Hydrogen midstream infrastructure — the pipelines and storage resources that sit between hydrogen’s supply and end-use — plays a central role in developing a resilient, liquid, and low-cost hydrogen market. Yet for all the talk about hydrogen’s supply and demand, there has been far less attention on the connective tissue that bridges the two together. The criticality of pipelines and storage to clean hydrogen development coupled with the notorious complexity of building large-scale infrastructure projects throughout North America create an urgency to initiate conversation, planning, and collaboration around midstream infrastructure development today.
Why do we need hydrogen pipelines and storage? After all, aren’t clean hydrogen projects developing via “hubs” to co-locate supply and demand and minimize transportation needs? Can’t clean hydrogen be produced anywhere the sun shines or the wind blows, offering an alternative to the inherently centralized extraction and production of fossil fuels and a reduced need for connective infrastructure bringing such supply to demand?
Hydrogen midstream infrastructure plays an important role in scaling up and maturing the market for clean hydrogen for several reasons, including:
By 2030, the U.S. Department of Energy estimates that 50% of all investments2 needed to scale the clean hydrogen market must flow to midstream infrastructure or end-use, totaling between $40 to $110 billion. The mere 1,600 miles of privately owned hydrogen pipeline and the small quantity of salt cavern resources both found exclusively in the Gulf must start to expand into a broader network within hubs, between hubs, and across major supply and demand centers in North America.
This significant investment opportunity is met with a simple reality that no part of large-scale infrastructure development, especially pipelines, is particularly simple nor fast. Even front runners like SoCalGas, which started planning their Angeles Link3 hydrogen pipeline several years ago, will likely not be able to put steel into the ground before 2030. We need to identify ways to expedite the pace of infrastructure development to ensure clean hydrogen can be deployed at the speed and scales necessary to reach net zero goals.
To ensure a swift and equitable development, communities must be holistically engaged throughout the project development process to ensure their voices are equally represented. Project developers must accelerate construction timeframes and shorten permitting processes. States and countries must streamline regulations and establish a clear regulatory body. Hydrogen producers, off-takers, and infrastructure developers must strengthen their coordination, as well as develop a trained workforce and deploy a tremendous amount of capital.
Although building infrastructure in North America faces different policy practicalities, regulatory frameworks, business models, and market readiness than in Europe, we can learn several lessons from Europe to inform how to accelerate development and address core barriers.
Europe is well underway with planning and development of hydrogen infrastructure, in part driven by outcomes of the European Hydrogen Backbone (EHB) initiative that Guidehouse has actively supported for the past three to four years. The EHB took a coordinated approach to identify infrastructure needs and how to minimize barriers to implementation. It is often cited as underpinning plans for European pipeline project development happening today.4
An early-stage deployment plan can facilitate jumping past patchwork interconnection challenges and provide a roadmap for strategic development and investment. A shared vision can focus the market on the most needed and impactful infrastructure corridors to simplify project planning and enhance coordination across players. When effectively done, this plan requires a systemic approach, engaging multiple stakeholders to build an understanding of what an optimal rollout for industry, offtake, community, and legislators looks like alongside knowledge of what infrastructure is critically needed. Taking a holistic lens toward infrastructure development early in the process can minimize external impacts and maximize system benefits.
North America can build off the European experience to ensure hydrogen hubs and projects do not encounter barriers that will hinder growth in supply or demand-side adoption. Guidehouse and RMI are initiating a North American Hydrogen Backbone collaborative to create an enabling framework for transparent and certain midstream infrastructure development. One key element of this collaborative is to engage diverse stakeholders early, including communities, independent developers, utilities, off-takers, regulators, and broader civil society, to:
Through this process of holistic, multi-stakeholder collaboration, and infrastructure vision-setting and road mapping, North America will be better positioned to accelerate the development of clean hydrogen and realize its potential for scaled deployment. These actions will ensure a verdant and sustainable market that helps to secure strong offtake with clear delivery conditions. Midstream infrastructure developers will get clarity on regulatory regimes and business models to start planning and investing in hydrogen infrastructure. Project developers will see reduced risk to development and potentially easier access to financing, having certainty that storage and delivery infrastructure will be available to resiliently bring hydrogen to off-takers at the needed volumes. Off-takers will be able to access lower-cost hydrogen supply found in regions of strong resources that would otherwise be unattainable without interconnected infrastructure. Communities will also ensure that the benefits of clean hydrogen’s development can flow through to them.
The North American Hydrogen Backbone aims to catalyze coordinated planning and multi-stakeholder collaboration around hydrogen midstream infrastructure, and in doing so, support the realization of clean hydrogen market development and economy-wide decarbonization. We invite interested national and regional private players and civil society to collaborate on this opportunity to create a shared vision of needed infrastructure and bring it into reality to accelerate the energy transition.
This article is authored by Guidehouse's Lisa Frantzis and Derek Imadi and RMI's Oleksiy Tatarenko, Tessa Weiss, and Patrick Molloy.
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