U.S. Federal Government and the Hydrogen Economy 2021

As set forth in Holland & Knight's Realizing a Hydrogen Economy blog series, there is an immense opportunity for hydrogen to play a key role in global decarbonization efforts across dozens of sectors and applications. However, to realize the full potential of hydrogen and to ensure green hydrogen is in a position to play a critical role in decarbonization, government partnerships, collaboration and an inviting regulatory landscape will be critical. This blog provides a high-level overview of the available U.S. federal government programs to support the development and deployment of hydrogen applications. Holland & Knight's Energy team has extensive experience with these and other similar programs and stands ready to assist interested parties in navigating through the process to take advantage of them.

U.S. Department of Energy (DOE)

Hydrogen and Fuel Cell Technologies Office

The Hydrogen and Fuel Cell Technologies Office (HFTO) is the premier applied research and development (R&D) program at DOE. The office most traditionally provides funding in the form of competitive grants to conduct R&D in hydrogen production, delivery, infrastructure, storage, fuel cells and multiple end uses across transportation, industrial and stationary power applications. Under the leadership of HFTO Director Sunita Satyapal, the program also provides support for technology validation, manufacturing, analysis, systems development and integration, safety, codes and standards, education and workforce development. The Consolidated Appropriations Act for Fiscal Year (FY) 2021 provided $150 million to HFTO.

The largest area of focus for HFTO today is the H2@Scale initiative that focuses on bringing "together stakeholders to advance affordable hydrogen production, transport, storage, and utilization to increase revenue opportunities in multiple energy sectors."¹ Through H2@Scale, DOE is funding projects and national laboratory-industry co-funded activities to accelerate the research, development and demonstration of applicable hydrogen technologies. A consortium of stakeholders have come together through H2@Scale to support and facilitate progress for the industry through seven R&D pillars:

• Grid simulation and testing R&D
• Development and use of co-products R&D
• Techno-economic modeling and analysis
• Hydrogen materials compatibility R&D
• Safety R&D (cross-cutting)
• Performance verification to guide R&D
• Materials and component manufacturing R&D

As the initiative matures, new priorities such as H2@Aviation are beginning to emerge that build on existing efforts that have a more specific focus, such as on medium- and heavy-duty vehicles. While some of these initiatives are in their infancy and many may look at HFTO's funding as minimal when compared with the capital needs to realize a green hydrogen economy, it's important to note the role that this programs have played in deploying and enabling hydrogen to date. Accordingly, it's inevitable that the DOE HFTO will continue to be at the center of the U.S. government's efforts and hydrogen deployment.

Loan Programs Office

The DOE loan programs represent the best and often only way for innovative technologies, and emerging and existing American manufacturers to cross the barrier from development to deployment of new and improved technologies in the U.S. and ultimately for export.

The Loan Programs Office (LPO) currently administers two programs that can play a catalytic role in jumpstarting the hydrogen economy. At present, LPO is the only program within DOE that can provide financing for commercial-scale deployment of clean energy technologies. Specifically, there is $4.5 billion in remaining Title XVII Innovative Clean Energy Loan Guarantee (Title XVII) authority to support green and blue hydrogen production and infrastructure through the open Renewable Energy and Efficient Energy Projects solicitation, and more than $10 billion in the Advanced Technology Vehicles Manufacturing Loan Program (ATVM) to support the manufacture of fuel-cell electric passenger vehicles and components.

The CLEAN Futures Act that was recently reintroduced by House Energy and Commerce Committee Chairman Frank Pallone (D-N.J.) addresses a long sought after expansion of ATVM program eligibility to include manufacturers of certain medium- and heavy-duty vehicles, and component suppliers. By expanding ATVM eligibility, it would open up the program to manufacturers of medium- and heavy-duty fuel-cell electric vehicles. In addition, it would reduce the burden on the supply chain manufacturers for those newly eligible vehicles to demonstrate that they are also eligible for ATVM financing.

In addition, the CLEAN Futures Act builds on the recent reforms to Title XVII that were included in the Energy Act of 2020. The legislation also defines the DOE loan programs' crucial eligibility criterion – "reasonable prospect of repayment," which many believe to be the critical obstacle preventing broad programmatic utilization since clean energy markets have evolved and matured, and, today, new financing structures, contracting terms and regulatory regimes are available but are not being taken into consideration in a comprehensive and holistic manner. By defining "reasonable prospect of repayment," the DOE will have more precise guidance for evaluating projects' financial viability, which will be instrumental in supporting new markets such as hydrogen.

Advanced Research Projects Agency – Energy (ARPA-E)

ARPA-E is DOE's "high-potential, high-impact" $430 million R&D program that focuses on energy technologies that are too early for private-sector investment. The agency's approach, which differs from the rest of the department's R&D portfolio, has resulted in the advancement of many game-changing technologies. A key element of ARPA-E's mission, which is specifically called for in its statutory mandate from Congress, is to prepare technologies for an eventual transfer from lab to market, and specialized Tech-to-Market teams within the agency work with award recipients to develop and implement strategies for commercialization.

In early March 2021, ARPA-E closed a Request for Information (RFI) that focused exclusively on stationary hydrogen storage technology development. In particular, the RFI was looking to collect information from industry, academia and the national labs on safe, low-cost, flexible scale, transportable and widely deployable hydrogen storage technology for ultralong-duration seasonal energy storage. Of most interest to ARPA-E in this specific RFI were turn-key systems ready to be integrated with hydrogen fuel-cell power generation, hydrogen-capable combined heat and power (CHP), microgrid and other distributed power generation systems. It is typical to see new funding opportunity announcements following RFIs,. Therefore it is likely a new opportunity will be released this year from ARPA-E with a goal of developing stationary hydrogen technologies and validating their reliability under variable conditions, manufacturability and favorable economics at scale.

Conclusion

Today, numerous programs and initiatives are already present across the federal government to support broad deployment of hydrogen. The programs set forth above are the established initiatives and federal government programs available to help companies in FY 2021. Additional near-term initiatives are likely to be unveiled as part of the Biden Administration's decarbonization initiatives. However, broader long-term initiatives similar to what other countries are proposing are not imminently expected until the Biden Administration and U.S. federal government is further underway in its plans to achieve full decarbonization and net-zero emissions by 2050.  As such initiatives are detailed and unveiled, Holland & Knight's Energy Team will provide additional details and analyses. In the interim, companies and interested parties are encouraged to review the programs set forth above and begin to engage with the federal government offices set forth above, as such offices will continue to play a central role in realizing a hydrogen economy.

For additional articles in the Realizing a Hydrogen Economy series, please visit Holland & Knight's Energy and Natural Resources Blog.

Learn more about our Energy and Natural Resources Industry Sector Group.

Notes

¹ H2@Scale: Enabling affordable, reliable, clean and secure energy across sectors