Hydrogen and Renewable Fuels

Hydrogen (H₂) is the lightest and most abundant element in the universe. It is also an energy carrier. Because its pure form is not found in nature, it must be extracted from other materials. Functional hydrogen comes in the form of gas or a super-cooled liquid, which after it is transported, stored, and dispensed through special infrastructure, can be used in a fuel cell or in combustion turbines to generate energy. It can also be integrated into certain industrial process to create other products, like agricultural fertilizers or derivative fuels.

For decades, hydrogen has mainly been produced through natural gas or coal-fed steam-methane reforming. Given the fossil fuel feedstock, this type of production is extremely carbon-intensive. To meet the low and no-carbon, reliable, and resilient energy needs of Washington while building a green economy, the State has prioritized supporting hydrogen produced using renewable energy-powered electrolysis, often referred to as “green hydrogen.” While renewable electrolysis is a technology that has already proven to be commercially effective, regional impacts of water and energy demand—along with byproducts of hydrogen use—are still being investigated.

Hydrogen is considered a renewable fuel when produced using renewable resources both as the source for the hydrogen and the source for the energy input into the production process. Beyond green hydrogen, there are a variety of other fuels produced from renewable resources.  This includes biodiesels made from animal fats or vegetable oils, bioethanol made from corn or sugar, and biogas and renewable natural gas (RNG) converted from methane captured from municipal waste processing systems. Depending on its chemical properties and energy density, a renewable fuel can be used to power specialized equipment and processes or “dropped in” to existing uses as a one-to-one fossil fuel replacement.

In recent years, the Washington Legislature passed a number of laws designed to accelerate the production and use of green electrolytic hydrogen and other renewable fuels:

• SB 5910 (Chapter 292, Laws of 2022) establishes the Office of Hydrogen and Renewable Fuels at Commerce and directed us to work with stakeholders and advise on funding and projects related to renewable and green electrolytic hydrogen and other renewable fuels.
• HB 1812 (Chapter 183, Laws of 2022) addresses siting of hydrogen manufacturing projects.
• HB 1988 (Chapter 185, Laws of 2022) provides incentives for green electrolytic and renewable hydrogen manufacturing and storage projects, supports clean energy manufacturing projects, and incentivizes the use of labor and community benefit tools such as apprenticeship standards and Community Workforce Agreements.
• RCW 54.04.190 authorizes public utilities to produce and sell green electrolytic and renewable hydrogen, biofuels, and other renewable fuels.
• HB 1216 (Laws of 2023) addresses siting and permitting reform for clean energy projects, including development of a Programmatic EIS (PEIS) for green electrolytic and renewable hydrogen.
• HB 1236 (Laws of 2023) provides authorization for public transit agencies to produce, sell and use green electrolytic and renewable hydrogen.

This legislation is part of a broader policy landscape that makes Washington a compelling place to produce and use green hydrogen and renewable fuels. Earlier legislation that paved the way includes the Clean Energy Transformation Act (CETA), net-zero GHG emission limits by 2050, and the Climate Commitment Act. Complimentary policies include the Healthy Environment for All (HEAL) Act to ensure environmental justice is advanced in state environmental policies and programs.

Washington’s laws identify two categories of clean or green hydrogen based on how the hydrogen is produced:

• “Renewable hydrogen” is hydrogen produced using renewable resources both as the source for hydrogen and the source for the energy input into the production process. This definition was first enacted in 2019 in providing authority to public utility districts to produce and distribute hydrogen (SB 5588, 2019) and to provide a sales tax exemption on equipment used to produce hydrogen (HB 2042, 2019).
• “Green electrolytic hydrogen” is hydrogen produced through electrolysis. It does not include hydrogen manufactured using steam reforming or any other conversion technology that produces hydrogen from a fossil fuel feedstock. In this definition water is the feedstock for the hydrogen, while the electricity is not a feedstock but is the input energy or process energy used in electrolysis of the water.

Washington added “green electrolytic hydrogen” in 2022 to authorize and encourage hydrogen production facilities even if they will not rely exclusively on renewable electricity sources in the near term. Under this definition, water is the feedstock for the hydrogen, while the electricity is not a feedstock but the process energy used in electrolysis. Hydrogen produced through electrolysis will meet this definition regardless of whether the electricity is produced from onsite renewable sources, from fossil-fired generation, from unspecified grid sources, or any combination of these resources. The Clean Energy Transformation Act (Chapter 19.405 RCW) is Washington’s clean electricity law, which requires all electricity used in Washington to be greenhouse gas neutral by 2030 and 100% clean by 2045. Under the 2030 GHG-neutral standard, a utility may use fossil-fired electricity for up to 20% of its supply under an alternative compliance mechanism.

The actual carbon intensity (CI) for green electrolytic hydrogen and other low-or zero carbon hydrogen depends on the sources of electricity used by each production facility. The Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation (GREET) model, developed by Argonne National Lab, is used by the US Treasury Department to determine carbon intensity of hydrogen in order to assign 45V Production Tax Credit. DOE materials regarding the GREET model show an aligned interpretation where the “feedstock” is assessed separately from “process inputs” which includes electricity. This is aligned also with the Washington Clean Fuel Program rules that show that clean fuels CI calculations will assess “feedstock” and “process energy” (see WAC 173-424-900, Table 8 Washington Temporary Fuel Pathway Codes).

This legislation is part of a broader policy landscape that makes Washington a compelling place to produce and use green electrolytic and renewable hydrogen and other renewable fuels. Earlier legislation that paved the way includes the Clean Energy Transformation Act (CETA), net-zero GHG emission limits by 2050, and the Climate Commitment Act. Complementary policies include the Healthy Environment for All (HEAL) Act to ensure environmental justice is advanced in state environmental policies and programs.

Green hydrogen and other renewable fuels are critical to reduce greenhouse gas emissions across Washington’s economy, especially in sectors that are difficult to decarbonize with electrification or other pathways. Analysis in the 2021 Washington State Energy Strategy (SES) found that hydrogen and renewable fuels will be of greatest strategic use to decarbonize marine transport, aviation, aluminum, steel, and cement manufacturing, and on-road transportation including transit, trucking, and drayage. Additionally, renewable fuels can be stored and provide flexible, on-demand power supply to promote grid resilience.

To learn more about projected hydrogen use in Washington by subsector, explore the SES Data Supplement – Hydrogen Use. This analysis will be updated upon completion of Commerce’s pending legislative report on Green Electrolytic Hydrogen and Renewable Fuels (due December 1, 2023).

Given the high energy need for producing green electrolytic hydrogen, it is important to carefully evaluate hydrogen’s effect on the state and region’s overall energy systems. Any significant increase in hydrogen production requires a corresponding increase in electricity generation capacity and, in some cases, transmission and storage. The State is already working with utilities to strategically grow renewable power generation and distribution to meet anticipated demands for light duty vehicles, home heating, and other direct electrification efforts. A similar planning approach will be taken to assess renewable generation and transmission requirements for new renewable fuels production, transportation, and use.

Tribal nations are critical partners in work that contributes to the state’s clean energy and climate action. While perspectives and participation vary, tribal leaders and members have expressed interest and participated in key areas of hydrogen-related work, including:

• Taking leadership roles in regional hydrogen project planning, including several tribes with representation on the board and advisory committees of PNWH2.
• Partnering in the development or review of hydrogen projects where they align with renewable energy efforts, energy storage and energy sovereignty needs, as well as economic development opportunities for tribal members.
• Providing input on how hydrogen should be strategically incorporated into Washington’s energy landscape. Hydrogen’s role must be developed in balance with interrelated issues regarding hydropower , cultural and natural resources , and fish and wildlife impacts and other considerations.

Commerce is committed to supporting multiple pathways for tribal engagement on hydrogen and the many issues with which we work with tribal leaders.

It is critical to ensure that equity, environmental justice and workforce benefits are centered in local and federal hydrogen planning and deployment. A hydrogen economy should benefit worker and community health and well-being while driving down GHG emissions in areas that are difficult to decarbonize.

Environmental Justice

• Ensure that meaningful community engagement occurs as projects are proposed and evaluated in the state and region. Communities must have an opportunity to learn about and provide feedback on proposed projects.
• Understand and mitigate environmental, health and safety concerns related to hydrogen. This includes addressing nitrogen oxides (NOx) emissions through combustion of hydrogen.
• Ensure an equitable distribution of benefits from hydrogen projects and investments, especially in communities with a disproportionate pollution burden from industrial plants, airports, maritime ports and heavy freight. Communities must be engaged in the determination of benefits from proposed H2 projects.

Workforce

• Engage with labor unions, workers, and educational and training institutes. The voice of relevant workers and unions can help ensure hydrogen deployment creates and supports good jobs.
• Use tools such as Community Workforce Agreements to ensure that hydrogen projects promote well-paying jobs and support apprenticeship utilization and local job opportunities. Permanent hydrogen jobs should be family-wage jobs.
• Analyze workforce opportunities and impacts as a clean hydrogen economy advances. This includes understanding how to deploy current energy workers in new hydrogen jobs, and ensuring training and workforce opportunities are available and accessible for all, including overburdened communities.