The US Environmental Agency (EPA) omitted hydrogen co-firing mandates in the standards it released today to cut emissions from US power plants.
The future delivered cost of hydrogen is higher than EPA anticipated last year when it proposed standards that would have given gas-fired power plants the option to co-fire with at least 30pc low-carbon hydrogen or deploy carbon capture and sequestration (CCS) by 2032, and mandated that baseload power plants co-fire with 96pc hydrogen by 2038.
EPA at the time modeled that hydrogen would be available at a delivered cost of $0.50/kg by 2032. But EPA is now modeling a delivered cost of $1.15/kg, accounting for Inflation Reduction Act subsidies, which is still ambitious depending on the production pathway used and the recovery of infrastructure or transportation costs. The power sector is only willing to pay $0.40-0.50/kg for hydrogen, a DOE report had estimated last year.
The agency was uncertain that enough low-carbon hydrogen would be available in the future to make the standard realistic, it said. While EPA will not consider hydrogen co-firing as a "best system of emission reduction" for power plants, it will establish standards of performance for plants that may opt to co-fire hydrogen in the future. This leaves the option open, but the effect on the hydrogen industry will be a far cry from the initial 320,000 t/yr in demand that EPA had previously expected to create.
EPA also abandoned its proposal to set a carbon intensity standard for hydrogen used in co-firing, after previously eyeing a standard of less than 0.45kg of CO2 per kilogram of hydrogen. It would not be helpful to issue a definition while the industry waits for the Treasury to issue final tax credit rules that will set the boundaries on what hydrogen can be considered clean, it said. Hydrogen "regardless of production pathway" will meet EPA's uniform fuels criteria for low load combustion turbines.
But the power sector will still need to compete with other hydrogen offtakers in industrial and heavy transport sectors. For this reason, it is improbable that limited conventional hydrogen supply today would be redirected to power plants, which would incur only extra transportation costs without emissions reduction benefits. Even as clean hydrogen production eventually comes online, its users will be co-located with production, which would limit the number of customers that could be found in power plants.
Hydrogen combustion is already technically feasible in some combustion turbines and EPA said it may reevaluate its decision as the industry develops. But without a vast quantities of low-carbon hydrogen on the market, it should be prioritized for efficient units rather than boilers or gas-fired steam generating units, EPA said.
