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This Week's Trend In Brief:

• Last week, President Biden announced the seven regional hydrogen hubs that will receive $7 billion in grants from the Inflation Reduction Act (IRA), but like many parts of the IRA, these hubs of excitement face a long, difficult road to development.
   

• Well before the IRA’s passage, climate activists made it clear they view hydrogen as a “false solution” that merely extends the life of fossil fuels, and now they have aggressive plans to keep the IRA’s hydrogen dreams from becoming a reality.
   

• Indeed, this vocal opposition, which was on full display in response to the President’s announcement, is just the latest reminder on the ever increasing gap between a climate industry building solutions for our clean energy future and climate activists whose continued existence requires never being satisfied.
   

• While that activism will certainly play out in permitting and approval processes necessary to build out these hydrogen hubs and other similar projects, activists and policymakers aligned with them will also apply pressure in Washington as the Biden Administration sets rules for what constitutes “clean” hydrogen and Wall Street as investors determine what projects meet their ESG goals for capital.
   

• To ensure hydrogen’s place in our clean energy future, energy developers, their partners in government, and other interested stakeholders will need a playbook to understand the opposition and anticipate how they can delay or disrupt hub supporters’ plans.

Digging Deeper:

 
On October 13, 2023, President Biden announced seven regional hydrogen hubs that will receive $7 billion in grants from the Inflation Reduction Act (IRA). As part of the IRA, lawmakers approved a hefty tax credit for companies that produce low-emissions hydrogen, in the hopes of driving down the cost of production. Dozens of regions competed for the money, which will be awarded to proposed hydrogen projects all across the continental United States. The Department of Energy estimates that the use of cleaner forms of hydrogen could grow to 10 million tons per year by 2030, up from virtually nothing today.

For years, climate activists made clear they view hydrogen as a “false solution” that merely extends the life of fossil fuels. Three of the seven hubs will rely on blue hydrogen, which pairs natural gas with carbon capture to reduce emissions in the energy-intense production of hydrogen. Activists are calling on hydrogen production to exclusively come through green hydrogen, produced with no emissions, despite blue hydrogen success at keeping emissions below the Department of Energy’s proposed emissions thresholds. Environmental groups believe labeling blue hydrogen low-emission merely extends the lifetime of oil and gas in the energy value chain, and claimed the process could lead to higher emissions if there is a methane leak.

That opposition was on full display in response to the President’s hydrogen hubs announcement, showing the outlines of the well-organized on-the-ground efforts these projects will face. 32 organizations from Appalachia signed a statement opposing the Appalachian Regional clean hydrogen hub centered in West Virginia. National environmental organization Earthjustice has already published information on the supposed risks of hydrogen. Numerous environmental groups have penned letters calling on the Biden Administration to withhold further funding for the hubs. The predictable opposition is another example of how climate solutions-focused projects conflict with the interests of climate activists.

Alongside that on-the-ground activism, activists and policymakers aligned with them will apply pressure in Washington as the Biden Administration sets rules for what constitutes “clean” hydrogen. The Treasury Department is in the midst of determining standards for the Inflation Reduction Act’s clean hydrogen tax credit. In the meantime, activist pressure towards green hydrogen is beginning to influence members of Congress. While at least 10 Democratic Senators reportedly urged the Administration to provide “a robust and flexible incentive that will catalyze and quickly scale a domestic hydrogen economy,” three of their colleagues called on the Treasury Department to adopt strict standards for the tax credit, qualifying only green hydrogen.

Firms should also anticipate activists targeting Wall Street, urging investors to carefully consider which hydrogen projects are consistent with their stated ESG commitments or update those commitments to be more restrictive. Activists demanding climate purity will predictably lobby Wall Street investors to update their ESG goals as they have with other climate initiatives. Indeed, some Wall Street lenders are already withholding financing hydrogen projects in anticipation of such pressure even as one study found that projected investment in hydrogen projects would fall by two-thirds by 2035 if rules are too stringent.

Hydrogen hubs are the latest reminder on the ever-increasing gap between a climate industry building solutions for our clean energy future and climate activists whose continued existence requires never being satisfied. Activists across the country have worked to cement the narrative that hydrogen is a “false solution” and have campaigned tirelessly to thwart hydrogen projects despite the climate benefits. Public affairs professionals and the organization they represent that hope to leverage federal support to build green infrastructure, hydrogen or otherwise, will need to understand the opposition and anticipate how that activism can delay or disrupt infrastructure investments. Energy industry public affairs teams need to adopt a proven playbook to assess their risks and anticipate potential concerns – within communities or from outside groups – then leverage that information advantage to monitor activity so they can stay two steps ahead of the opposition.

Trends in Energy is your weekly look at key trends affecting the energy industry, brought to you by the competitive intelligence experts at Delve. As the political and regulatory landscape continues to shift, reach out to learn how our insights can help you navigate these challenges.