some of those could be fulfilled by other clean technologies.

In a 2022 report, RMI noted that “many of today’s micro-level business cases of hydrogen for heating buildings, generating power, or fueling light-duty vehicles are better suited for investments in energy efficiency or direct electrification.”

In contrast, electrification is not an economical or easily available option for heavy industries like steelmaking, which rely on the high heat in fossil-fueled blast furnaces. Electrification is also irrelevant in ammonia and other chemical industries that rely on hydrogen as an ingredient, not a fuel source.

“What we really need to focus on is the right use sectors for hydrogen. That is what RMI has been saying all along,” said Oleksiy Tatarenko of RMI. As a senior principal in the organization’s Climate-Aligned Industries program, Tatarenko leads the RMI hydrogen initiative.

“I’ve been leading this team for three and a half years, and that’s why we have set this up around key sectors such as iron, steel, chemicals, ammonia and fertilizer,” Tatarenko told Triple Pundit. 

Green hydrogen can also help decarbonize the aviation and cargo shipping sectors. Tatarenko said. “We are focusing on the sectors that are hard to electrify,” he added. “For example, deep ocean cargo vessels cannot run on batteries for 5,000 to 10,000 miles.”

A new export opportunity for green hydrogen producers

In a study published last month, Tataranko and his team advised that the EU can reset its near-term domestic green hydrogen production goals to a more realistic level by focusing more narrowly on key industrial sectors.

The analysis also affirms that the EU will fall short of its near-term domestic green hydrogen production goals, even under the reset scenario. The solution is to combine domestic production with imports, allowing the EU to accelerate its decarbonization efforts.

“While domestic production is expected to scale this decade, hydrogen trade will play an essential role in closing short- to medium-term supply gaps, enabling early decarbonization, and positioning the EU as a lead market in the global hydrogen landscape,” according to the study.

One new green hydrogen opportunity for the EU is already arising. Despite being under attack from Russia for more than three years, Ukraine is laying plans to deploy its considerable wind, solar, and biomass resources to produce green hydrogen and export it to the EU.

Hydrogen stakeholders are also moving forward with plans to pipe green hydrogen to Italy and other parts of the EU from solar-powered electrolysis facilities in northern Africa. In addition, Canada is considering exporting green hydrogen to the EU through Belgium.

The window is closing for U.S. producers

In the U.S., supportive federal policies during former President Joe Biden’s administration catalyzed new investments in green hydrogen, encouraging producers to explore export opportunities and domestic use.

In addition to longstanding federal research programs in support of sustainable hydrogen, the 2021 Bipartisan Infrastructure Law and the 2022 Inflation Reduction Act provided billions in funding to support sustainable hydrogen production and deployment.

Practically all of these initiatives were suspended or reversed by President Donald Trump since he took office in January, leading to a pullback across the industry. 

Despite the sudden withdrawal of federal support, some new proposals appeared in recent weeks. In March, for example, the Energy Abundance Development Corporation (formerly Green Hydrogen International) announced plans for a massive new data center hub near Laredo, Texas, to be powered entirely by wind, solar, battery storage and green hydrogen.

Since then, President Trump altered the outlook yet again, issuing new rounds of tariffs. The U.S.-based global electrolyzer manufacturer Cummins is among those warning that the tariff activity will push costs up and depress sales.

Still, momentum for the global energy transition continues to increase, with green hydrogen playing a significant role. If U.S. producers are sidelined for now, they may have an opportunity to catch up later. After all, the nation’s renewable energy resources are not going anywhere. They were here long before President Trump took charge of federal energy policy, and they will remain long after.