Joe Biden’s flagship hydrogen project faces growing opposition

One of the Biden administration’s flagship projects to derive energy from hydrogen faces an uncertain future due to strong community opposition, underscoring the difficulty in rolling out a technology once hailed as key to the green transition.

The Appalachian Regional Clean Hydrogen Hub (ARCH2), spanning the prolific Marcellus shale basin in West Virginia, Ohio and Pennsylvania, is designed to produce hydrogen using primarily gas and carbon capture by mid-2030. But the $6bn project, which includes fossil fuel companies EQT, CNX and Marathon Petroleum as developers, faces opposition from local communities and green groups over its environmental footprint and doubts over its commercial viability.

Last month more than 50 local environmental groups urged the Department of Energy in a letter to suspend negotiations on ARCH2 until more clarity was provided on the project.

“This is just the latest reinvention of the [oil and gas] industry in an attempt to stay relevant and reposition themselves as a solution to a problem that they created, the climate crisis,” said Tom Torres, hydrogen campaign co-ordinator for the Ohio River Valley Institute, and one of the letter’s signatories.

Clean hydrogen has been touted for its potential to green hard-to-abate sectors such as shipping and cement production. America’s abundant cheap gas resources have made it an attractive destination for projects such as ARCH2, which use gas and carbon capture, also known as blue hydrogen.

But the rollout of blue hydrogen is controversial because it generates emissions and relies on carbon capture technology, which has yet to be proven cost-efficient at scale. A study by researchers at Stanford and Cornell found that the emissions footprint of blue hydrogen was 20 per cent greater than burning gas or coal for heat.

Green groups claim blue hydrogen projects hand the fossil fuel industry a lifeline and funds should instead be directed towards green hydrogen, which is produced using renewables.

Kat Finneran, a doctoral student in geography from Findlay, Ohio, the headquarters of Marathon Petroleum, warned the hydrogen hub would “prolong fracking operations for decades”. 

“It doesn’t just prolong them, it validates and greenwashes them,” said Finneran, who also testified in a Department of Energy listening session in March with nearly 200 participants.

By 2030, the US is expected to become the world’s largest clean hydrogen producer, with blue hydrogen making up more than three-quarters of production, according to consultancy BloombergNEF. Green hydrogen, generated using renewable electricity, will make up the remaining fifth.

Shawn Bennett, project leader for ARCH2 and former deputy assistant secretary for oil and gas under the Trump administration, has defended the hub’s environmental credentials and commercial viability.

He said the hub would not “cause new [gas] wells to be spudded” and attributed local pushback to a “misunderstanding” about the project’s stage of development. ARCH2 was in negotiations with the DOE and had not finalised sites for its hydrogen facilities to begin serious community engagement, said Bennett.

“In lieu of funding it’s very difficult . . . to start making promises and commitments to communities,” said Bennett, who testified at a Pennsylvania house hearing on June 17 on hydrogen hubs, where environmental groups and lawmakers raised concerns over blue hydrogen’s carbon footprint. 

A Department of Energy spokesperson said that clean hydrogen was “essential” to a strong green energy economy and that hydrogen hubs “will help unlock the full potential of this versatile fuel”. 

The Biden administration has set a goal of producing 10mn metric tonnes of clean hydrogen annually by 2030, up from virtually zero today and the same size as the “dirty” hydrogen industry, which is derived from fossil fuels and produces a significant amount of emissions

Community pushback has plagued other hydrogen projects, with France-based CMG Cleantech moving its $113mn renewable technology park in Osceola County, Florida to another site after locals opposed its green hydrogen plans. The move delayed the project by 8 months.

Analysts say hydrogen projects face a struggle to secure funding and customers, with BNEF estimating that only 6 per cent of US projects have secured binding supply agreements. 

“There’s a real lack of trust that there will be a real hydrogen market with competitive prices,” said Elina Teplinsky, partner at Pillsbury Law. “A lot of companies are waiting on the sidelines before they make any serious investment.”

The lack of final rules for the Inflation Reduction Act’s controversial clean hydrogen production tax credit has also hampered the sector’s rollout.

In February, all seven hydrogen hubs penned a letter to Treasury warning that “investments and jobs will not fully materialise” unless the rules are “significantly revised”.

Climate Capital

Where climate change meets business, markets and politics. Explore the FT’s coverage here.

Are you curious about the FT’s environmental sustainability commitments? Find out more about our science-based targets here