Hydrogen is just another hole for natural gas to fill.
In a way, the story of American natural gas is a particularly American story, one of entrepreneurial hustle, booms and busts, and a will to find opportunity where nobody’s looked. Of resourceful self-preservation for the sake of self-preservation alone. Of supply needing demand, and of manufacturing that demand through the means at hand, even if the logic is sometimes tough to follow. Natural gas has fueled American homes, American electricity, and, more recently, American plastics, an industry more usually fed by oil. As the grand ambitions for that last endeavor have begun to show signs of waning, the industry has once again pivoted, this time to embrace its potential as part of America’s climate future. When the Biden administration announced this year that its build-out of facilities for hydrogen—a fuel that could help reduce emissions from heavy industry—would have a starring role for natural gas, it was hardly a surprise: The industry appears to have worked hard to ensure its place.
The gas industry has had plenty of practice making a case for itself. A few decades ago, when the U.S. as a whole was becoming more environmentally minded, the newly formed Environmental Protection Agency was eying the gas industry, and public-health research was beginning to suggest that gas stoves might be bad for health. In the 1970s and ’80s, the industry went on an offensive to downplay those dangers, using the same strategies, even the same PR firms, as the tobacco industry to avoid regulation, and was largely successful. Preserving demand for the product—gas stoves were “gateway” appliances that made a home more likely to have a gas furnace, a gas clothes dryer, and so on—was key.
The fracking boom supercharged that imperative, flooding the market with cheap gas. As hydraulic fracturing and horizontal-drilling technologies began liberating gas from hard-to-reach shale formations, production went way up. The U.S. natural-gas market was exploding with supply, which began to drive gas prices down. All that gas needed someplace to go.
But then a fortuitous pivot provided exactly that place: Ethane, a previously unusable waste product of natural-gas extraction, proved useful. In the past two decades, the industry has begun pouring resources into commercializing a method to “crack” ethane molecules, allowing them to be rearranged into ethylene, the main building block of plastics. The majority of petrochemical cracker plants built after 2012 were designed to use ethane. Drilling for “wet” gas—which is higher in ethane content, and therefore less useful as natural gas destined to be burned for fuel—became a profitable endeavor.
This ushered in the gas-for-plastic revolution: The industry envisioned a plastics boom, planning for ethane “cracker” plants all over the Ohio River Valley and the Gulf Coast. In 2018, the International Energy Agency predicted that petrochemical production—which is mostly plastic—would account for nearly half of all growth for fossil-fuel demand by 2050. As of February 2020, some 343 new plastic-production plants and expansions were permitted or planned in the U.S., according to the American Chemistry Council, a top trade group for American plastic companies. Shell’s cracker, a behemoth operation on a sprawling 384-acre campus, began operations last year, with its very own ethane pipeline snaking from the shale-gas fields to supply it. “What led the massive boom in the construction of new plastics facilities in the U.S. was not the emergence of massive public demand for plastics, but the fact that natural-gas feedstocks became incredibly cheap,” Carroll Muffett, the president of the Center for International Environmental Law, a nonprofit human-rights and environmental law firm, told me in 2020. “The fracking boom triggered the renaissance of the plastics industry in the U.S.”
Yet plastic production is no guarantee; almost every boom eventually goes bust, and the market is beginning to show some tentative signs of waning. Some of the planned plastic plants never came to fruition, whether because they failed to find an investment partner or they faced falling commodity prices and were dealing with corruption charges. There are hints that demand is slowing down for the moment, leading to slimming margins for plastic makers (although no shortage of predictions show the industry continuing to grow, in and outside the U.S.).
No matter the future of plastics, the U.S. gas industry is already well into its next gambit, or rather, gambits: One is the monumental-scale build-out of liquified-natural-gas (LNG) export facilities. Within one day of Russia’s attack on Ukraine in February 2022, the gas industry had sent a letter to the White House requesting its help obtaining approval for pending plans to build terminals to send gas to Europe, to stem an energy crisis that the conflict would surely cause. The Biden administration largely obliged, and the major fossil-fuel companies saw their profits more than double year-over-year. Now LNG terminals are popping up throughout the U.S. Gulf Coast, and exports of gas to Europe remain high. Although some still see natural gas as a “bridge fuel” between more carbon-intensive fuels, such as coal and oil, and a genuinely clean-energy future of solar and wind power, that idea has been widely questioned: Natural-gas use seems mostly a bridge to using more natural gas. Shipping LNG abroad appears to be worse for the environment than burning coal, leading to questions about whether the Biden administration will step in to halt the infrastructure build-out.
The industry’s other gambit also has received direct support from the Biden administration, whose signature climate laws include billions of dollars of investments and tax credits for hydrogen fuel—made from natural gas. Exxon, for one, is heavily lobbying the Biden administration to allow the industry access to tax credits written into the Inflation Reduction Act; last month, the Biden administration announced that it would invest $7 billion in the creation of seven hydrogen “hubs,” and hydrogen from gas was central to the plan.
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Hydrogen is an intriguing form of energy, if it can be made efficiently. It can be burned in engines with no carbon emissions, or arranged into a fuel cell to supply electrical current, where the only by-product is water. It could be a climate solution, particularly for the hardest-to-abate sectors of energy use, such as steelmaking and maritime shipping, which still rely on the world’s most polluting fuels, including coal and bunker oil. But no one has exactly figured out how to split molecules to make hydrogen without using a ton of power. So its capacity as a “green” energy comes down to how that power is supplied. Zero-emission hydrogen must be made with power exclusively from non-combusting sources, such as solar and wind (insiders call this “green” hydrogen), and is the gold standard for what clean hydrogen could really be. The Biden administration stipulated that three of the seven hubs would run on renewables, or a mix of nuclear and renewable power. The others will run—for now—at least partially on natural gas with carbon capture (often called “blue” hydrogen). And two of them are specifically slated to be located in gas-rich regions.
The gas industry itself is thrilled about this, and says that it can be a true partner in the quest to lower emissions. “Natural gas utilities are committed to exploring all options for emissions reduction as demonstrated by the 39 hydrogen pilot projects already underway and are eager to participate in a number of the hubs,” American Gas Association President Karen Harbert said in an emailed statement. “No matter the source for the hydrogen, one thing is certain that natural gas utilities will be critical players in driving this exciting opportunity for further decarbonization.”
But refining natural gas into hydrogen is a highly energy-intensive process. Natural gas is good for making hydrogen because it’s mostly methane. Each methane molecule is made up of one carbon atom bonded to four hydrogen atoms. That’s plenty of hydrogen for the taking, if you can split that molecule. At the moment, conventional processes for refining natural gas into hydrogen are almost comically inefficient: By one calculation, hydrogen made from natural gas has a total greenhouse gas footprint 20 percent greater than burning the natural gas itself, and uses far more energy to produce. That energy balance looks a bit better when compared with the even dirtier energies that gas-made hydrogen might displace, such as the coal used in steelmaking, which is why it’s on the table at all.
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To meet federal “clean hydrogen” standards, something like 90 percent of the extremely high level of carbon dioxide made in the gas-to-hydrogen process would have to be captured. Exxon says it plans for its hydrogen project in Texas to entrap 98 percent of the emissions; other attempts at carbon capture have tapped out at about 60 percent—which suggests that goal might simply not yet be commercially feasible. Storing the captured carbon is another challenge: A common strategy is to inject the pressurized gas into natural geologic formations underground. But this is hard to get right, and one of the biggest carbon-capture projects in the world failed spectacularly on this count, transforming a would-be climate solution into a major carbon emitter.
Perhaps most challenging of all, the entire gas-to-hydrogen system—from well pad to pipeline to compressor station to hydrogen facility—would have to avoid leaking virtually any methane. This seems a very high bar, given that methane leaks are already a ubiquitous occurrence in all aspects of the natural-gas industry. And because the blue hydrogen process both uses methane as a feedstock and must generate additional power to run its carbon-capture system, the potential for leaks of the hyper-warming greenhouse gas is that much higher.
The pitfalls seem to be significant. For now, the promise of genuinely clean hydrogen from gas seems to be far off. But in the meantime, the industry has found yet another hole for its natural gas to fill.
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