Hydrogen, the “Holy Grail” of energy for some who follow energy policy and politics, is a futile endeavor, and the Biden administration’s “green” hydrogen push is “a multi-billion dollar boondoggle,” according to a new analysis from the conservative Manhattan Institute.
Hydrogen, writes economist Jonathan Lesser, “green or otherwise, is not a useful energy resource because it requires more energy to produce than it can provide. This is an immutable thermodynamic fact.”
It takes energy to release hydrogen, the most common element on earth, from the atoms to which it is strongly bound, more energy that it produces when burned in a power plant, steel mill, or used in a hydrogen fuel cell. That makes hydrogen a loser in the contest to reduce greenhouse gas emissions, primarily carbon dioxide, argues Lesser.
He notes, a kilogram (2.2 pounds) of hydrogen contains the equivalent of a tad under 40 kWh of electricity. Under the most efficient technologies to liberate the hydrogen (80%), it takes 49 kWh of electricity to produce a kilo of H2. Add transmission and distribution line losses, and the energy needed to compress, store, and transport the hydrogen, and the economic balance looks even worse.
The Biden administration, in its goal of net zero CO2 emissions by 2050, is pushing hydrogen (along with a host of other technologies and policies). In 2021, the administration announced its “Earthshot” hydrogen program to produce 10 million metric tons of the element at $1/kilo by 2030.
The Department of Energy is allocating $7 billion for seven “Regional Clean Hydrogen Hubs,” while the Treasury Department is authorizing a production tax credit for clean, green hydrogen (essentially H2 produced by dedicated renewable energy generation) of $3/kilo.
This, argues Lesser, is a money-losing proposition from the start. The numbers just don’t work in Lesser’s analysis. He writes, “The high cost of the production tax credit — $3/kg is equivalent to $91 per megawatt-hour (MWh), based on the energy content of hydrogen – is far greater than wholesale electricity prices in the U.S., which in 2023 averaged between $30/MWh and $50/MWh.”
Earthshot is a dud, says Lesser. Barring the invention of a hitherto unknown technology, that goal “is unrealistic, regardless of the path.” It doesn’t matter if the analysis is for conventional steam reforming with natural gas to get hydrogen, with carbon capture of the natural gas emissions, electrolysis by electricity produced in nuclear plants, or electrolysis from renewable electricity.
In total, he concludes, “even under highly optimistic assumptions, the actual cost to produce green hydrogen is unlikely to fall much below $3/kg, even when needed battery storage costs to overcome wind and solar intermittency are excluded. When that cost is included, the cost to produce green hydrogen increases to $3.62/kg–$8.85/kg.”
To top it all off, Lesser says widespread use of hydrogen to replace fossil fuels is unlikely to have a substantial impact on CO2 emissions. The White House, he notes, hopes its hydrogen initiative will “reduce CO2 emissions by 25 million tons annually by 2030. By comparison, in 2022, U.S. energy-related CO2 emissions totaled about 4.8 billion metric tons, and world energy-related CO2 emissions totaled about 34.4 billion metric tons.”
“Such a reduction would have no measurable impact on world climate, especially as emissions from China and India continue to increase rapidly.” Manhattan Institute economist Jonathan Lesser
Those negligible reductions, along with the high cost to produce them, mean that hydrogen reductions don’t come close to getting under the “social cost of carbon” at whatever realistic value for the SCC might be. “Such a reduction would have no measurable impact on world climate, especially as emissions from China and India continue to increase rapidly.”
The Manhattan Institute for Policy Research is a conventionally-conservative, verging on libertarian, think tank focused on domestic policy and issues, including energy, health care, higher education, city governance, and the like. It was founded in 1978 as the International Center for Economic Policy Studies. The co-founders were Sir Antony Fisher (1915-1988), a wealthy and influential British businessman and William J. Casey (1913-1987), who made a fortune in business law and was Ronald Reagan’s director of the U.S. Central Intelligence Agency from 1981-1987. The name of the think tank changed to Manhattan Institute in 1981.
According to SourceWatch, Manhattan Institute has a financial base with many contributions ranging from quite small to a few large, but none particularly dominant. Total 2020 revenue was $16.7 million, with expenses of $15.7 million, and net assets of $21.1 million.
Jonathan Lesser is an “adjunct fellow” at the institute. His biography says is president of Continental Economics, a consulting firm, with “more than 30 years of experience working for regulated utilities, for government, and as a consultant in the energy industry.” His PhD is from the University of Washington.
–Kennedy Maize