The Biden administration has designated seven regional hydrogen hubs to receive as much as $7B in federal funding to develop hydrogen as an energy source in a sustainable way.

The sites chosen are:

• The Appalachian hub: West Virginia, Ohio and Pennsylvania

• The California hub

• The Gulf Coast hub in Texas

• The heartland hub: Minnesota, North Dakota and South Dakota

• The mid-Atlantic hub: Pennsylvania, Delaware and New Jersey

• The Midwest hub: Illinois, Indiana and Michigan

• The Pacific Northwest hub: Washington, Oregon and Montana

The 2021 Infrastructure Investment and Jobs Act allocated funding to the Department of Energy to support the development of regional hydrogen hubs. The goal of the program is to build up networks of producers, users and the infrastructure required to link them, which would require the development of new hydrogen facilities and space for ancillary businesses.

Since then, DOE has accepted proposals from hydrogen hub applicants. The proposals tend to be backed by state governments and industry groups, including energy companies and renewable developers.

The designation of hubs doesn't represent a commitment by the DOE to provide funding. Before funding is awarded, applicants for funding in a particular hub will undertake negotiations with the DOE, which may cancel negotiations or rescind the selection during that time.

The hydrogen economy is already a growing part of the energy sector, with 170 hydrogen projects underway in North America at the beginning of 2023, representing $46B in direct investment in the sector, up from $29B in 2022. Growth in the sector promises development not only of hydrogen production facilities but also real estate development to support the industry.

In 2022, the global production of hydrogen stood at about 82.3 million metric tons, according to Wood Mackenzie data, with virtually all of that produced in unsustainable ways. Demand for hydrogen was up 28% over the last 10 years, the company reported.

When used as a fuel, the only direct byproduct of hydrogen is water vapor. It is the production of hydrogen that can be and is carbon-intensive.

Hydrogen is most commonly produced on an industrial scale by separating hydrogen atoms from carbon atoms in methane. Other methods include splitting hydrogen from water using an electric current, a longstanding process known as electrolysis.

The electricity needed for electrolysis can be generated by solar, wind or other renewable energy sources. Hydrogen produced sustainably via electrolysis is known as green hydrogen.

Green hydrogen is still relatively uncommon since the cheapest hydrogen made from natural gas costs about $1.50 per kilogram, with green hydrogen costing $5 or more for the same amount, The Wall Street Journal reported. Tax credits provided by the Inflation Reduction Act, which will be as much as $3 per kilogram, aim to tilt the market toward green hydrogen.