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The Midwestern clean hydrogen economy: Potential for community- and climate-beneficial industry decarbonization

November 7, 2023 Work Area: Zero-Carbon Fuels

The Midwest is a dynamic and diverse swath of the country, with an economy that includes more than just agriculture. The country’s largest in-land petroleum refinery, the bulk of our domestic iron and steel production, and numerous fertilizer and chemical manufacturers, as well as an extensive interstate and heavy-duty trucking network all call the Midwest home. Each of these industries are considered hard-to-abate sectors given that they either use carbon-based fuels (e.g., diesel) or produce carbon as part of their production process (I.e., steel or refineries) and cannot be fully decarbonized through electrification. Low-carbon hydrogen is a critical component of the climate mitigation solution set, especially as an input to other products for these hard-to-abate industries and as a zero-carbon fuel replacement for current liquid fuels. Given this, it is likely to play an important role in affordably achieving full, economy-wide decarbonization by 2050. 

In 2023, the U.S. Department of Energy (DOE) launched a National Hydrogen Strategy to scale-up the production and use of low-carbon hydrogen across the country. Given the concentration of hard-to-abate industries in the Midwest, the region stands to benefit from the DOE’s Regional Clean Hydrogen Hubs Program (Hubs Program) enacted by Congress. In particular, the DOE’s Hubs Program can help and should ensure that low-carbon hydrogen is prioritized for end-use sectors which currently use hydrogen in order to maximize existing carbon dioxide (CO2) emissions reductions. As the Hubs Program expands and production quantities increase, additional end-use sectors which show promise for climate- and community-benefits should then be prioritized, including key Midwest industries such as heavy industry and heavy transportation. 

The Midwest Hydrogen Hubs 

Currently, hydrogen is used as a feedstock and a fuel source for a variety of products that are used throughout the modern world. Today’s hydrogen is almost exclusively produced from fossil feedstocks, with most of current global hydrogen produced through a process called steam methane reformation (SMR) where natural gas is reacted with steam to split both molecules, resulting in pure hydrogen and CO2. Globally, this existing high-carbon intensity hydrogen production accounts for more than 900 million metric tons of CO2 emissions annually (approximately 2.5% of our global emissions). The Hubs Program aims to address these existing emissions and catalyze new uses of hydrogen in hard-to-abate sectors by providing demonstration resources to shift existing production processes to low-carbon production methods. Five Midwestern hubs submitted final applications to the DOE through the competitive Hubs Program process, including:  

  • Great Lakes Clean Hydrogen Hub (GLCH) 
  • Heartland Hub (HH2H
  • Hydrogen, Agriculture, Renewables, Vehicles, Energy Storage, and Transportation Hub (HARVEST) 
  • Mid-Continent Clean Hydrogen Hub (MCH2
  • Midwest Alliance for Clean Hydrogen (MachH2

Of the five applicants, HH2H and MachH2 were selected by DOE for the next phase of the Hubs Program.  

These applicants plan to develop similar production processes and primary end-uses, according to CATF research, applicant announcements, and the DOE Office of Clean Energy Demonstrations (OCED) announcement, as shown in the table below. 

States InvolvedLead Applicant(s)Production PathwayEnd-Users
HH2H MT, MN, ND, SD, WI*U. North Dakota Energy & Environmental Research Center Biomass gasification 
Natural Gas with Carbon Capture and Sequestration   
Power Generation 
Residential Heating 
MachH2 IL, IN, MIConstellation Nuclear 
Natural Gas with Carbon Capture and Sequestration 
Industrial Refining 
Power Generation 
*Montana and Wisconsin are included as associated with the HH2H per the University of North Dakota’s press release (linked in table above), but not in the OCED announcement. 

While these two selected hubs will move forward, it remains to be seen whether the three remaining applicants will proceed independently. 

Low-carbon production is essential 

Both HH2H and MachH2 have stated they will use a combination of nuclear, wind, and solar energy to power the electrolyzers that will make low-carbon hydrogen by splitting water. Both hubs also note some production from natural gas with carbon capture and sequestration. Regardless of production method, hubs must make every possible effort to minimize their greenhouse gas emissions. For electrolyzer-based production, that means using zero-carbon electricity to run the electrolyzers. For natural gas-based production, that means achieving high rates of carbon capture, minimizing methane leakage from the natural gas supply chain, and using zero-carbon electricity for any process electricity.   

High-value end-uses should be prioritized 

As with all new investments in technology, there is both promise and hype. There has been a lot of talk about hydrogen being used for a variety of end-uses, but it is important to note that it is energy-intensive to produce and an expensive energy carrier. For those reasons, hubs should prioritize hydrogen use in sectors that currently use hydrogen as an input, followed by sectors which do not have feasible decarbonization alternatives or are prohibitively expensive to electrify. In the Midwest, hydrogen presents an option to offset existing emissions for several major sectors:  

  1. Petroleum refining 

    Globally, approximately 43% of all currently produced hydrogen is created and consumed in petroleum refineries. Substituting current high-emitting hydrogen production with low-carbon hydrogen is an easy win that can lower CO2 emissions in the near term as refineries transition over the coming decades to a low-carbon economy.  
  1. Ammonia production 

    Globally, ammonia production, mostly used to create fertilizers, produces approximately 500 million metric tons of CO2. Replacing current hydrogen production methods with low-carbon hydrogen can significantly reduce the carbon intensity of this process.  
  1. Iron and steel manufacturing 

    The Midwest is a powerhouse of the United States’ steel industry. Hydrogen can be used in some of these mills as a substitute for coke coal in the iron refining process or burned in a pure oxygen environment (called “oxy-combustion”) as a replacement for natural gas in high-heat applications such as steel and glass manufacturing. 
  1. Methanol 

    Methanol is a chemical feedstock in a wide variety of household products and chemicals. Its production uses natural gas as a feedstock. Replacing this with low-carbon hydrogen would lower the overall carbon intensity of this base feedstock. Given its chemical structure (CH3OH) though, it cannot be fully decarbonized. 

Additional promising uses that could provide climate benefits in the Midwest include: 

  1. Heavy-duty long-haul transportation 

    Diesel truck fleets crisscross the region and the country, creating significant local air pollution along interstate corridors. While battery electric vehicles (BEVs) for heavy-duty fleets are currently available, fuel cell electric vehicles (FCEVs) utilize hydrogen as the energy carrier and offer a variety of benefits over their BEV counterparts. 
  1. Maritime shipping fuels 

    Maritime shipping in the Great Lakes region, on the river barge fleets throughout the Midwest, and globally relies heavily on diesel fuel. Low-carbon hydrogen, ammonia, and methanol are all options to replace current diesel fleets and sourcing the hydrogen for any of these end fuels from low-carbon sources will help ensure these conversions are as climate-beneficial as possible. 
  1. Biofuels refining 

    Much like petroleum refining, the biomass feedstocks used to create biofuels require hydrogen to remove oxygen and hydrotreat the final product. Substituting current hydrogen production with low-carbon hydrogen is another opportunity that can lower emissions associated with biofuels production. 
  1. Sustainable aviation fuels 

    The aviation sector makes up approximately 2% of global CO2 emissions, and planes are challenging to electrify. Sustainable Aviation Fuels (SAF) is a very new field of study and will develop over the coming decades. Hydrogen can provide a decarbonization option—through hydrogen-powered planes, use of hydrogen as a feedstock in a synthetic fuel, or necessary hydrotreating of bio-based SAFs. The potential emissions reductions of these currently proposed replacement fuels will require low-carbon hydrogen as a feedstock. 

Hydrogen is also being considered for other sectors and end-uses, but these cases may not be the most climate- and community-beneficial pathways for decarbonization. Hydrogen combustion with air has the potential to increase local emissions of nitrogen oxides (NOx), which are linked to respiratory health risks. As such, using hydrogen for natural gas blending, power generation, residential heating, and light-duty or passenger vehicles (called Hydrogen internal combustion engines, or H2ICE) all need to be scrutinized to make sure these do not worsen local air pollution concerns in historically overburdened communities. Any projected increases will need to be weighed against the decrease in other, status quo local emissions (ex. particulate matter) for communities to assess the tradeoffs and determine alternatives. Likewise, using hydrogen as a seasonal energy storage option may have some niche applications, but its use will likely be regionally specific. 

What’s Next 

Despite being selected as finalists, the two Midwestern Hubs are not final yet. Now the Hubs Program moves into the negotiations phase, where the DOE and Hubs applicants will develop a shared understanding of the project’s scope, the budget, and the requirements for the award agreement – including community benefits related commitments. As part of this process, community engagement and community benefits plans will be essential to ensure host communities are informed about the technology and are able to provide input to shape the benefits and mitigate the risks associated with these new infrastructure projects. This is a central component of the Hubs Program, and it will be essential for host communities, developers, and interested third parties, like CATF, to work collaboratively to address new challenges that may emerge. A few of these could include: 

  • Siting decisions for renewable energy, electrolyzers, carbon storage, hydrogen storage, and transportation infrastructure; 
  • Ensuring hydrogen demand builds in sectors where hydrogen is already used as an input, followed by sectors where hydrogen shows the most promise for decarbonizing hard-to-abate sectors; and 
  • Maximizing local benefits (ex. air quality improvements and workforce development opportunities) and mitigating risks (ex. safe water use, treatment, reuse, and disposal). 

To date both HH2H and MachH2 have presented on various aspects of their Community Benefits Plans and there are many aspects worth noting. HH2H, for instance, includes a potential equity ownership partnership agreement with the Mandan, Hidatsa, and Arikara Nation, local farmers, and farm cooperatives; focuses on wealth creation for the community partners; incorporates K-12 STEM and apprenticeship programs; and is governed by a CBP Advisory Board. Likewise, MachH2 committed to engaging historically disadvantaged communities to source high-paying jobs associated with the hub; committed to directing 40+% of subcontractor funds to diverse business enterprises; and is governed by both a Community Benefits Advisory Working group and local advisory councils. Now that the applicants have moved into the negotiation phase of the Hubs Program, ensuring these commitments come to life will be essential. 

The Midwest has a wealth of industries that could see significant carbon emissions reductions through the build-out and use of low-carbon hydrogen. With meaningful community engagement and partnerships which provides decision-making authority for host communities and a good faith effort to address community concerns, these Hubs and their projects have the potential to address local air pollution and create clean energy job opportunities for local communities. To make these benefits materialize in the Midwest though, deep collaboration between communities, hub developers, and policymakers will be essential.  

For more on hydrogen hubs, please see CATF’s U.S. Hydrogen Hubs Map, as well as our most recent blog following the hydrogen hubs selection announcement. These resources will be updated as additional hub details emerge. 

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