Tuesday, August 16, 2022

Energy Provisions in the Inflation Reduction Act

 

Today, Aug. 16, 2022, President Biden signed into law the Inflation Reduction Act (IRA). Provisions in this law cover diverse topics like climate, health, and taxes. With $369 billion dollars devoted to climate and energy, this law is single largest action taken by the US Congress to curb the growing threat from climate change. Given how deadlocked the Congress has been these past few years and how many bills were never even voted on, the passage of IRA along strict party lines is nevertheless an achievement worth noting. 

 

Do I like everything in it? No! Could I have passed a better legislation? No! I am just celebrating the enactment of this important law that addresses our climate and energy crisis. Earlier today, I had a conversation with artist and host Michael Killen on his show, The Michael Killen Report, on this topic. A link to it follows a brief discussion of the IRA. 

 

IRA is projected to cut greenhouse gas emissions by 40% from 2005 levels by 2030. That’s 80% of what the larger Build Back Better was projected to achieve. Most of the energy-related provisions focus on electricity. That reflects the growing realization that we need to electrify as much of the society as possible and produce clean electricity to run it. It provides investments and tax credits for a diverse set of energy initiatives covering electrical power generation, transmission and distribution, and consumption.

 

A. Generation

  1. Provides $60 B in incentives for installation new clean energy systems—mostly wind and solar. It will lock in investment and production tax credits (ITC and PTC) for the next ten years. By removing this uncertainty of revenues from ITC and PTC, the bill incentivizes businesses to engage in these projects. Leveraged with the private investments, these funds could increase the US renewable energy capacity to 300 GW from its current level of 200 GW.
  2. Provides funding through Defense Authorization Act for domestic manufacture of solar panels, off-shore wind turbines, batteries, and critical minerals. Currently, most of the critical materials are manufactured in China.
  3. The bill includes PTC for nuclear power companies to keep them open as well as funds for R&D into newer technologies.
  4. Extends current tax credits for biofuel and biodiesel for ten years.

 

B. Distribution

  1. Modernizes the electrical grid with new interstate high tension transmission lines for greater resiliency.
  2. Streamlines the permitting process for easement acquisition to facilitate new transmission and distribution lines.

 

C. Consumption

  1. Transportation
    • Accelerate adoption of EVs through tax credits to customers of up to $7,500 for new $4,000 for used vehicles.
    • Funds for building out a network of 500,000 charging stations.
    • Promote electrification of heavy-duty vehicles (trucks, buses, etc.). Includes funding for expanding electrification of USPS vehicles, school buses, and government-owned fleet of vehicles.
  2. Commercial Residential
    • Provides rebates and tax credits to home-owners for energy audits and retrofits for improving efficiencies (electrical stoves; heat pumps; insulation).
    • Includes tax incentives for district energy systems in residential and business communities.
  3. Industrial
    • Promotes the use of hydrogen for high temp. industrial heating instead for fossil fuels
    • Provides tax credits for production of hydrogen with reduced carbon footprint.

 

There are many important provisions to curb ghg emissions, such as capping of abandoned wells and funds for improved agricultural processes, as well as leasing of lands for oil and gas extraction and pipelines. There are also about $10 billion allocated for “climate justice” measures to redress neighborhoods that have been adversely affected by energy industry.

 

Will these actions stop climate change? No; climate change is a global phenomenon, and it will take collective action from all other nations as well. Yet, it is a small step in the right direction. Let’s hope it spurs appropriate actions throughout the globe.

 

Here's the video link. Take a listen.

 


 

Friday, July 22, 2022

Hydrogen: Hope or Hype

 

Headlines declaring hydrogen as the clean fuel for the future are becoming all too frequent. Governments and private companies in Australia, India, China, Germany, Saudi Arabia, and many other countries have announced large projects for producing, storing, and transporting hydrogen. Globally, over 300 projects are being undertaken with investments amounting to $500 billion. India has unveiled plans for producing 5 million tonnes of hydrogen in a bid to become a global export hub.

The promise of hydrogen is that it produces only water when it burns. Thus, using it instead of coal, oil, or natural gas would eliminate greenhouse gas (GHG) emissions. Hydrogen certainly has a role in the net-zero emissions scenarios of tomorrow, for example those proposed by the Intergovernmental Panel for Climate Change (IPCC), the International Energy Agency (IEA) and many other organizations. Most scenarios for decarbonization rely on electrifying as much as possible. While the bulk of decarbonization will come from the electrification of home appliances, vehicles, and industries there are many sectors such as metal refining, long-distance trucking, and shipping that are hard to decarbonize with electricity alone and here hydrogen could play a crucial role. But calling it the fuel of the future is a stretch too far. Hydrogen currently represents less than 1% of total global energy and even in the net-zero emissions scenarios it barely increases to 5% by 2050; nowhere near enough to justify the appellation.

Some exaggeration by promoters of any technology is understandable, but when these pronouncements begin to change government policy, it behooves everyone to take a closer look at the contributions hydrogen can make in the future. If the primary reason for using hydrogen is to reduce greenhouse gas emissions, we must consider the extent to which hydrogen will need to replace fossil fuels and ensure that the hydrogen is produced in ways that do not emit greenhouse gases. This essay will review the ways hydrogen is produced as well as point out the areas where use of hydrogen will be critically important in reducing GHG emissions.

While hydrogen is the most abundant element in the universe, it is not present as such on Earth. On Earth hydrogen is mostly present in combination with oxygen as water. It is also present in combination with varying amounts of carbon in fossil fuels such as natural gas, oil, and coal, as well as in biomass. Hydrogen can be produced from any of these sources, but the processing will entail energy consumption and/or emission of carbon dioxide. Hydrogen is not a source of energy; it is an energy carrier. In that respect, it resembles electricity–we must expend energy from another source to produce it.

Hydrogen Production. Hydrogen is a widely used industrial gas. About 90 million metric tons are produced each year, equivalent to about 6% of global oil consumption. Most of the hydrogen is used in petroleum refining, and for producing ammonia and methanol. Currently, half of the hydrogen is produced by the reaction of natural gas (methane) with steam in a process known as steam reforming. Analogous reactions with petroleum, coal, or biomass provide most of the remainder. Steam reforming is the cheapest source of hydrogen and is used in petroleum refining operations and for producing ammonia. However, each tonne of hydrogen produced by this process entails producing about 6 tonnes of carbon dioxide, and hence hydrogen produced using current technologies would not be helpful for a transition to a clean future unless the carbon dioxide is captured and sequestered. Technology for carbon capture and sequestration (CCS) is still very expensive and not practiced at anywhere near the required scale.

Hydrogen can also be produced by the electrolysis of water as well–passing electricity through water. The electrolysis process does not entail emission of carbon dioxide, but there could be emissions in producing the electricity. Commercial electrolyzers have an efficiency of 75% and require over 50 MWh of electricity to produce a tonne of hydrogen. Producing one tonne of hydrogen by electrolysis would result in emitting 20 tonnes of carbon dioxide if the electricity was generated by a natural gas power plant and over 50 tonnes if coal was burned to generate the electricity. Either way, it is a situation far worse than with steam reforming!

Colors of Hydrogen. Hydrogen itself is a colorless gas. However, depending on the process used to produce it different colors have been assigned to it to reflect the varying amounts carbon emissions. Indeed, there is full rainbow of hydrogen designations (Figure). Hydrogen produced by fossil fuels has the highest emissions and is labeled black or grey. If carbon-capture is employed in conjunction with such production, the resulting hydrogen is labeled blue. If we use a clean source of electricity to produce hydrogen, it could be a desirable fuel. Indeed, promoters of hydrogen are talking about using wind and solar power to produce what is called green hydrogen. Nuclear power could also be used to produce emissions-free hydrogen; it is referred to as pink hydrogen. Other sources of clean electricity include hydro and geothermal power.


Figure: Colors of hydrogen depending on production technologies.
Source: Global Energy Infrastructure


To produce the 500 million tonnes of hydrogen projected in the net-zero scenarios would require 2,600 TWh of clean electricity, an amount that could be generated from 1,200 GW of wind or solar farms. To put in perspective, current global installed capacity of wind and solar power is only 1,400 GW. The recently announced Adani–Total venture seeks to dedicate 2.3 GW of solar to produce green hydrogen, capable of producing only 10,000 tonnes of hydrogen a year—a tiny fraction of what is needed.

Hydrogen Consumption. One large application of hydrogen is in metals refining. Use of hydrogen instead of coal/coke for reducing iron ore and producing steel has been developed but it is currently being practiced at only a very small scale because the process is more expensive. Expanding hydrogen’s role in metallurgical operations could reduce up to 20% of greenhouse gases, but that would require producing over 200 million tonnes of emissions-free hydrogen.

Transportation contributes to about one third of greenhouse gas emissions and use of hydrogen in this sector would be very impactful. Hydrogen packs far more energy per unit of weight or volume than batteries, but hydrogen has to be contained in a vessel. Because storage vessels must withstand high pressures, they must be constructed from heavy steel or other materials bolstered by reinforced fiber, resulting in increased weight for the overall system. For cars and light duty vehicles, battery EVs outperform hydrogen FC-EV.

There is another reason why fuel-cell EVs have not gained traction whereas battery EVs are rapidly penetrating this sector; it has to do with efficiency. Batteries return around 95% of the electrical energy saved in them. In the case of a fuel-cell vehicle we lose 30% of the energy in first producing hydrogen from electricity, and then another 35% in the regenerating electricity using the fuel cell, for a combined efficiency of 45%. Increasing the efficiencies of electrolyzers and fuel cells could allow FC-EVs to gain market share in this sector. Until then they will remain a minor player.

The chief drawback of battery EVs is their relatively lower capacity and slow recharging. For long-distance trucking and other heavy-duty applications where large amounts of on-board energy needs to be stored, hydrogen fuel cells technology becomes attractive. Storing compressed hydrogen becomes more practical in large vehicles and ships.

Hydrogen, like batteries, is a way of storing electricity. If electric power is generated at times when there is low demand, it makes sense to store it—put it in a bank if you like. However, there are substantial energy losses both during conversion of electricity to hydrogen (30%) and regeneration of electricity from hydrogen (40%). The situation is akin to a bank that charges you a 30% fee to deposit money and again charges you a 40% fee during withdrawal! You must be desperate to save money in such a bank. For this reason, schemes to produce hydrogen at wind and solar facilities to ameliorate the problem of intermittency makes limited sense. It would be far better to use the excess electricity directly for water treatment, desalination, or whatever else the local region may need.