Indiana environmental and citizen groups say a lack of transparency for a planned regional hydrogen fuel hub is stoking fears that the project will primarily benefit polluting heavy industries – though the federally funded program is meant to be part of a clean energy transition.
“If we don’t get this right, if this hydrogen hub program doesn’t unfold in a way that’s equitable and different from the extractive energy programs of the past, this will just be another handout for fossil fuels that harms communities,” said Lauren Piette, senior associate attorney for the environmental law firm Earthjustice.
The U.S. Department of Energy last year awarded $1 billion to the Midwest Alliance for Clean Hydrogen’s “MachH2,” a consortium of companies, universities, and other entities in Indiana, Illinois, and Michigan, to ramp up hydrogen fuel production in the region. The funding is part of a broader effort to scale up and bring down the cost of the clean-burning gas, with the DOE spending $7 billion to fund seven hydrogen hubs nationwide.
Since that announcement, though, environmental and citizen groups say they have received little information or outreach from MachH2 organizers. In that vacuum, based on what little information is publicly available, concerns are growing that the hub will perpetuate polluting heavy industry in Northwest Indiana and help drive construction of controversial carbon dioxide pipelines.
“Transparency is a demand,” said Chris Chyung, executive director of Indiana Conservation Voters. “To listen to farmers and environmental justice communities is also a demand of Hoosiers who are so frustrated and tired of being the Midwest’s dumping ground and Chicago’s dumping ground.”
Backers say the large-scale production of hydrogen in the Midwest could mean revolutionary decarbonization for regional industry and transportation, and create more than 13,000 jobs.
“We’re looking at some heavy industry — steel, glass, concrete,” said Neil Banwart, chief integration officer for MachH2. “From the transportation perspective, we’re looking at heavy-duty long-haul trucking, and in the longer term certain marine applications, maybe rail — fuel cells on locomotives, agricultural production of fertilizer.”
Environmental and citizens groups agree that hydrogen will have an important role in the clean energy economy, offering a clean-burning substitute for fossil fuels in certain industrial and transportation applications where electrification isn’t feasible. But they worry a focus on “blue hydrogen” — made with natural gas and carbon sequestration — will only keep polluters in business longer and distract from cleaner, cheaper climate solutions.
“It’s at the point now where everything is going to be hydrogen. We’re going to be using hydrogen to make electricity and melt metals and fly planes and make concrete and run boats. It’s a bit of a gold rush,” said Kerwin Olson, executive director of Citizens Action Coalition. “We need to figure out what are the best uses of hydrogen, and what are the environmental impacts going to be of those choices.”
Community engagement
Banwart said MachH2 is developing a community engagement plan, as required by the Energy Department, and will launch the process once negotiations with the DOE are complete and the hub’s first phase begins later this year. MachH2 has said their process will include community advisory councils, town halls and an online dashboard. Already, Banwart said, the hub organizers have held three state-specific community meetings and the DOE hosted a community meeting shortly after the announcement that MachH2 was chosen to receive funds.
It is unclear if there will be public comment periods or other chances for stakeholder review of specific hydrogen hub proposals. But most projects would need to get operating permits and other approvals from state, local and federal agencies.
“It’s extremely secretive,” Citizens Action Coalition program director Ben Inskeep said, “We’re really in the dark on a lot of the details.”
MachH2’s slide deck says the program will include $30 million in funding for startup companies, with a focus on inclusivity. Diversity, equity, inclusion and accessibility will be prioritized in hiring, and $15 million will fund wraparound services and a workforce training program, MachH2 has promised.
But critics say environmental justice can only be achieved through a much deeper look at the plans for the hydrogen hub, which could expand to neighboring states beyond Indiana, Illinois and Michigan.
“We were very disturbed to hear DOE say the majority of hub projects would be located in disadvantaged communities, as if that was a good thing,” said Piette. “Based on the very limited information we have, MachH2 could be environmentally disastrous. It could increase carbon dioxide emissions, on top of that it could add pollution in already overburdened communities.”
Blue hydrogen
Already, the BP Whiting oil refinery in Northwest Indiana produces large amounts of hydrogen from natural gas, known as gray hydrogen. If the carbon emissions from such hydrogen production are captured and sequestered, it is known as blue hydrogen. (Hydrogen produced from water through an electrolysis process, powered by renewable energy, is known as green hydrogen.)
BP is making major investments worldwide in both blue and green hydrogen. The company has announced its plans to produce hydrogen from natural gas in Northwest Indiana and capture the carbon, piping it to proposed sequestration sites in the state. The hydrogen could be used for local industry as well as sustainable aviation fuel, company officials have said.
A focal point of the hub will likely be BP’s refinery. MachH2’s slide deck notes a “Northern Indiana clean H2 node” spearheaded by BP among nine proposed projects.
Multiple groups oppose BP’s plans, and the organization Just Transition Northwest Indiana has a campaign called “No False Solutions,” opposing the BP project and urging supporters to “stop the hydrogen hub rush.”
Many Indiana citizens are also deeply opposed to carbon dioxide pipelines and sequestration, fearing impacts on farmland and danger if carbon dioxide leaks. The demand for those types of projects could rise thanks to new federal incentives.
The Inflation Reduction Act offers lucrative subsidies for carbon dioxide capture and sequestration, under tax code section 45Q. This could incentivize blue hydrogen production that involves carbon sequestration, with the 45Q tax incentives potentially dwarfing funds received through the hydrogen hub.
The company Wabash Valley Resources has faced massive community outrage for its plans to use hydrogen in fertilizer production and sequester carbon in Indiana. Wabash Valley Resources has a federal grant for hydrogen technology demonstration.
“It’s all a messy web of hydrogen and carbon dioxide at this point,” said Piette.
Clean energy advocates generally support green hydrogen, but they and lawmakers have called for clarity and regulations around how renewables used to power hydrogen production are obtained and classified. Ideally, they say, hydrogen production leads to new renewable development. If hydrogen production uses renewable energy that otherwise would flow onto the grid for consumers or power other industries, it is not leading to overall carbon reductions.
The U.S. Treasury Department is currently developing rules governing how hydrogen production receives tax credits for using renewable energy under tax code section 45V. Treasury draft rules require that the production must lead to “incremental” increases in renewable generation to receive tax credits.
“Without safeguards, 45V risks creating a shell game in power markets, where existing clean generation gets nominally claimed by hydrogen electrolyzers but the resulting gap in grid capacity is backfilled by fossil fuel generation,” says an October 2023 letter from U.S. Sen. Sheldon Whitehouse and seven other senators to the Treasury Department. “In such a scenario, the program would undermine climate progress and lead to the production of hydrogen with a true emissions intensity higher than even its conventional fossil fuel-derived counterpart.”
Banwart said that MachH2 will include blue, green and “pink” hydrogen production. Pink hydrogen, powered by nuclear energy, would likely be located in Illinois near one of the state’s nuclear plants. It is not yet determined where and exactly how green hydrogen would be produced in MachH2’s area, Banwart said.
Green steel
There’s widespread agreement that one of the most promising uses of hydrogen is to power heavy industrial processes like those used in steel production.
Cleveland Cliffs’ Northwest Indiana steel mill near the BP refinery has announced plans to inject hydrogen in its blast furnaces, combined with fossil fuels, and the company is building a hydrogen pipeline to its fence-line. Cleveland Cliffs has said it will procure hydrogen from MachH2 projects.
Environmental advocates have widely embraced the concept of “green steel,” but usually referring to a specific steel-making process known as Direct Reduced Iron (DRI) that uses hydrogen produced with clean energy. Injecting hydrogen along with fossil fuels in traditional blast furnaces does relatively little to reduce carbon emissions, critics argue, especially if that hydrogen is produced with natural gas.
“Even in the best-case scenario this is not coming close to the scale of emissions reductions we need to decarbonize steel,” said Inskeep. “Their continued investments in keeping these facilities open are not signaling the pivot they need to make” to DRI steelmaking.
DRI technology is still in its infancy worldwide, but industry sources have pegged it as the most promising way to decarbonize the sector. Conversion to DRI could be extremely costly but not hard to imagine, said Hilary Lewis, steel director at Industrious Labs, an organization devoted to decarbonizing heavy industry. Cleveland Cliffs has a DRI plant in Toledo, which it bills as “the most modern and efficient direct reduction plant in the world.”
“Steel technology has changed over time,” said Lewis. “We’ve gone through different types of steelmaking. A hundred years ago it was open hearth steelmaking, the precursor to blast furnaces. That was a big technology transition. The steel industry would point to electric arc furnaces (as another innovation). The steel industry goes through technology changes.”
A report by Citizens Action Coalition and American Council for an Energy-Efficient Economy notes that automakers are increasingly demanding low-carbon metals in pursuit of their own sustainability goals, and Indiana — home to a quarter of U.S. steel production — risks losing market share if steel mills don’t decarbonize.
“The main application [of hydrogen] we want to see is cleaner steel production, and that depends on cleaner hydrogen as well,” said Chyung.