Understanding and Measuring the Environmental Impact of Clean Hydrogen Production with LCA

New Policies and Tax Credits Require Quantifiable Emissions

By Tanya Peacock, EcoEngineers

As the world seeks sustainable energy solutions, clean hydrogen is emerging as a promising option among various approaches to decarbonization. Its potential to revolutionize energy consumption is particularly notable in heavy industries and transportation sectors where decarbonization poses significant challenges. To better understand hydrogen’s role in the energy transition alongside other decarbonization strategies, we need to understand the environmental aspects of producing, transporting, and using clean hydrogen.

The Importance of Life-Cycle Analysis (LCA)

LCA has emerged as a key tool in understanding the environmental impacts of not only hydrogen production but also a myriad of low-carbon fuels and pathways. This methodical approach accounts for the emissions across a product’s life stages. From extraction to disposal, LCA quantifies carbon emissions across various production pathways and is essential for transitioning to cleaner energy.

Recent policies, including the Inflation Reduction Act (IRA), have made it imperative to quantify life-cycle greenhouse gas (GHG) emissions for hydrogen on a well-to-gate life-cycle basis to qualify for the new 45V clean hydrogen production tax credit. This guidance, which offers up to $3 per kilogram of hydrogen with a carbon intensity (CI) below certain thresholds, underscores the importance of LCA models like the Argonne National Laboratory’s Greenhouse Gases, Regulated Emissions, and Energy Use in Technologies (GREET) model used in government support mechanisms such as the 45V clean hydrogen production tax credit.

Making Clean Hydrogen Cleaner

The quest for cleaner hydrogen has drawn attention to blue and grey hydrogen projects, and its sustainability continues to be a point of focus. One innovative strategy for improving hydrogen’s environmental attributes involves leveraging renewable natural gas (RNG) credits. Market mechanisms like California’s Low Carbon Fuel Standard (LCFS) encourage RNG’s use for CI reduction by employing a book-and-claim system — a common accounting method where a sustainability claim made by a company is separated from the physical flow of these commodities. Yet, the proposed 45V clean hydrogen tax credit guidance from the U.S. Treasury and Internal Revenue Service (IRS), while allowing RNG use, awaits further clarification on compliance. The U.S. Department of Energy (DOE) also requires additional validation if RNG feedstock does not fit within the parameters of the 45VH2-GREET model.

Carbon capture and storage (CCS) is another critical component in the clean hydrogen narrative, and its potential to enable large-scale clean hydrogen production is significant. By utilizing established infrastructure and benefiting from economies of scale, CCS can be a powerful ally toward net-zero goals, especially with the financial incentive of 45V tax credits.

The U.S. Environmental Protection Agency (USEPA) has not yet approved any hydrogen pathways for Renewable Identification Number (RIN) generation under the Renewable Fuel Standard (RFS). Multiple pathway petitions have been filed by EcoEngineers and others on behalf of their hydrogen clients.

Clean Hydrogen Future Hinges on Low-Carbon Pathways

Hydrogen production from unconventional sources, such as dairy manure, requires detailed LCAs to calculate the CI accurately. The technology choice for hydrogen production, from steam methane reforming (SMR) to electrolysis powered by renewable energy, directly influences the CI score derived from LCA. Producers are motivated to lower their CI not just to comply with regulations but to monetize credits and/or tax incentives and to meet sustainability targets.

The 45V clean hydrogen production tax credit guidance also outlines criteria for sourcing renewable power for hydrogen production. While on-site production is an option for some projects, any grid power used must be verified as renewable through Energy Attribute Certificates (EACs), adhering to strict registration and accounting standards.

Additionally, producers of clean hydrogen face the ongoing task of updating their LCA in alignment with GREET model revisions. The IRA mandates annual LCA updates, ensuring that life-cycle GHG emissions rate calculations are based on the latest data. Additionally, the LCA must address co-products and their emissions, with a clear methodology from regulatory bodies to ensure fair assessments, especially regarding emission allocations to co-products or crediting clean hydrogen production when displacing less clean hydrogen. Also required are annual verification reports performed by an unrelated party.

Summary

Understanding the CI of hydrogen is not just about regulatory compliance; it’s a business imperative. Project developers are incentivized to explore technology options and process improvements to reduce the CI of their hydrogen. Comprehensive LCA services are invaluable, assessing hydrogen CI and identifying strategies for carbon reduction. These services support project developers and policymakers in making informed decisions that align with environmental and economic objectives, aiming to create a transparent, consistent, and fair clean hydrogen market that reflects the true environmental costs and benefits of production methods.

Integrating RNG credits, alongside strategic use of CCS and meticulous LCAs is critical for hydrogen production’s evolution towards sustainability. The interplay of regulations, market incentives, and technological advancements will determine the pace and scale of hydrogen’s role in the energy transition. As the clean hydrogen economy expands, our approach to measuring and managing its environmental impact must evolve in tandem, ensuring that a greener future is within reach.

For more information about our clean hydrogen services, contact:

Tanya Peacock, Managing Director, California and Hydrogen | tpeacock@ecoengineers.com

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Understanding and Measuring the Environmental Impact of Clean Hydrogen Production with LCA