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Hydrogen and Carbon Capture Receive Strong Support in the Infrastructure Bill

Client Updates

The Senate passed an amended version of H.R. 3684, the Infrastructure Investment and Jobs Act (“Infrastructure Bill”) with bipartisan support (69-30) on August 10, 2021.  The Infrastructure Bill contains billions of dollars of appropriations for research and development, grants, and other programs to advance the United States’ burgeoning carbon capture and clean hydrogen industries.

The Infrastructure Bill, as amended by the Senate, will return to the House of Representatives, where it will undergo debate during the Fall session.  A summary of the Infrastructure Bill’s provisions related to carbon capture and hydrogen follows.

I. Carbon Capture Provisions

Carbon Capture Congressional Findings (§ 40301) - Congress finds that:

  • Carbon capture, removal and utilization technologies require a backbone system of shared carbon dioxide transport and storage infrastructure to enable large-scale deployment, realize economies of scale, and create an interconnected carbon management market. (§ 40301(5))

  • Carbon dioxide transport and storage infrastructure face barriers to deployment such as high capital costs, and chicken-and-egg challenges, that require Federal and State support, in combination with private investment, to be overcome. (§ 40301(7))

  • Each State should take into consideration (i) qualifying the infrastructure as pollution control devices under applicable laws of each State and (ii) establishing a waiver of ad valorem and property taxes for the infrastructure for a period of not less than 10 years. (§ 40301(8))

Carbon Utilization Program (§ 40302)

  • The Secretary of Energy shall establish a program for research, development and demonstration for carbon utilization… to develop or obtain, in coordination with other applicable Federal agencies and standard-setting organizations, standards and certifications as appropriate to facilitate the commercialization of the carbon products. (§ 40302(1)(B))

  • Grant Program – Not later than 1 year after enactment of the Act, the Secretary shall establish a program to provide grants to eligible entities to procure and use commercial or industrial products that (i) use or are derived from anthropogenic carbon oxides and (ii) demonstrate significant net reductions in lifecycle greenhouse gas emissions compared to incumbent technologies, processes and products. (§ 40302(2))

    • Eligible Entities: A state, unit of local government or public utility or agency. (§ 40302(2))

    • Applications: Submit an application to the Secretary at such time and manner and containing the information as the Secretary determines to be appropriate. (§ 40302(2))

    • Appropriations (§ 40302(2))





Carbon Capture Technology Program (
§ 40303)

  • The Secretary of Energy shall establish a front-end engineering and design program for carbon dioxide transport infrastructure necessary to enable deployment of carbon capture, utilization, and storage technologies. (§ 40303(1))
  • Appropriations (§ 40303(2))



Carbon Dioxide Transportation Infrastructure Finance and Innovation (CIFIA) (§ 40304)

  • The Secretary of Energy shall establish a carbon dioxide transportation infrastructure finance and innovation program which shall provide eligible projects a Federal credit instrument, a grant or both. (§ 40304(§ 999B(a)))

  • Eligible Project criteria: (§ 40304(§ 999B(b)

    • Creditworthy – such that there exists a reasonable prospect of repayment of the principal and interest as determined by the Secretary.

    • Project Costs are reasonably anticipated to equal or exceed $100,000,000.

    • Submits Letter of Interest and Application to Secretary.

    • Revenue Sources – Federal credit instrument repayable from (i) user fees, (ii) payments owing to obligor under public-private partnership or (iii) other revenue sources that also source or fund the project obligations.

    • Beneficial Effects – Secretary must determine that financial assistance will attract public or private investment or enable the project to either proceed at an earlier date than if without assistance or reduce the lifecycle costs (including debt service costs) of the project.

    • Readiness – Applicant shall demonstrate a reasonable expectation that the contracting process for construction can commence by not later than 90 days after a project is granted financial assistance.

  • Secretary shall give priority to projects that: (§ 40304(§ 999B(c)(2)))

    • (i) are large-capacity common carrier infrastructure;

      • Common carrier is a transportation infrastructure operator or owner that (i) publishes a publicly available tariff containing just and reasonable rates, terms, and conditions of nondiscriminatory service and (ii) holds itself out to provide transportation services to the public for a fee. (§ 40304(2))

    • (ii) have demonstrated demand from associated projects that capture carbon dioxide from anthropogenic sources or ambient air;

    • (iii) enable geographical diversity in associated projects that capture carbon dioxide from anthropogenic sources or ambient air, with the goal of enabling projects in all major carbon dioxide-emitting regions of the US; and

    • (iv) are sited within or adjacent to existing pipeline or other linear infrastructure corridors in a manner that minimizes environmental disturbance and other siting concerns.

       

  • Appropriations (§ 40304(§ 999H(a)(1)))




Carbon Storage Validation and Testing (
§ 40305)

  • Secretary of Energy shall establish a program of research, development and demonstration and commercialization for carbon storage including “evaluating the quantity, location and timing of geologic carbon storage deployment that may be needed and developing strategies and resources to enable the deployment.” (§ 40305(2)(b)(iii))

  • Secretary shall establish a commercialization program to provide funding for the development of new or expanded commercial large-scale carbon sequestration projects and associated carbon dioxide transport infrastructure, including funding for the feasibility, site characterization, permitting and construction stages of project development. (§ 40305(4))

    • Secretary shall give priority to either projects with substantial carbon dioxide storage capacity or projects that will store carbon dioxide from multiple carbon capture facilities.

  • Appropriations(§ 40305(6))



Secure Geologic Storage Permitting (§ 40306)

  • Administrator of EPA is authorized for the permitting of Class VI wells by the Administrator for the injection of carbon dioxide for the purpose of geologic sequestration. (§ 40306(b))

  • Appropriations (§ 40306(b))



  • State Program - Establishes grant program for the Administrator of the EPA to award grants to States for underground injection control programs for permitting Class VI wells for the injection of carbon dioxide. (§ 40306(c)(1))
  • Appropriations (§ 40306(c)(3)


Geologic Carbon Sequestration on the Outer Continental Shelf (§ 40307)

  • Secretary of Interior may grant a lease, easement or right of way on the outer Continental Shelf for activities that provide for, support or are directly related to the injection of a carbon dioxide stream into sub-seabed geologic formations for the purpose of long-term carbon sequestration. (§ 40307)

Carbon Removal (§ 40308)

  • Secretary shall establish a program to provide funding for eligible projects that contribute to the development of 4 regional direct air capture hubs that: (§ 40308(j)(2))

    • (i) facilitates the deployment of direct air capture projects;

    • (ii) has capacity to capture and sequester, utilize or sequester and utilize at least 1,000,000 metric tons of carbon dioxide from the atmosphere annually;

    • (iii) demonstrates the capture, processing, delivery and sequestration or end-use of captured carbon; and

    • (iv) could be developed into a regional or interregional carbon network to facilitate sequestration or carbon utilization.

  • Appropriations (§ 40308(j)(4))



Carbon Capture Demonstration and Pilot Programs (§ 41004)

  • Secretary of Energy is authorized the following appropriation for Carbon Capture Large-Scale Pilot Projects: (§ 41004(a)




  • Secretary of Energy is authorized the following appropriation for Carbon Capture Demonstration Projects Program: (§ 41004(b))




Grants for Charging and Fueling Infrastructure (
§ 11401)

  • Proposes to establish a grant program to deploy publicly accessible charging and fueling infrastructure, including hydrogen fueling infrastructure. (§ 11401(a))

  • Eligible entities include: (A) a State or political subdivision of a State;(B) metropolitan planning organization; (C) a unit of local government; (D) a special purpose district or public authority with a transportation function (including a port authority); (E) an Indian Tribe; (F) a territory of the United States; (G) an authority, agency, or instrumentality of, or an entity owned by, 1 or more entities described in subparagraphs (A) through (F); or (H) a group of entities described in subparagraphs (A) through (G). (§ 11401(b)(5)(f)(3))

  • Secretary may provide a grant under this section for a project that is expected to reduce greenhouse gas emissions and to expand or fill gaps in access to publicly accessible vehicle charging and fueling infrastructure, including hydrogen fueling infrastructure. (§ 11401(b)(5)(f)(8)(D))

Carbon Reduction Program (§ 11403)

  • The Secretary will establish a carbon reduction program to reduce transportation emissions.(§ 11403(b))

  • Eligible projects under the carbon reduction program include a project to support the deployment of alternative fuel vehicles (including the acquisition, installation, or operation of hydrogen fueling infrastructure). (§ 11403(c)(1)(J)(i))

Report on Emerging Alternative Fuel Vehicles and Infrastructure (§  11511)

  • The Secretary to submit to Congress a report on Emerging Alternative Fuel Vehicles and Infrastructure no more than 1 year after the date of enactment of this Act. (§ 11511(b)). Emerging Alternative Fuel Vehicle includes a vehicle fueled by hydrogen. (§ 11511(a))

II. Hydrogen Provisions

Hydrogen Congressional Findings and Purpose (§ 40311)

  • Congress’s findings are: (1) hydrogen plays a critical part of the comprehensive energy portfolio of the United States; (2) the use of hydrogen resources of the United States promotes energy security and resilience and provides economic value and environmental benefits for diverse applications across multiple sectors of the economy; and (3) hydrogen can be produced from a variety of domestically available clean energy sources. (§ 40311(a)). Clean energy sources include: renewable energy resources, fossil fuels with CCUS, and nuclear power. (§ 40311(a)(3))

  • The purpose of Subtitle B is: to accelerate research, development, demonstration and deployment of hydrogen from clean energy sources. (§ 40311(b))

  • Subtitle B will do the following: (1) provide a statutory definition for the term “clean hydrogen”; (2) establish a clean hydrogen strategy and roadmap for the United States; (3) establish a clearing house for clean hydrogen program information at the National Energy Technology Laboratory; (4) develop a robust clean hydrogen supply chain and workforce by prioritizing clean hydrogen demonstration projects in major shale gas regions; (5) establish regional clean hydrogen hubs; and (6) authorize appropriations to carry out the Department of Energy Hydrogen Program Plan. (§ 40311(b))

Clean Hydrogen Research and Development Program (§ 40313)

  • Goals of the program include: (1) to advance research and development to demonstrate and commercialize the use of clean hydrogen in the transportation, utility, industrial, commercial and residential sectors; and (2) to demonstrate a standard of clean hydrogen production in the transportation, utility, industrial, commercial, and residential sectors by 2040. (§ 40313(a)(3)(b))

  • The Secretary, in partnership with the private sector, to conduct activities to advance and support: (1) the establishment of technology goals oriented toward achieving the standard of clean hydrogen production developed under Section 822(a); (2) the production of clean hydrogen from diverse energy sources; (3) the use of clean hydrogen for commercial, industrial, and residential electric power generation; (4) the use of clean hydrogen in industrial applications, including steelmaking, cement, chemical feedstocks, and process heat; (5) the use of clean hydrogen as a fuel source for both residential and commercial comfort heating and hot water requirements; (6) the safe and efficient delivery of hydrogen or hydrogen carrier fuels; (7) advanced vehicle, locomotive, maritime vessel, or plane technologies; (8) storage of hydrogen or hydrogen-carrier fuels; (9) the development of safe, durable, affordable and efficient fuel cells; (10) the ability of domestic clean hydrogen equipment manufacturers to manufacture commercially available competitive technologies in the United States; (11) the use of clean hydrogen in the transportation section and (12) in coordination with relevant agencies, the development of appropriate, uniform codes and standards for the safe and consistent deployment and commercialization of clean hydrogen production, processing, delivery, and end-use technologies. (§ 40313(a)(5)(e))

Appalachian Regional Energy Hub Initiative (§ 14511)

  • The Appalachian Regional Commission may provide technical assistance to, make grants to, enter into contracts with, or otherwise amounts to individuals or entities in the Appalachian region for projects and activities that, among others, will help establish a regional energy hub in the Appalachian region for natural gas and natural gas liquids, including hydrogen produced from steam methane reforming or natural gas feedstocks. (§ 14511(a)(3))

Additional Clean Hydrogen Programs (§ 40314)

  • Regional Clean Hydrogen Hubs (§  813)

    • Establishes “regional clean hydrogen hubs”, which are networks of clean hydrogen producers, potential clean hydrogen consumers, and connective infrastructure in close proximity.” (§ 813(a))

    • The Secretary to establish a program to support the development of at least 4 regional clean hydrogen hubs. (§ 813(b))

    • Appropriations (§ 813(d))





  • National Clean Hydrogen Strategy and Roadmap (§ 814)

    • The Secretary is to develop a technologically and economically feasible national strategy and roadmap to facilitate widescale production, processing, delivery, storage, and use of clean hydrogen. To be submitted to congress no later than 180 days after the enactment of the Act and shall update the report not less than once every three years. (§ 814(a)(1))

  • Clean Hydrogen Manufacturing and Recycling (§ 815)

    • Clean Hydrogen Manufacturing Initiative

      • The Secretary to award multiyear grants to, and enter into contracts, cooperative agreements, or any other agreements authorized under this Act or other Federal law, with eligible entities (as determined by the Secretary) for research, development, and demonstration projects to advance new clean hydrogen production, processing, delivery, storage, and use equipment manufacturing technologies and techniques. (§ 815(a)(1))

    • Clean Hydrogen Technology Recycling
      • The Secretary to award multiyear grants to, and entire into contracts, cooperative agreements, or any other Agreement authorized under this Act or other federal law, with eligible entities for research, development, and demonstration projects to create innovative and practical approaches to increase the reuse and recycling of clean hydrogen technologies. (§  815(b)(1))

    • Appropriations (§ 815(c))




  • Clean Hydrogen Electrolysis Program (§  816)

    • The Secretary to establish a research, development, demonstration, commercialization and deployment program for purposes of commercialization to improve the efficiency, increase the durability, and reduce the cost of producing clean hydrogen using electrolyzers. The Secretary to award grants, on a competitive basis, to eligible entities for projects that the Secretary determines would provide the greatest progress toward achieving the goal of the program. (§ 816(b))

    • Appropriations (§ 816(g))




  • Laboratory Management (§ 817)

    • The National Energy Technology Laboratory to coordinate with the Idaho National Laboratory, and the National Renewable Energy Laboratory to continue to work in a crosscutting manner with institutions of higher education, research institutes, industrial researchers, and act as a clearinghouse to collection information from, and distribute information to, the National Laboratories and other entities. (§ 817(b))
  • Clean Hydrogen Production Qualifications (§ 40315)

    • The Secretary, in consultation with the Administrator of the Environmental Protection Agency and after taking into account input from industry and other stakeholders, as determined by the Secretary, to develop an initial standard for the carbon intensity of clean hydrogen production that shall apply to activities carried out under this title. (§ 40315)

 

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