President Biden’s signature Build Back Better bill fell into the dustbin of history last summer, but apparently the US Department of Commerce did not get the memo. The agency has just put up $50 million for a green hydrogen hub in the New Orleans region under a new program called the Build Back Better Regional Challenge. That’s going to be a tough row to hoe, considering the grip of fossil fuel stakeholders on the Pelican State. However, Build Back Better is all about transformation, right?
What Is The Build Back Better Challenge?
For those of you new to the topic, the Build Back Better bill was supposed to transform the US economy. It combined economic growth provisions with climate action, equity, and environmental justice.
Exactly zero Senate Republicans agreed to vote for the bill, so it needed support from all 50 Democratic Senators. The Democratic Senator from West Virginia, Joe Manchin, held out until the rest of his caucus agreed to tamp down on that transformational thing. A watered-down version finally passed last month under the title “Inflation Reduction Act of 2022.”
Although the IRA is no BBB, climate advocates are generally satisfied that it will spur significant progress on decarbonization.
Meanwhile, the Commerce Department has been plowing ahead with a test of the equity and environmental justice aims of BBB, in miniature. The agency launched the new Build Back Better Regional Challenge last year, deploying Covid-19 emergency funds from the American Rescue Plan.
As described by Commerce, the BBBRC aims to “transform regional economies” through a holistic, equity-driven approach governed by a “singular vision,” leading to the growth of new industries and the scaling-up of existing ones.
The Brookings Institution, for one, caught on to the idea that the BBBRC is a stealth mode version of the Build Back Better bill. Last week the Commerce Department announced a cohort of the New Orleans region and 20 other BBBRC awardees last week for a total of $1 billion in funding, and Brookings had this to say:
“…the BBBRC represents a critical test for key assumptions of the broader Biden administration economic framework: that major public investment can catalyze new markets and technologies; that growth and equity can be mutually reinforcing drivers of shared prosperity; and that federal agencies can unleash state and local innovation while requiring effective, on-the-ground implementation at the same time.”
Louisiana Already Front & Center In Green Hydrogen Race
Louisiana’s green hydrogen ambitions will put these key assumptions to the test. The global green hydrogen market is beginning to take off like a rocket, and renewable energy stakeholders in the Pelican State aim to go along for the ride.
Among other advantages, Louisiana can lay claim to offshore wind power in the Gulf of Mexico. Wind speeds in the Gulf are not optimal compared to the Atlantic and Pacific coasts, but last year the Energy Department’s National Renewable Energy Laboratory laid out the economic case for an offshore wind industry in Louisiana.
Offshore wind can provide the clean kilowatts to power electrolyzer systems, which push hydrogen gas from water. Natural gas is currently the feedstock of choice for hydrogen production alongside other fossil sources, but water electrolysis has the potential to push natural gas off the map as costs come down and the electrolyzer industry scales up.
Louisiana’s ammonia industry will also come into play. Ammonia (NH3) is another sector that leans heavily on natural gas, but with green hydrogen in hand the ammonia industry is already beginning to pivot into a more sustainable model.
How To Win The Build Back Better Challenge
The $50 million Louisiana grant goes specifically to the South Louisiana region, under the umbrella of the “H2theFuture” initiative of the Greater New Orleans Development Foundation.
H2theFuture is tasked with cutting the cost of sustainable H2 and bringing it to parity with fossil-sourced hydrogen, while also adhering to the tenets of BBBRC.
“The need for systemic economic diversification in Louisiana is urgent. In the last decade, the region lost more than 22,000 good-paying jobs in the oil and gas industry, leaving it with legacy energy infrastructure, workforce, and a demand-base primed for transition,” explains the The Commerce Department’s Economic Development Administration.
Projects to be funded by the grant include cost-cutting test beds, hydrogen fuel for ships, and a hydrogen fueling barge at the Port of South Louisiana.
BBBRC is a justice program as well as an industry-supporting one, so H2theFuture also had to demonstrate the importance of transitioning to a fossil-free economy, in order to win funding.
“There is a strong and multifaceted equity argument for South Louisiana to make this transition to clean hydrogen – decades of structural inequities have affected the region, which are reflected in current statistics,” H2theFuture explains.
“In the energy industry, while jobs are well-paying, only 29% are held by minorities, compared to over 50% in the lower- wage hospitality sector (Emsi); average wages are $62,000 for whites compared to $33,000 for African Americans (ACS 5-Year Estimates),” they add.
“…air and soil pollution disproportionately affect communities living close to industry,” H2thFuture also notes. “According to the EPA, of the top 15 census tracts with the highest cancer risk in the nation, 7 are majority-black population tracts in South Louisiana.”
Among the equity provisions planned for the new hydrogen hub are:
— an inclusive entrepreneurship program
— an HBCU New Energy Specialization to position students from the region’s four Historically Black Colleges and Universities as hydrogen industry leaders in business, public policy, and law
— a workforce training and apprenticeship program
Follow The Money To Green Hydrogen
In an interesting twist, South Louisiana’s BBBRC grant dovetails with the Energy Department’s $8 billion plan to create a network of regional “Clean Hydrogen Hubs” throughout the US. The plan is funded through last year’s Bipartisan Infrastructure Law.
The new grant could give H2theFuture a leg up on the sustainable H2 competition. They’ll need all they help they can get. Also competing for a share of the $8 billion pot is a powerful alliance of six northeast coastal states that are primed and ready to tap into their offshore wind resources. That group initially launched with Massachusetts, Connecticut, New York, and New Jersey. Maine and Rhode Island have also hopped on board.
In another interesting twist, the Energy Department’s $8 billion hydrogen hub competition places an emphasis on principles that support the BBBRC.
“Principles of equity and justice will guide [Bipartisan Infrastructure Law] implementation, consistent with the Biden Administration’s commitments to ensure that overburdened, underserved, and underrepresented individuals and communities have access to federal resources,” the Energy Department explains.
If you’re wondering why the Energy Department is focusing on the word “clean” for its hydrogen hub competition, that’s a good question. As a creature of the Bipartisan Infrastructure Law, the hydrogen hub program is designed to draw on multiple resources for hydrogen supply, and not all of them are renewable.
Specifically, the law provides for at least one hub has to incorporate nuclear energy for water electrolysis. That could work in H2theFuture’s advantage, though the northeast coalition could also call upon its remaining nuclear fleet.
The law also provides for the incorporation of natural gas with carbon capture. That could be another advantage to H2theFuture, considering Louisiana’s gas industry. However, a coalition of Appalachian states comprised of Pennsylvania, Ohio and West Virginia already seems to have a lock on that angle. They have already announced a focus on natural gas with carbon capture.
Good luck with that. Manufacturers are scurrying to decarbonize their operations and clean up their supply chains including energy, materials, and parts. Hydrogen from natural gas is going to be a tough sell in the sparkling green economy of the future.
Follow me on Twitter @TinaMCasey.
Image: Green hydrogen with offshore wind power courtesy of H2theFuture.
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