New Energy Permitting Reform Bill: Opportunities and Gaps for the U.S. Hydrogen Economy

The recently introduced Energy Permitting Reform Act of 2024 by Senators Joe Manchin and John Barrasso is designed to streamline the permitting process for energy projects in the United States. Understanding this legislation is crucial for those of in the hydrogen ecosystem, like us at Modern Hydrogen . It directly impacts the development of essential energy infrastructure and has considerable implications for the integration of hydrogen technologies.

While the Act aims to accelerate project timelines, identifying areas needing further support is key to fully unlocking hydrogen's potential as a clean energy solution.

Key Provisions to Review:

Expedited Judicial Review: The bill "establishes a 150-day statute of limitations from the date of the final agency action on a project; requires courts to expedite review of legal challenges; and sets a 180-day deadline for federal agencies to act on remanded authorizations." This provision aims to reduce delays in legal proceedings, which can benefit hydrogen projects by ensuring faster resolution of legal challenges.

Onshore Energy and Minerals: The Act "accelerates leasing and permitting decisions for all types of energy projects on federal lands, without bypassing environmental and land-use laws." This streamlined process can facilitate the rapid and scalable deployment of methane pyrolysis projects for hydrogen production using existing natural gas infrastructure.

Electric Grid Projects: Reforms to support the development and modernization of electric transmission infrastructure "provide two pathways for transmission development that include clear standards for cost allocation among customers that benefit from a project." Some see these changes as essential for integrating hydrogen production facilities with the national grid.

Hydrogen production through electrolysis often requires substantial amounts of electricity. Investment in efficient and modernized electric transmission infrastructure is essential to ensure that green hydrogen production facilities can be integrated smoothly into the national grid. This integration allows for the transportation of electricity from renewable energy sources, such as wind and solar farms, to hydrogen production sites as that infrastructure is built over the next few decades.

What Should Complement This Bill

Despite these positive steps, there's more work to be done to propel the hydrogen economy:

Uncertainty Surrounding 45V Hydrogen Production Tax Credit: The 45V tax credit still faces significant uncertainty. Clear guidelines and support are necessary to stabilize the market and encourage investment.

Infrastructure Development: Investors want to see specific provisions for developing dedicated hydrogen infrastructure, such as pipelines and storage facilities, which are crucial for a robust hydrogen supply chain in the long term.

Support for Hydrogen Technologies: There is a lack of explicit support for integrating hydrogen fuel cell technologies across various sectors, including transportation and industry.

Funding for Research and Development: Enhanced funding for R&D in hydrogen technologies is lagging, which is essential for driving innovation and making hydrogen a more competitive energy source.

Impact on U.S. Sectors

Natural Gas Utilities: The bill's streamlined permitting process could help natural gas utilities more efficiently transition to incorporating hydrogen into their supply chains. A provision ensures continuous availability of leasing opportunities, facilitating quicker integration of hydrogen production technologies.

The Act strengthens the Federal Energy Regulatory Commission’s (FERC) ability to approve transmission lines by eliminating the National Interest Electric Transmission Corridor designation process. This means FERC can now green-light transmission projects that meet specific national interest criteria. According to Utility Dive , this streamlined approach is pivotal for gas utilities to integrate new energy infrastructure, including hydrogen projects, more efficiently and effectively.

Heavy Industry: The Act's efforts to streamline project approvals will benefit heavy industry, particularly those that are difficult to decarbonize. However, the Act lacks specific R&D funding to drive innovation in medium-scale, distributed hydrogen technologies, which is crucial for these industries to adopt hydrogen as a clean fuel alternative.

Hydrogen Mobility: The Act’s provision to "expedite judicial reviews and set deadlines for federal agencies to act on remanded authorizations" could help fast-track the deployment of hydrogen fuel cell technologies. This streamlined approach is essential for enhancing hydrogen mobility through improved infrastructure and integration.

What do governmental hydrogen strategies look like around the world? Here's one comparison.

Comparison with Australia's Hydrogen Strategy

Australia uses different approaches to support its hydrogen economy. This week's article from Energy Source & Distribution describes these strategic components of the Australian Hydrogen Strategy:

Government Investment: Australia's Hydrogen Headstart program has committed $4 billion to support large-scale renewable hydrogen projects, focusing on clean hydrogen.

Hydrogen Hubs: Australia is developing hydrogen hubs to create ecosystems that support collaboration among producers, handlers, and users, fostering industry growth.

The U.S. is making strides in developing hydrogen hubs through the Department of Energy’s Hydrogen Hubs program, designed to create regional networks for hydrogen production, processing, delivery, storage, and usage.

Notably, California's Hydrogen Hub made important progress just last week. "With the agreement signed and the first round of funding secured, California is the first state to officially launch a Hydrogen Hub, an initiative to accelerate the development and deployment of clean, renewable hydrogen projects – cutting pollution and expanding clean energy," announced Governor Gavin Newsom .

However, it has been clear that the U.S. faces regulatory and infrastructure challenges that hinder other hubs' progress - particularly because of the questions around 45V. The Energy Permitting Reform Act of 2024 seeks to streamline these processes, but it falls short of provisions for dedicated hydrogen infrastructure and clear incentives compared to Australia’s comprehensive strategy.

Strategic Trade Partnerships: Australia leverages strategic trade partnerships with countries like Japan and Korea to develop new export markets for hydrogen.

Clear Policy and Incentives: The Australian government emphasizes the need for clear policy and strong incentives to bridge the gap and ensure major hydrogen projects reach final investment decisions.

Ensuring a More Sustainable Future

The Energy Permitting Reform Act of 2024 is a positive step towards enhancing the U.S. energy infrastructure. However, addressing the gaps in support for the hydrogen ecosystem, providing clear guidelines for the 45V tax credit, and learning from other comprehensive strategies can significantly bolster the U.S. hydrogen economy.