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Report: Houston area poised to become a global clean hydrogen hub


As the U.S. Department of Energy prepares to announce $8 billion in funding plans for clean hydrogen centers across the country, a new report reveals that Houston, long considered the “energy capital of the world energy,” is well positioned to take advantage of Texas. ™ vast energy resources to become a global clean hydrogen hub. These energy resources include existing hydrogen generation facilities and pipelines along the Gulf Coast, a base of large, sophisticated industrial energy consumers, and renewable energy assets throughout the state. The report, released today by the Center for Houston’s Future, Houston as the Epicenter of a Global Clean Hydrogen Hub, explains how these assets can be leveraged to create a global clean hydrogen hub. Find the report here. Inspired by the unprecedented opportunity for Houston to lead the energy transition to a low-carbon future, the report contains the most detailed assessment yet of the economic potential and environmental impact of clean hydrogen. The report explains how clean hydrogen can be produced by adding carbon capture to current natural gas-based hydrogen plants or by electrolysis (the process that splits water into hydrogen and oxygen). Using these methods, the report shows how clean hydrogen can be an important tool in fighting climate change and reducing industrial emissions while creating well-paying jobs. Clean hydrogen hubs are expected to emerge in regions with sufficient clean hydrogen supply and demand. Given that the Houston area produces and consumes one-third of the nation’s hydrogen and has more than 50% of the nation’s dedicated hydrogen pipelines, the report provides a roadmap for how these assets can be used to accelerate a transition to a clean economy. hydrogen. The report was created as part of the Greater Houston Partnership’s Houston Energy Transition Initiative, with input from more than 100 experts representing 70 companies and organizations across the hydrogen value chain. In addition, McKinsey and Company donated significant economic research and analysis for the report. Among the conclusions of the study: the production of clean hydrogen could be multiplied by 5 compared to current hydrogen production by 2050. The creation of a clean hydrogen industry could create 180,000 jobs ( direct, indirect, and induced) statewide, while adding $100 billion to Texas GDP growth. Globally, a Houston-led clean hydrogen hub could reduce 220 million tons (MT) of carbon emissions by 2050. impact,” said Houston Mayor Sylvester Turner. “We can also deliver economic growth, create jobs and reduce emissions in Houston and the Gulf Coast, including in underserved communities.” Governments around the world are looking to clean hydrogen to help achieve net zero carbon emissions goals. In the United States, the Department of Energy says clean hydrogen is crucial to President Biden’s goals of a 100% clean electric grid by 2035 and net-zero carbon emissions by 2050. “The Houston area has the talent, expertise and infrastructure to lead the global energy transition to a low-carbon world. Clean hydrogen, as well as carbon capture, use and storage are part of key technology areas in which Houston is designed to succeed and can be an example for other leading energy economies around the world,” said Bobby Tudor, president of the Greater Houston Partnership’s Houston Energy Transition Initiative. outlines a vision of how the hub could meet the ambitious cost targets proposed by the DOE in its recent Energy Earthshot initiative and meet the stringent emissions targets set by Congress in the bipartisan Infrastructure Act. The report explains how delivering results that support environmental justice, create good jobs, and encourage US-based manufacturing are central to the vision of a successful clean hydrogen hub in the region. “Using this roadmap as a guide and with Houston’s energy sector in the lead, we are poised to create a new clean hydrogen economy that will help fight climate change by creating jobs and prosperity. economic growth,” the Center for Houston said. Brett Perlman, future CEO of ™. “We are more than ready, able and willing to achieve these goals, as demonstrated by our record of overwhelming success in energy innovation and developing new markets.” Here are the main conclusions selected. Vision and strategic roadmap The proposed vision for 2050 could have a massive impact on the climate, jobs and the economy, including an estimated global reduction of 220 MT of CO2, an economic value of $100 billion and the creation of 180,000 jobs. With the right policy framework, the hub could become the world leader in the production, application, development and export of clean hydrogen Demand Global demand for clean hydrogen is limited today, but we expect that ‘it will grow by 6-8% per year on average between 2030 and critical role in decarbonized sectors such as industry, mobility and electricity – potentially meeting 660 MT of demand by 2050, according to the Council hydrogen. Demand for clean hydrogen in Texas alone could reach 21 MT by 2050, compared to a current demand of 3.6 MT for conventionally produced hydrogen. The expected demand in 2050 includes 11 MT for local demand and a surplus of 10 MT for export. The export of hydrogen and hydrogen-based fuels is the main driver of the increase, contributing about 10 MT of hydrogen demand. Industrial applications are the second engine, raw materials and heating in sectors such as refining, petrochemicals, ammonia, iron and steel and cement accounting for around 6 MT of hydrogen demand. Mobility, with land transport (trucks, light commercial vehicles and buses) representing ~2.3 MT of hydrogen demand and marine and aviation representing ~1.5 MT of hydrogen and fuel demand at hydrogen base. Utility power generation, with energy storage and local grid natural gas blending accounting for approximately 1.6 MT of hydrogen demand. Supply The costs of producing clean hydrogen for electrolysis-based and natural gas-based hydrogen are expected to drop significantly. The estimated cost of producing hydrogen from natural gas with carbon capture and storage in 2030 could meet the DOE’s goal of $1/kg of clean hydrogen. Electrolysis-based hydrogen could be reduced to $1.5/kg by 2030, but it will take additional government support to meet the Department of Energy’s target. The region has natural advantages in developing cost-effective hydrogen transport and storage, given the extensive oil and gas and hydrogen pipelines, experience in hydrogen storage , salt caverns and port infrastructure. The Gulf Coast of Texas is positioned to be the United States’ hydrogen export hub, given our ability to compete with major potential exporters (e.g., Australia, Chile, and Saudi Arabia) on the cost of hydrogen delivery. Strategic considerations such as security and reliability also have advantages. Impact of the hub in the region and state As the clean hydrogen ecosystem grows, we can see a variety of projects dealing with supply, demand and infrastructure spread across the region, with concentrations in areas around Greater Houston, Corpus Christi and South Texas, Baton Rouge and New Orleans, Beaumont and East Texas, and extending into Dallas and the Triangle of Texas, as well as West Texas. Cross-cutting enablers Government commitments, direct incentives and regulatory frameworks are among the main policy instruments to reduce costs and increase demand. In addition to federal policies, Texas and Louisiana should implement state-level policies to accelerate progress on Vision 2050. More work is needed to flesh out the appropriate options. Scaling up hydrogen requires the development of infrastructure, including hydrogen transport and storage, filling stations, CO2 transport and storage, purification and transportation of hydrogen. water, electricity transmission, port infrastructure and a mature supply chain for critical materials. The center would benefit from a vibrant innovation ecosystem, including a research consortium that fosters collaboration between different institutions, a start-up network that leverages existing assets and demand in the region, a to scale and commercialize new technologies and local manufacturing of equipment. Meeting the hub’s talent needs requires equitable workforce development programs. Community colleges, higher education institutions and businesses could all play a key role in training the hydrogen economy workforce. The next phase of this work will focus on creating a demand-driven roadmap for 2022 to 2030. Our team will also explore hub funding requirements, sector-specific legal and regulatory unlocks, and ways to build the right coalition for an integrated development effort. the hydrogen hub. Collectively, these actions will create the model for Houston – as the energy capital of the world – and the Gulf Coast to lead the transition to clean hydrogen. “By working together now, government, industry and community leaders can have a meaningful impact at home and around the world that will be felt for years to come,” Perlman said. Learn more about the Center for Houston’s Future and its work on hydrogen as well as the partnership and HETI.

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