Green hydrogen is a term heard often in the world of climate technology and greenhouse gas emissions reduction…Â
But what is green hydrogen exactly?Â
What Is Green Hydrogen?
Green hydrogen, aka “clean hydrogen”, is hydrogen that is created using only renewable or zero emissions energy sources, such as solar, hydro, wind or nuclear energy.
Interest in clean hydrogen has increased significantly over the past few years. Indeed, Google searches for the term “green hydrogen” have steadily grown as concerns about climate change have increased.Â
Meanwhile, renewable energy prices have fallen meaning the cost of developing clean hydrogen solutions is more affordable for fossil fuel companies seeking alternative, carbon neutral, powerful forms of energy.
How Is Green Hydrogen Produced?
Hydrogen fuel is commonly created in energy intensive processes such as steam-methane reforming and electrolysis…Â
Approximately 98% of all hydrogen is produced using steam methane reforming or electrolysis powered by inexpensive fossil fuels, such as natural gas. This results in what’s called “gray hydrogen”.
The alternative is “green hydrogen” which is hydrogen that is created using only renewable energy or zero emissions sources, such as solar, wind or nuclear energy.
In the electrolysis process, H2O is input into an electrolyzer where the two hydrogen atoms are split from the one oxygen atom leaving you with pure hydrogen and oxygen.
The resulting clean hydrogen may then be stored as a gas or as liquified hydrogen for use in transportation, heating, or other fuel purposes.
The hydrogen (H2) and oxygen (O2) can also be recombined in a fuel cell to create energy…Â
When hydrogen and oxygen is combined in a fuel cell it creates energy with no emissions except water – so that’s a very nice outcome. Hydrogen fuel cells may be used in hydrogen fuel cell vehicles and buildings as power sources.
Clean Hydrogen Tax Credits
Tax incentives are being rolled out for green hydrogen plants to encourage more development of clean hydrogen at scale…Â
The “Inflation Reduction Act“, or IRA, passed in August 2022 increased incentives for clean hydrogen, methane emissions reduction, energy efficiency improvements, solar developers, energy storage, onshore and offshore wind facilities and more.
The IRA offers a tax credit for clean hydrogen worth up to $3.00 per kilogram.
To be eligible, the clean hydrogen must be produced with a maximum lifecycle emissions limit of 0.44 kg of CO2e, when manufactured at a “Qualified Clean Hydrogen Production Facility” that pays prevailing wages in accordance with Secretary of Labor guidelines.
The cost of clean hydrogen is as low as $0.73 cents per kilogram in some parts of the U.S. when incorporating the full value of new tax credit.
Green Hydrogen Plant Insurance
Commercial and industrial green hydrogen production requires building electrolyzers at scale, powered by on-site renewables or grid-powered renewables.Â
Whether you’re building a green hydrogen plant, or new fuel cell or an industrial scale electrolyzer, you’ll want to transfer risk away from your business to an insurance company that will allow you to focus on your day to day operations and sales so that you can be successful in this industry.Â
Insurance for clean hydrogen plants should include, but not necessarily be limited to, the following coverages:
- Commercial general liability insurance
- Excess or umbrella insurance
- Property insurance
- Professional liability insurance, aka “Errors & Omissions”
- Commercial auto and Hired/Non-Owned Auto
- D&O Insurance
- Employment Practices Liability Insurance
- Workers Compensation and Employer’s Liability (or “Stop Gap” Coverage)
- Cyber Liability
Commercial and industrial clean hydrogen companies like Plug Power and Siemens and utilities like NextEra Energy are working on building green hydrogen plants at scale.
Summary
98% of hydrogen fuel today is manufactured using fossil fuels, such as natural gas.
However, with the IRA clean hydrogen tax credits and the cost of renewable energy continuing to fall, the cost of developing green hydrogen plants is becoming more competitive.
With an energy intensity approximately 3 times that of gasoline or jet fuel, clean hydrogen is a low emissions fuel with the potential to power important parts of our economy from manufacturing to transportation, aviation, heating and energy storage.
