Hydrogen: The next clean fuel. Maybe.

Hydrogen has stolen the heart of many a clean energy wonk. But with big investments on the horizon, its climate credentials are coming under deepening scrutiny.

Depending on how it’s made, transported and consumed, hydrogen can be a zero-carbon renewable dream — or a carbon-intensive, business-as-usual dirty fuel. The Energy Department is betting that with enough government support, it can be more of the former.

The department is preparing to dole out up to $7 billion to help build an industry for lower-carbon hydrogen. The hope is that a cleanly made hydrogen could replace fossil fuels in some of the hardest sectors to electrify, and wouldn’t release carbon when it’s burned in power plants.

The money will be given to so-called hubs where the fuel is produced, stored and consumed in a single geographic cluster, to keep down costs and maximize efficiencies. Governors, state officials, U.S. senators and private-sector coalitions from at least 39 states, plus the Navajo Nation, have expressed interest in bringing home some of that money.

Today, the U.S. largely produces hydrogen made from natural gas in a carbon-intensive process. The Energy Department will steer clear of funding such “grey” hydrogen, instead focusing on hydrogen made in cleaner ways, which might involve capturing carbon or using renewable or nuclear electricity and water as energy sources.

The Biden administration hopes that by 2030, the U.S. can produce about as much lower-carbon hydrogen as it does of the “grey” kind today.

Even if companies miss out on the $7 billion in grants — funded through last year’s bipartisan infrastructure law — they might be able to take advantage of the Inflation Reduction Act’s tax credits for low-carbon hydrogen production.

But is it really clean? With all that federal support in the offing, battles are raging over how exactly to define clean hydrogen.

“Green” hydrogen — as industry groups call it — can be made using any electricity from the grid, instead of dedicated wind and solar facilities. Environmentalists and grid modelers say that could lead to significant greenhouse gas emissions.

“Blue” hydrogen has come under even more criticism. It is made using natural gas, paired with carbon capture systems — a process environmentalists dismiss as a false solution.

And if burned directly in a power plant turbine, even the cleanest types of hydrogen can release nitrogen oxide, which contributes to environmental ills such as acid rain.

To claim federal funds, hydrogen projects will have to abide by limits on carbon emissions, as laid out in the Inflation Reduction Act and the infrastructure law. But the precise way to calculate the carbon is still unclear until the Treasury and Energy departments finish crafting guidance documents.

It’s Monday — thank you for tuning in to POLITICO’s Power Switch. I’m your host, Arianna Skibell. Power Switch is brought to you by the journalists behind E&E News and POLITICO Energy. Send your tips, comments, questions to [email protected]

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