Do recent changes to the Environmental Protection Agency’s (EPA) emissions performance standards for existing fossil-fired plants signal the end of hydrogen generation exuberance in the U.S.?
Originally, the EPA proposed using both carbon capture and storage (CCS) and hydrogen co-firing as pathways to a greener future. However, the final rule exclusively mandates CCS technology. It cited cost and availability concerns as major roadblocks in widespread deployment of green hydrogen in generation.
EPA’s final rule, titled “New Source Performance Standards (NSPS) for Greenhouse Gas Emissions from New, Modified, and Reconstructed Fossil Fuel-Fired Electric Generating Units,” offers confidence to those innovating and investing in carbon capture technology.
According to Morgan Stanley, over 500 million tonnes per year (MTPA) of carbon storage capacity is expected to come online within the next five years.
“As sequestration capabilities grow in the U.S. and globally, CO2 utilization provides an immediate pathway to repurpose captured carbon while supporting long-term decarbonization efforts,” said Megan Reusser, Technology Manager, Burns & McDonnell during a recent session at the PowerGen International Show in Dallas.
According to the EPA, the U.S. emits 6342.2 million tonnes of greenhouse gases (GHG) every year of which 25% comes from the electric power sector. While this sector has made by far the greatest progress in reducing its level of emissions over the last few decades, it rarely is cut any slack by regulatory bodies.
The proposed NSPS ruling in 2023 was originally favorable to hydrogen being blended with natural gas. It called for co-firing of 30% (by volume) of low-GHG hydrogen by 2032. This was then to ramp up to 96% by 2038.
An avalanche of public comments brought about a reevaluation of those terms. Green hydrogen co-firing was dropped in the final ruling (green hydrogen entails the use of excess renewable energy to produce hydrogen in an electrolyzer). Instead, only the carbon capture targets remain.
Power plants must achieve a 90% carbon capture rate by 2025. This is estimated to bring about a reduction of 1.38 billion metric tons of CO2 system-wide by 2047. “Green hydrogen was excluded due to its production being more expensive than CCS and the fact that the U.S. has limited infrastructure to produce, transport, or store it,” said Reusser.
There aren’t that many hydrogen-ready pipelines, storage facilities, and gas turbines. Further, hydrogen co-firing is nowhere near being scalable enough for large-scale generation. The forecast emission reductions were deemed unrealistic.
To read more about the likelihood of green hydrogen decarbonizing the power sector, please see our article (now 3 years old!): “Pipe dream? Green hydrogen powering gas turbines: the numbers don’t add up.”
An inconvenient truth is that the power required to produce enough hydrogen in an onsite electrolyzer for a 30% blend with natural gas would be more than most simple cycle gas turbine plants can produce. Instead, the EPA focused on more feasible solutions such as CCS.
“The EPA prioritized CCS as the exclusive compliance pathway in the final rule due to its established track record in reducing emissions from power plants,” said Reusser. “CCS technology is more readily deployable and offers a higher level of certainty in achieving the required 90% CO₂ reduction.”
New natural gas facilities are now subject to stricter NSPS standards for GHG emissions, essentially requiring the inclusion of CCS technology. Existing plants have escaped inclusion in the ruling for now unless they seek to upgrade their turbomachinery.
However, the EPA has only deferred setting emission guidelines for GHG emissions from existing stationary combustion turbines. The agency plans to address these in future regulatory actions. Any facility that started construction after May 23, 2023 comes under NSPS standard.
By 2032, the teeth in this ruling will bite. New combined cycle and simple cycle units will find themselves subject to low GHG requirements. No current turbine or configuration comes anywhere close to meeting these standards with CCS.
“This adds up to higher capital and operational expenses for retrofitting and compliance as well as a limited role for hydrogen co-firing,” said Reusser. “Achieving 90% carbon capture can more than double the CAPEX of a combined cycle plant though this may be offset to some degree by tax credits.”
The cynical among us might quip that such a facility is not really a power plant. It is really a CO2 plant that also provides power generation capabilities.
This EPA ruling doesn’t mean that hydrogen is over. Yes, it has been dealt a severe blow in the U.S., but some tax credits remain for qualifying hydrogen generation initiatives.
The likelihood is that the U.S. will largely leave experimentation and innovation in hydrogen generation to the rest of the world while it focuses on those industries where hydrogen is already in use: refining, chemicals, steel, ammonia, methanol, and cement.
“These industries use hydrogen mostly as a molecule rather than for power,” said Reusser. “They are the ones that will drive green hydrogen usage in the U.S.”
