US infrastructure bill lays foundations for a low-carbon future
Bill supports development and expansion of the hydrogen industry in the US through a mix of regulatory initiatives, federal grants and other incentives
Rapid decarbonisation of the US energy sector is becoming increasingly important to achieve state and national clean energy targets. The emerging low-carbon hydrogen and carbon capture, utilisation and storage (CCUS) industries could play a vital role in the transition to a lower-carbon future.
Hydrogen has many potential uses—including as a carrier of energy and as a source of heat—and, when, produced in a low-carbon manner, shows great promise as a tool for allowing hard-to-decarbonise industries to achieve lower emissions, especially the hydrocarbon-heavy fuel sector.
The capture of carbon from industrial emissions and through direct air capture (DAC), and its subsequent permanent underground sequestration or conversion into useful products, is seen by many as a necessary component for reducing global emissions.
Despite the potential of these technologies as drivers of decarbonisation, high costs and uncertain regulatory environments in the US have hampered development.
Key players in the energy industry have voiced their support for clean hydrogen and CCUS, and have been more vocal in advocating for increased federal funding for such projects. The Bipartisan Infrastructure Investment and Jobs Act, as passed by the Senate, would bridge that gap by including billions of dollars in appropriations for research and development, grants, and other programmes to advance the hydrogen and CCUS industries in the US.
The infrastructure bill was first introduced in June this year and was passed by the House of Representatives in July. The Senate made numerous amendments to the bill before ultimately passing it by a margin of 69/30 in early August. It then returned to the House, where it awaits debate. Although the bill was expected to experience delays, the House recently passed a rule that set 27 September 2021 as the deadline to vote on it.
Stimulating the hydrogen industry
The infrastructure bill supports the development and expansion of the hydrogen industry in the US through a mix of regulatory initiatives, federal grants and incentives, and other programmes.
It instructs the energy secretary, in cooperation with the heads of relevant offices of the Department of Energy, to develop a national strategy and roadmap that focuses on facilitating the production, processing, delivery, storage and use of clean hydrogen.
69/30 – Margin by which the bill passed in the Senate
The energy secretary must also work with the administrator of the Environmental Protection Agency (EPA) to develop an initial standard for the carbon intensity of clean hydrogen after considering input from industry and other stakeholders. Importantly, the bill defines clean hydrogen as including hydrogen produced using nuclear energy, biomass and hydrocarbons with CCUS, as well as hydrogen produced through electrolysis.
It also permits the energy secretary to provide multi-year grants and to enter into agreements with eligible entities working on clean hydrogen manufacturing and recycling projects. And it directs the energy secretary to promote the production of clean hydrogen by establishing a programme that concentrates on improving the efficiency, durability and cost of electrolysers, and awarding grants to projects that would achieve those goals.
In addition, the bill establishes the creation of regional clean hydrogen hubs and instructs the Department of Energy’s national laboratories to act as clearing houses to collect and distribute information concerning hydrogen programmes.
Promoting the carbon capture industry
Congress recognises that high capital costs, insufficient transport and storage infrastructure, and lack of state and federal support impede the rapid deployment of CCUS. With the infrastructure bill, Congress would provide assistance to overcome significant obstacles preventing the growth of the CCUS sector. The bill takes several approaches to do this, including requiring the development of standards, providing federal funding and creating federal programmes that will reduce carbon emissions and advance carbon-capture technologies.
The infrastructure bill requires the energy secretary to develop carbon utilisation standards and certifications to facilitate the commercialisation of carbon products. It paves the way for carbon storage and sequestration by promoting the exploration of geological carbon storage and the development of strategies and resources to enable it.
The infrastructure bill is expected to stimulate the rapid decarbonisation of the energy sector through billions of dollars in appropriations for research and development, grants, and other programmes to advance the hydrogen and CCUS industries
Carbon-capture technologies will also benefit from significant proposed outlays in the infrastructure bill. Congress has included federal funding for commercial or industrial products that reduce greenhouse gas emissions, and the energy secretary is required to establish four regional DAC hubs. In addition, the bill requires the secretary of transportation to establish a carbon reduction programme to reduce transport emissions.
Federal programmes designed to promote the deployment of carbon capture include the proposed use of federal lands, increased funding for carbon sequestration permitting activities, and engineering and design schemes. The infrastructure bill grants the secretary of the interior the authority to convey leases, easements or rights of way on the outer continental shelf for long-term geological carbon sequestration, and authorises appropriations for the administrator of the EPA to award grants to states for underground injection control programmes for permitting Class VI wells. The energy secretary will also focus on multiple facets of CO₂ transportation infrastructure by creating an engineering and design programme as well as a finance and innovation programme.
Steps towards sector stimulation
With the infrastructure bill, Congress has taken important steps to stimulate the rapid decarbonisation of the energy sector by including billions of dollars in appropriations for research and development, grants and other schemes to advance the hydrogen and CCUS industries in the US. Both industries will benefit from the federal support and funding provided by the bill. They have long have faced uncertainty due in part to the lack of a regulatory framework and high costs.
The infrastructure bill provides some initial steps towards regulatory certainty, offers federal support through appropriations, and appoints relevant departments and agencies to develop clean hydrogen and CCUS programmes in conjunction with the private sector. Furthermore, the bill creates incentives for industry players to invest in these sectors. Although clearer regulations are needed, the passage of the infrastructure bill will be instrumental to enable progress towards clean energy goals, as the successful deployment of clean hydrogen and carbon-capture technologies is critical to the rapid decarbonisation of the energy sector.