US Department of Energy Clean Hydrogen Production Standard (CHPS) draft guidance.
This draft guidance document contains the U.S. Department of Energy’s (DOE’s) initial proposal for a Clean Hydrogen Production Standard (CHPS), developed to meet the requirements of the Infrastructure Investment and Jobs Act of 2021, also known as the Bipartisan Infrastructure Law
(BIL), Section 40315.
The CHPS is not a regulatory standard, and DOE may not necessarily require future funded activities to achieve the standard.
However, hydrogen hubs funded in support of the BIL will be required to “demonstrably aid achievement” of the CHPS by mitigating emissions across the supply chain to the greatest extent possible (e.g., by employing high rates of carbon capture, using low-carbon electricity, or mitigating upstream methane emissions).
Future DOE funding opportunity announcements will further describe merit review criteria that will be used in selection of successful projects subject to the CHPS.
Background
Hydrogen plays a critical role in a comprehensive energy portfolio for the United States, and the use of hydrogen resources promotes energy security and resilience as well as provides economic value and environmental benefits for diverse applications across multiple sectors in the economy The DOE is committed to creating and strengthening technologically and economically feasible production, processing, delivery, storage, and use of clean hydrogen from diverse fuel sources.
The BIL amended the Energy Policy Act of 2005 (EPAct 2005) to accelerate research, development, demonstration, and deployment of hydrogen from clean energy sources.1 Section 40315 of the BIL states that “not later than 180 days after November 15, 2021, the Secretary, in consultation with the Administrator of the Environmental Protection Agency 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 shall apply to activities carried out under this subchapter.”
Further, the statute directs that the Secretary shall determine no later than 5 years after the initial standard is published, if the standard should be adjusted below the existing threshold and carry out the adjustment if deemed appropriate.
The statute requires that “the standard developed shall—”
- “support clean hydrogen production from each source described in section 16154(e)(2) of this title” (e.g., including but not limited to fossil fuels with carbon capture, utilization, and sequestration (CCUS); hydrogen-carrier fuels (including ethanol and methanol); renewable energy resources, including biomass; nuclear energy);
- “define the term “clean hydrogen” as provided in section 16166(b)(1)(B) to mean hydrogen produced with a carbon intensity equal to or less than 2 kilograms of carbon dioxide-equivalent produced at the site of production per kilogram of hydrogen produced; and”
- “take into consideration technological and economic feasibility.”
Thus, the statute requires DOE to set a CHPS accounting for Congress’s definition of “clean hydrogen” noted above, while also ensuring support for hydrogen production from diverse lowcarbon energy sources, and consideration of technological and economic feasibility.
Accordingly, under the statute, the definition of clean hydrogen is a component of the CHPS but
is not the sole component of the CHPS.
In this draft guidance, DOE seeks stakeholder comment on its proposal to implement the provisions of Section 40315 by adopting a CHPS that: (1) incorporates the definition of “clean hydrogen” provided in statute, and (2) supports diverse feedstocks and allows for consideration of technological and economic feasibility of achieving overall emissions reductions by establishing a lifecycle greenhouse gas emissions target for clean hydrogen production.
The lifecycle target proposed in this draft also aligns with Section 13204 of the 2022 Inflation Reduction Act (IRA), which creates a new 10-year production tax credit (the 45V Credit) for “qualified clean hydrogen” defined with reference to the lifecycle greenhouse gas emissions rate of hydrogen production.
To qualify for a credit in the IRA, hydrogen must be produced “through a process that results in a lifecycle greenhouse gas emissions rate of not greater than 4 kilograms of CO2e per kilogram of hydrogen.”6 The CHPS is not a regulatory standard. Rather, it serves only to guide the DOE’s hydrogen programs in EPAct 2005, as amended.
These include the Regional Clean Hydrogen Hubs Program and the Clean Hydrogen Research and Development Program. As set forth below, the BIL provisions governing Regional Clean Hydrogen Hubs (Hubs) provide that DOE can select projects that do not meet the CHPS so long as DOE selects projects that “demonstrably aid the achievement” of the CHPS by mitigating emissions as much as possible across the supply chain (e.g., through aggressive carbon capture onsite, measures to mitigate fugitive methane emissions, or use of clean electricity).
Additionally, the Clean Hydrogen Research and Development Program directs DOE to establish “a series of technology cost goals oriented toward achieving the CHPS.”
Thus, these programs are expressly designed to reduce the carbon intensity of hydrogen production from diverse feedstocks over time. Accordingly, projects selected under those programs may not necessarily be required to meet the CHPS so long as they demonstrably aid the achievement of the CHPS.
While DOE-funded activities may not necessarily require achievement of the target set forth in the CHPS or achievement of an emissions intensity of 2 kgCO2e/kgH2 at the site of production (the definition of “clean hydrogen”), DOE may expect stakeholders to reduce emissions across the supply chain as aggressively as technologically and economically feasible, and preference may be given to funding applicants on the basis of their emissions alongside other selection criteria.
Previous DOE analyses of the emissions of hydrogen production from various feedstock have identified examples of parameters that could be optimized in real-world deployments to achieve these targets.8,9 For example, DOE may give preference to projects that mitigate upstream fugitive emissions, use a cleaner electricity generation mix, employ high rates of carbon capture and sequestration, or blend fossil fuels with renewable natural gas or low-carbon biomass.
When applying to DOE solicitations, applicants should review requirements and merit review criteria within those solicitations for corresponding guidance on DOE’s expectations of successful proposals.
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U.S. Department of Energy Clean Hydrogen Production Standard (CHPS) Draft Guidance, September 23, 2022
