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This could’t be a coincidence. Simply days after oil and fuel stakeholders applauded the US Treasury Division for supporting pure fuel within the home hydrogen provide chain, the White Home pulled the rug out from below them with a newly introduced offshore drilling ban. To the extent that the drilling ban places the squeeze on the home provide of pure fuel, it should assist assist the expansion of inexperienced hydrogen and different extra sustainable hydrogen pathways.
This Ban On Offshore Oil & Fuel Drilling Is Everlasting, Trump Or No Trump
There’s rather a lot to unpack right here, so let’s begin with the drilling ban first. Bloomberg reporter Jennifer A. Dlouhy was amongst these getting the inside track final week, citing nameless sources.
“Biden is about inside days to problem the chief order barring the sale of latest drilling rights in parts of the nation’s outer continental shelf, based on folks conversant in the trouble who requested to not be named as a result of the choice isn’t public,” Dlouhy wrote on January 2.
Dlouhy emphasised that Trump can not merely undo the Biden EO with a countermanding order. The Biden EO is much like different everlasting protecting orders issued by Republican and Democratic presidents alike below the authority of the 1953 Outer Continental Shelf Lands Act, together with Dwight Eisenhower and George H.W. Bush.
“Trump, himself, has really used the identical statute to dam oil and fuel leasing in waters close to Florida and alongside the Southeast US in a bid to attraction to voters within the last weeks of the 2020 presidential marketing campaign,” she identified.
The New Offshore Drilling Ban Protects Different Financial Stakeholders
After all, something is feasible below a unified Trump administration. Simply because the courts have by no means earlier than invalidated a protecting EO below the Outer Continental Shelf Lands Act doesn’t imply that they gained’t. In the meanwhile, although, environmental organizations are celebrating and so is the White Home.
“Right now President Biden will take motion to guard your complete U.S. East coast, the japanese Gulf of Mexico, the Pacific off the coasts of Washington, Oregon, and California, and extra parts of the Northern Bering Sea in Alaska from future oil and pure fuel leasing,” the White Home introduced this morning.
“In defending greater than 625 million acres of the U.S. ocean from offshore drilling, President Biden has decided that the environmental and financial dangers and harms that may end result from drilling in these areas outweigh their restricted fossil gas useful resource potential,” the White Home continued.
The White Home additional emphasised that coastal counties account for a major proportion of the US inhabitants, at about 40%. That makes defending these counties from dangers associated to offshore drilling a matter of nationwide financial curiosity, not only a coastal one. “With these withdrawals, President Biden is defending coastal communities, marine ecosystems, and native economies – together with fishing, recreation, and tourism – from oil spills and different impacts of offshore drilling,” the White Home emphasised.
Drilling Ban Ranges The Sustainable Hydrogen Enjoying Discipline
As famous by the White Home, the areas coated by the brand new drilling ban solely account for a “restricted” quantity of home oil and fuel reserves. Nonetheless, even small variations within the availability of fossil power can impression costs. The Gulf of Mexico, for instance, at present accounts for about 5% of complete US fuel manufacturing in federal offshore waters. All else being equal, the drilling ban will shave down fuel manufacturing within the Gulf in future years. The distinction must be made up elsewhere or prices will rise.
That’s the place the hydrogen angle is available in. Hydrogen has crossed the CleanTechnica radar as an enter for zero emission gas cells and as a carbon-free flamable gas, however it is usually performs a central position in key industries together with refining, metallurgy, and meals programs.
To this point, the US home hydrogen provide chain has depended virtually completely on extracting hydrogen from pure fuel. Diversifying that provide chain has turn into a matter of nationwide power coverage, most visibly expressed by the newly fashioned Regional Clear Hydrogen Hubs program. This system was seeded with funding from the 2021 Bipartisan Infrastructure Legislation and is run by the Division of Power (see rather more Hydrogen Hubs background right here).
Different provide chains can be found, significantly within the space of water electrolysis. Biomass, biogas, and different sustainable sources are additionally rising. These different pathways are costly, they usually face vital competitors from low-cost pure fuel. To the extent that the drilling ban impacts the fee and availability of the home pure fuel provide, the enjoying subject can be leveled.
What Will Occur To The Clear Hydrogen Hubs Now?
Transferring alongside to final week’s announcement from the US Division of the Treasury, the company issued a long-awaited Closing Rule on the manufacturing tax credit score for “clear” hydrogen described in part 45V of the Inflation Discount Act of 2022. The tax credit score covers pure fuel below the definition of “clear,” however provided that carbon seize programs are included. These issues are costly, they usually have the potential to flip the script in favor of different provide chains.
In its new rule, the Treasury Division didn’t take away the carbon seize requirement. However, the American Petroleum Affiliation greeted the information with good cheer. “This framework presents a possibility for pure fuel, when paired with carbon seize and storage, to compete extra pretty in new markets and meet rising demand for inexpensive, dependable, lower-carbon power,” the group acknowledged on January 3.
API was singing a distinct tune earlier right this moment in response to the drilling ban.
“Congress and the incoming administration ought to absolutely leverage the nation’s huge offshore assets as a crucial supply of inexpensive power, authorities income and stability all over the world. We urge policymakers to make use of each device at their disposal to reverse this politically motivated choice and restore a pro-American power strategy to federal leasing,” API acknowledged.
Good luck with that. If something, the brand new drilling ban will present Trump and his allies in authorities with a brilliant, shiny object to chase whereas the actual work of decarbonization continues.
For that matter, by way of huge offshore assets the US offshore wind trade is in a greater place to grease the wheels of the US financial system, with out the dangers concerned in offshore oil and fuel drilling. Along with producing zero-carbon electrical energy for working water electrolysis programs, offshore wind assets can assist fill the surging demand from knowledge facilities and elsewhere — if solely offshore drillers and their allies in authorities would step apart, that’s.
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Picture (cropped): The brand new offshore drilling ban may assist the US Division of Power obtain its mission of diversifying the US hydrogen provide chain past pure fuel (courtesy of US Division of Power).
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