The Ohio River Valley Institute published the following statement in response to the Department of Energy’s announcement of up to $925 million in federal funding for the Appalachian Regional Clean Hydrogen Hub (ARCH2).
ARCH2 Blue Hydrogen Hub Threatens Higher Costs with Few Jobs, Continued Emissions
Alternative ‘Clean Energy Pathway’ Would Create 12,000 Jobs by 2035 at 13% Lower Cost
JOHNSTOWN, Pa. — The Biden-Harris administration’s announcement of up to $925 million in federal funding for the Appalachian Regional Clean Hydrogen Hub (ARCH2) stands to raise costs for families and set the region on a path of economic stagnation and continued methane emissions. Alternative investments in distributed generation and energy efficiency would generate thousands of jobs and cut power sector emissions by 97% by 2050 at a total cost 13% lower than investment in blue hydrogen and carbon capture technologies, according to research from the Ohio River Valley Institute.
“The funding announcement sets in motion one of two scenarios,” explains Sean O’Leary, Senior Researcher with the Ohio River Valley Institute. “Because hydrogen and carbon capture are economic for only a few niche industries, plans to develop ARCH2 may yield a small affair with disappointingly little economic and climate benefit. Or, if plans maintain momentum, hydrogen and CCS will be forced into irremediably uneconomic applications, resulting in higher prices, utility bills, and taxes with little or no net economic benefit.”
“Our region cannot afford to invest further in an oil and gas industry that has failed to produce job, income, and population growth for more than a decade. Now is the time to pursue proven, cost-effective, job-producing decarbonization models like the Clean Energy Pathway for Southwestern Pennsylvania, which affords real opportunities for job growth and reduction in climate-warming emissions,” adds Joanne Kilgour, Executive Director of the Ohio River Valley Institute.
The Clean Energy Pathway:
- Cuts CO2 emissions in the power sector by 92% by 2035 and 97% by 2050, placing the region on track to limit global warming to 1.5°C by 2050 in accordance with international climate goals.
- Supports the creation of 12,416 jobs by 2035 and 15,353 jobs by 2050 via efficiency expenditures and residential bill savings.
- Yields annual environmental and health benefits of more than $2.5 billion by 2035 and $4.2 billion by 2050.
- Costs 13% less than a pathway reliant on natural gas and carbon capture technologies.
Research shows the carbon capture technology underlying ARCH2’s hydrogen hub proposal, which spans parts of West Virginia, southeastern Ohio, southwestern Pennsylvania, and eastern Kentucky, is a cost-prohibitive and ultimately ineffective means of decarbonization.
First, the technology is unproven at scale. Carbon capture has been under development for decades and received more than 15 years of federal tax incentives, yet the technology is still not used in any large American power plant. Numerous carbon capture retrofits and pilot projects have been canceled or have failed. Moreover, state regulatory agencies lack the bandwidth and technical expertise to properly permit and monitor the unprecedented network of carbon transportation and storage infrastructure that hub development would require.
The technology itself has also failed to reliably reduce carbon emissions in the power sector. Real-world carbon capture rates are far below Department of Energy targets and even operators’ claims, according to IEEFA research. Realistic assumptions about carbon capture rates, leakage, and emissions from transportation and storage show producing methane-based “blue” hydrogen with carbon capture yields a carbon intensity more than three times as much as the the DOE’s clean hydrogen standard, particularly when accounting for the significant associated emissions from “upstream” methane extraction and transport—endemic to all natural gas plants with proposed carbon capture retrofits. In fact, the total greenhouse gas footprint of methane-based blue hydrogen is more than 20% greater than burning natural gas or coal for heat, according to a peer-reviewed study of lifecycle emissions.
Meanwhile, the cost of carbon capture poses a substantial burden to taxpayers and ratepayers. Widespread adoption of carbon capture and sequestration in the nation’s electric system would spike the cost of power generation by roughly $100 billion per year. At the household level, developing a full-scale hydrogen and carbon capture hub would add $1,000 to $3,000 or more per year to Western Pennsylvanians’ taxes, utility bills, or a combination of both, research shows.
“The inescapable truth is that carbon capture and sequestration makes everything it touches far more expensive,” O’Leary continues. “The carbon capture technology underlying blue hydrogen hub proposals would nearly double the cost of electricity from natural gas and nearly triple the cost from coal. With renewable resources, storage, energy efficiency and demand-side resources competing with and often undercutting the cost of natural gas in power generation, there is no sound rationale for subsidizing CCS-equipped fossil fuel generation, which would cost far more and be only partially effective at reducing emissions.”
Prospective target sectors for hydrogen produced as part of ARCH2 and related facilities include ammonia and agriculture, heavy-duty transportation, and heavy industry. Yet research shows hydrogen is cost-ineffective for many such applications. Hydrogen is fundamentally uneconomic as a ‘base load’ or ‘peaking’ resource for generating electricity and a poor means of balancing load in an increasingly renewables-based power system. Hydrogen is also unlikely to play a major role in road transportation, even for heavy trucks.
Offtake, production, and construction plans for hydrogen hub development have also been largely concealed from the public, even as the Department of Energy attests community engagement comprises a considerable role in consideration of hub proposals. Encouragements to engage stakeholders are vague, unenforceable, and framed as an avenue of expediency rather than a de facto precondition for project development. Hub applicants have even required non-disclosure agreements and statements of support in exchange for information about development plans.
“A lack of transparency and meaningful public engagement from the Department of Energy and hydrogen hub applicants functions to shirk accountability and leave impacted communities in the dark about hub development plans,” explained Tom Torres, hydrogen campaign coordinator with the Ohio River Valley Institute. “Against this backdrop, merely gesturing at beneficial standards without ensuring the production of these goods has the same effect as if these policies were intended to encourage fossil fuel-based hydrogen over green hydrogen, to limit public participation, and to further burden communities experiencing environmental injustice.”
Ultimately, the blue hydrogen hub decarbonization model is likely to become the latest in a series of false promises from the natural gas industry. History has proven the decade-long shale gas boom, the abandoned Appalachian Storage Hub project, and the ballyhooed petrochemical renaissance structurally incapable of delivering on promises of job growth and local economic prosperity. As Appalachian natural gas production begins to plateau and the region’s largest gas-producing counties continue to lose jobs and residents, the prospect of generating economic prosperity through increased gas production and methane-based hydrogen development looks increasingly dim. Research suggests most employment growth associated with the hub would be temporary construction jobs, and downstream growth is projected to be minimal as the extreme costs associated with hydrogen and carbon capture discourage new industries.
Alternative models of decarbonization offer far greater climate and employment impact at significantly lower cost, according to Ohio River Valley Institute research. Strategies focused on natural gas and carbon capture will be 13% more costly than the Clean Energy Pathway for Southwestern Pennsylvania, a renewables-based pathway outlined by Strategen and the Ohio River Valley Institute that centers energy efficiency & clean energy imports from the PJM market. The Clean Energy Pathway, which analyzes the 10-county region surrounding Pittsburgh, avoids expensive investments in CCS technologies to reduce emissions, limits the region’s exposure to fuel price volatility, and mitigates the risk of stranded fossil fuel assets. It also achieves a 97% reduction in CO₂ emissions from the power sector by 2050.
“High-multiplier” investments in energy efficiency, weatherization, distributed generation, and education can compound local economic growth. The Centralia Model for Economic Transition offers a “bigger bang approach” to economic development that, if replicated in Appalachia, could help distressed energy communities spark job, population, and income growth. The approach is modeled after the remarkable economic turnaround of Centralia, WA, a formerly struggling coal community that rebounded to job and income growth twice the national average after deploying a $55 million transition fund in clean energy, energy efficiency, and education. The spending transformed the regional economic profile by spurring local job growth, driving complementary investment, providing utility bill savings, increasing disposable incomes, and improving quality of life.
The carbon-intensive steel sector also poses a ripe opportunity for decarbonization and job creation. A transition from traditional coal-based steelmaking to fossil fuel-free steelmaking powered by renewables-based green hydrogen—one niche application for which hydrogen is economic—could grow total jobs supported by steelmaking in Southwestern Pennsylvania by up to 43% by 2031, forestalling projected job losses, research shows. Transitioning to fossil fuel-free steelmaking would also cut Pennsylvania’s industrial sector emissions by 4 million metric tons of CO2e per year, improving quality of life and saving $380 million in health, community, and environmental costs.