The Gray Area: The Role and Regulation of Gray Hydrogen in the Clean Energy Transition

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There is discussion regarding the role of gray hydrogen, or hydrogen derived from fossil fuels, as the world moves toward clean energy. Gray hydrogen can reduce emissions in the interim while greener hydrogen production ramps up, according to supporters. Gray hydrogen’s detractors argue that it could lock in the use of fossil fuels indefinitely and divert attention from truly renewable alternatives.

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Steam methane reforming is a process that produces gray hydrogen by reacting natural gas methane with steam to produce carbon dioxide and hydrogen. Gray hydrogen has a carbon footprint because the CO2 is not captured but instead released into the atmosphere. However, supporters point out that gray hydrogen still emits less CO2 than burning coal or natural gas directly, even in the absence of carbon capture.

Some consider gray hydrogen to be a practical option that makes use of the current natural gas infrastructure to produce cheap hydrogen in large quantities. They contend that sustainability must be balanced with affordability and energy security. Some argue that increasing reliance on fossil fuels undermines efforts to combat climate change. Additionally, investing in less expensive gray hydrogen produced through renewable energy-powered electrolysis could be undermined by cheaper green hydrogen.

With the proposal of large-scale gray hydrogen projects, the debate is unfolding. However, some climate experts argue that gray hydrogen should only be used in certain situations, such as the production of steel, where green hydrogen isn’t yet economically feasible. They support giving renewable energy top priority in order to lower the cost of green hydrogen.

Gray hydrogen’s future is uncertain. Supporters see it as a viable option for industries that are challenging to decarbonize. However, environmentalists worry that unless its scope and longevity are restricted, it will only prolong the use of fossil fuels. Whether gray hydrogen is a diversion or a bridge to a cleaner energy future will become clear in the upcoming years.

Gray Hydrogen Regulations and Policies:

Governments are creating policies and incentives to control the expansion of gray hydrogen projects as they have grown. Gray hydrogen proponents cite European regulations that permit natural gas hydrogen projects to proceed as long as they switch to low-carbon hydrogen by 2030. By 2050, the European Union wants to increase the share of hydrogen in its energy mix to 13–14%, and it has allocated funds to build infrastructure supporting hydrogen.

Critics claim that insufficient regulations pose a risk of locking in the use of fossil fuels and that Europe’s approach is inadequate. They cite more stringent regulations in nations such as New Zealand, which prohibit the classification of hydrogen derived from natural gas as “renewable” or “low-emissions”. A clean fuel standard being developed in Canada might restrict the amount of credits available for gray hydrogen.

Only blue hydrogen produced using carbon capture is eligible for credit under California’s low carbon fuel program at the state level. States like New Jersey and New York are offering incentives for green hydrogen.

Finding the ideal policy balance to promote decarbonization while simultaneously assisting affordability, scale, and a seamless energy transition is likely to be a topic of ongoing discussion. The course that gray hydrogen takes will be shaped by the regulatory measures that governments adopt.

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