氫樞紐難題：如何為生態(tài)系統(tǒng)提供資金

TheHydrogenHubsConundrum:

HowtoFundanEcosystem

ROBINGASTER|SEPTEMBER2022

Recentfederallegislationprovides$8billiontodevelopatleastfourhydrogenhubs,butlittleguidance.DOEshouldfocusitsfundingonthecapitalcostsofhydrogenproductionandinfrastructure,whilegenerallyeschewingoperatingexpensesandsupportforendusers.

KEYTAKEAWAYS

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DOEmustfundthehydrogenproductionplantatthecoreofeachhubatacostofabout$250million–$500millioneach,witha50percentprivatesectorcostshare.

Capitalexpendituresonassociatedinfrastructure,suchashydrogendeliverysystems,shouldalsobesupportedbyDOE,usingthesame50percentcostshare.

Asthecoreplantrampsup,DOEmayneedtosupportitsoperatingexpensestoacceleratethegrowthofsustainableend-usemarkets.Butitshouldbecarefulnottoextendthesesubsidiesmuchbeyondwhentheplantreachesfull-scaleoperation.

DOEshouldalsoavoidsubsidizinginfrastructureoperations,anditshouldnotsubsidizeendusersexcepttoseedspecificmarketstemporarily.Ongoingsubsidiesareinconsistentwiththehubs’missionofdemonstratingsustainablemarkets.

DOEfundingshouldnotflowthrougheachhub’sorganizingentitytospecifichubprojects.Instead,theorganizersshouldincludeallrelatedprojectsintheirproposals,butDOEshouldfundprojectsdirectly,settheterms,andoverseethem.

Finally,DOEshouldexplorewaystohelpde-riskhubsandassociateddemonstrationprojectsinotherways.Forexample,thevolatilityofenergypricespresentsakeyrisk.DOEshouldexplorewaystoinsureorhedgeagainstthisandotherrisks.

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CONTENTS

KeyTakeaways 1

Introduction 2

WhatIsaHydrogenHub? 3

TheStrategicChallengeforDOE:FundaSingleProjectoraMultiprojectEcosystem? 4

TheCorePlantFocus 4

TheDistributedFundingModel 4

WhatShouldDOEFund? 5

CorePlantCapitalExpenditures 5

FacilityOperations 6

Infrastructure 6

End-UserSubsidies 7

De-risking 7

WhoFundsWhat? 8

HowtoFundanEcosystem 9

NextStep:TheSelectionProcess 10

Endnotes 11

INTRODUCTION

InNovember2021,Congresspassedamassivepackageofdirectfederalinvestmentsinlow-carbonenergysystemsaspartoftheInfrastructureInvestmentandJobsAct(IIJA,alsoknownasthebipartisaninfrastructurelaw).TheIIJA’sinclusionofmorethan$20billiontosupportpilotanddemonstrationprojectswasparticularlynoteworthy,amajorsteptowardfillingthebiggestgapintheU.S.cleanenergyinnovationecosystem.ThelawalsoestablishedanewofficeinDOE,theOfficeofCleanEnergyDemonstrations,tooverseetheseprojectsthusaddressasignificantgapinitsmanagementstructure.

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ThelargestprograminthisportfolioistheRegionalHydrogenHubsprogram(knownasH2Hubs),fundedat$8billionoverfiveyears.Thissumvastlyexceedspriorinvestmentsinthefield.DOEintendstocreateatleastfourandlikelyeightorevenmoreofthesehubs.Givenhydrogen’sversatilityasanenergycarrier,withthepotentialtocontributetoelectricpower,transportation,energystorage,industrialheat,andotheruses,H2Hubsrepresentsaboldinitiativetoaccelerateinnovationthatwouldmakeitacorecomponentofthenation’senergymix.

ThisbriefingexaminestheoverarchingstrategicchallengefacingDOEasitseekstoimplementtheprogram:definingwhatahubisandwhatelementsofitwarrantfederalsupport.Futurebriefingswillexploreotheraspectsoftheprogram.

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WHATISAHYDROGENHUB?

Whatisahydrogenhub,anyway?Section813(a)oftheIIJAdefinesa“regionalcleanhydrogenhub”as“anetworkofcleanhydrogenproducers,potentialcleanhydrogenconsumers,andconnectiveinfrastructurelocatedincloseproximity.”

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Clearly,Congressunderstandsa“hub”tobemuchmorethanasinglemajorhydrogenproductionfacility:Itexplicitlyincludeddownstreamusersandtheinfrastructuretoconnectthemtothefacility.(Similarthinkingisalsoembeddedinthelaw’snewprogramforDirectAirCapturehubs.

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However,theNoticeofIntent(NOI)publishedbyDOEinJuly,whichsketchestheagency’simplementationplans,suggestsquitestronglythatDOEwillfocusfundingonthehydrogenproductionfacility(whichwerefertoasthe“coreplant”),ratherthanthebroaderecosystemaroundit.Inparticular,theNOIoffersspecifictargetsforhydrogenproductionscale(aminimumof50metrictonnes[MT]daily),alongwithalignmentwithkeymetricsembeddedintheambitiousagency-wide“HydrogenShot”initiative:productioncostsoflessthan$2perH2kg,fallingovertimeto$1;andlessthan2kgoflifecycleCO2emissionsperkgofH2ofproduced.

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Allthesetargetsaredirectlyrelevantforacoreplant,anddifficulttoapplytothewiderecosystem.

TheNOIthussuggestsastrategicchallengeforDOE.Ontheonehand,itappearstobeseekingaccountabilityandsimplicitybyfocusingitsfundingonthecoreplant.Ontheother,ithasanobligationtofulfillthecongressionalmandatetohelpbuildahydrogen-drivenecosystem,whichwilldependonaflourishingecologyofendusersandaneffectiveinfrastructurethatlinksthemtothecoreplant.

ThisreportarguesthatDOEshouldresolvethechallengebymakinggoodontheNOI,primarilyfundingthecoreplantatthecenterofthehubs,assuchaplantprovidesthemostdirectmeansofprovidinglong-termbenefitstotheregionalhydrogenecosystem.ButDOEshouldalsofundcriticalinfrastructureimprovementsonacase-by-casebasis,removingimportantroadblockstotheadoptionofhydrogen.Thecoreplantwillinevitablysoakupalargepercentageoftheavailablefunds,butit’simportanttoensurethatothercriticalpiecesaresupportedasneeded.

Oncethisbroadstrategyisapproved,DOEwillhavetwofurtherissuestoresolve.First,thereisthequestionofwhoselectsandfundsspecificprojects.TheNOIstatesDOE’splanstofundasingleentityineachregion.Presumably,thoseentitieswouldthenfundprojects(possiblyeventhecoreplant,althoughDOEcouldalsofundthatdirectly).WebelievethisdelegatedapproachtoberiskyforbothDOEandthehubentity.Werecommendahybridapproachinwhichallfundableprojectsareincludedinthehubproposal,butwithDOEmakingtheformalselectionanddirectlyfundingselectedprojects.TheprocesswouldthenbesupportedbyDOE’sprojectselectionexpertise(whichthehubsdon’thave)andbyfederalacquisitionregulations(whichhubsdon’tuse).

Second,thereisthequestionofidentifyingtheprojectstosupportbeyondthecoreplant.Weanticipatethatconstructionofthecoreplantwillutilizeontheorderof$250millionto$500millioninDOEfundingforeachhub.

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Thisleavesapooloffundingthatcouldreachhundredsofmillionsofdollarsforeachhub,dependingontheeventualnumberofhubs.Thosedollarscouldbespentonthreeareas:1)ongoingoperationalfundingforthecoreplant,2)infrastructure(primarilyfordeliveringhydrogentoendusers),and3)supportingendusersofhydrogen,suchasindustrialplantsortransportationsystems.Weacceptthatoperationalfundingwouldbe

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appropriateforthecoreplantuntiltheyreachfulloperatingcapacity,butatthatpoint,subsidiesmusttaperoff.WealsostronglybelievethatDOEfundingshouldsupportcapitalexpenditureonselectedinfrastructureprojects,especiallythosethatconnectthecoreplanttoanchorendusers.However,inprinciple,DOEshouldnotbeusingdemonstrationprojectfundstosubsidizeendusersdirectly,anditshouldnotsubsidizetheongoingoperationsofinfrastructureproviders.

THESTRATEGICCHALLENGEFORDOE:FUNDASINGLEPROJECTORA

MULTIPROJECTECOSYSTEM?

TheCorePlantFocus

FocusingfundingonasinglecoreplantwithineachhubhassignificantadvantagesforDOE.Thehardmetricsdescribedearliercanbeapplieddirectlyduringtheselectionprocess.DOEisalsomoreexperiencedinmanagingindividuallargeprojects—whichithasdonebefore—thanmultiprojectecosystems.Further,singleprojectsalignbetterwithotherDOEprograms,suchasthoseadministeredbytheLoanProgramOffice,thatmightalsobeengagedincreatingthehydrogeneconomy.Milestonesforthecoreplantwillbemucheasiertodesign,andprogressagainstthemwillbemoreeasilymeasured.Thisinturnmeansthatgo/no-godecisionsforfurtherfunding,whilestillpotentiallydifficult,willbemoretransparentandeasiertodefend.

ButthecoreplantfocuscarriespotentialdownsidesforDOEaswell.Notably,itmakesaportfolioapproacheffectivelyimpossible:Thesheerscaleofthefundingandlimitednumberofinvestments(fourtoeight)meanthatnearlyeveryprojectwillbe“toobigtofail.”Thecoreplantfocuscouldalsoundervaluedownstreamdevelopment,specificallytheendusersthatarecriticaltotheeventualemergenceofthehydrogeneconomy,aswellastheinfrastructureneededtodeliverhydrogentothem.Investmentsinhydrogentransportinfrastructure,forexample,maybecriticalforprojects’successbutwouldneedfundingfromelsewhere.ThisapproachmightalsorequireDOEtoignoremanyrelevantcriteriaforecosystemsuccess,leavingitwithoverlynarrowprojectobjectives.Forexample,Congressexplicitlyincludedwell-payingjobsasaprogramobjective.Butwhatmattershereisnotjustjobswithinthecoreplant,butwell-payingjobsacrosstheentirehydrogeneconomyintheregion.

Thecoreplantapproachimpliesthatalltheancillaryworkofbuildingaregionalhydrogeneconomy—andfundingit—willfallonthehubsthemselves.Keypiecesoftheinfrastructuremightthereforebeleftunfunded,whilebetterfundedormoreinfluentiallocalplayerscantiltregionaldevelopmenttowardtheirstrategicneeds.Thisapproachalsodeniesthehubsakeyleverinbuildingouttheecosystem:controlovertheflowoffunding.

Finally,thecoreplantfocusmeansthatgo/no-godecisionswillbehardertomake.ItisverydifficulttoimagineDOEacceptingthefalloutfromendingahugeprojectinNewYorkthatissupportedbySenatorSchumeroranenormousprojectinCaliforniabackedbyGovernorNewsom.Thosearethepoliticalrealities.

TheDistributedFundingModel

Alternatively.DOEcoulddistributeitsfundingacrosstheregionalecosystemratherthanfocusingonlyonthecoreplant.ForDOE,adistributedapproachmeanstheveryhighstakesoffundingafewhugeprojectswouldbereduced,andtheportfoliomanagementapproachrecommendedbytheInformationTechnologyandInnovationFoundation(ITIF)andothernongovernmental

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organizations(NGOs)wouldbefeasibletoimplement[ref].

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Underthismodel,DOEwouldbeabletofundmanyprojectsthatcarrydifferentriskprofiles,anditcouldassesstheirsuccessoveramuchbroaderrangeofoutcomes.AdistributedmodelwouldalsoallowDOEtodevelopmilestonesandmetricsthataresimplerandeasiertoimplement,againbeingfocusedaroundmanysmallerandsimplerprojects.Forthehubs,amultiprojectapproachwouldhelpdirectDOEresourcesintosegmentsofthedownstreaminfrastructurethatcouldbehardtofundotherwise,andwherelackofinvestmentcouldbadlydamagetheecosystemitself.

However,thedistributedfundingmodelalsocarriessignificantrisksforDOE.Breakingupthefundingintomultipleprojectscouldmeanthecoreplantdoesn’tgetenoughfundingtoreachscale,while—dependingonwhomakesfundingdecisions—increasinglythepotentialforinternalconflictsofinterestatthehubs.Fundingmultipleprojectscouldmakeithardtodeterminewhethertheoverallhubecosystemwasachievingitsobjectives,andwouldmakego/no-godecisionsatthehublevelalmostimpossible(although,asnotedearlier,suchadecisionwouldeffectivelybeimpossibleanyway).MultipleprojectswouldalsoriskdilutingDOE’strackingandassessmentcapability.

WHATSHOULDDOEFUND?

Asidefrominitialfundsforplanningandcommunityoutreach,thereare,broadlyspeaking,fiveelementsoftheproposedregionalhydrogenecosystemDOEcouldfund:

1.Thecoreplantbuildoutandcloselyrelatedinitiatives

2.Coreplantoperations

3.Infrastructure(including,forexample,relatedlong-durationstorage,pipelines)

4.Endusers

5.De-risking

WebelievethatDOEshouldfundnumbers1and3,andbepreparedtosubsidizecoreplantoperationsuntilitreachesfullproduction.Number5shouldbeexplored,asDOEmaybebetterpositionedthanindividualhubsaretoaddresscertainrisks.Pumpprimingforendusersshouldbeavoidedwhereverpossible.

CorePlantCapitalExpenditures

WhateverDOEdecidesaboutfundingadditionalelementsoftheecosystem,itwillfundthecoreplantandmostoftheprogram’sfundingwillsupportcoreplantcapitalexpenditures(CAPEX).Howmuchwillthatcost?Ausefulreferencecanbedrawnfromtheworld’slargestalkalineelectrolyzer(AE)plantinChina,whichcameonlineinlateDecember.Baofengclaimsthatits150megawatt(MW)projectcanproduce27,000tonsofhydrogenperyear.

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Atcurrentcosts,then,productionof50MTofhydrogenwillthereforerequireabout278MWofcapacity.AECAPEXiscurrentlyestimatedat~$1,000perkilowatt(kW).

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TheCAPEXrequiredtoproduceatthatscalecanbecurrentlyestimatedatabout$278million.Buildingfor100MTwouldcostontheorderof$500million.Thesefiguresroughlyapproximatetheannounced$250millioncostofAirLiquide’s30MTgreenhydrogenplantinNevada.

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Thesecostswillfallovertime,assupportedbyGlenketal.,themostcomprehensiveestimateofcostdeclinetrajectoriestodate.

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Drawingonawiderangeofsources,GlenkarguesthatAEcatalyzercostsareexpectedtofallatarateof2.96percent(+/-1.23percent)annually;thecostofprotonexchangemembrane(PEM)catalyzersisexpectedtofallfaster,at4.77percent(+/-1.88percent)annually.CatalyzersareamajorcostelementforCAPEXforelectrolysis-basedhydrogenproductionplants.

ThisadmittedlyinexactanalysissuggeststhattheCAPEXforthecoreplantonthescalerequiredbyDOEwillbeontheorderof$250millionto$500million.

FacilityOperations

DOEsuggestsintheNOIthatthehubsshouldbecomeself-sustaining,andthatanyoperatingsubsidieswillthereforebetaperedoff.However,afirmerlimitmaybeneeded,asthecoreplantwilllikelyseekfurthersubsidiestoreducecostsandhenceimprovetheircompetitivepositiondownstream—andDOEwillbepoorlyplacedtoresistthesedemandsonceithassunklargesumsintoagivenproject.

TheH2Hubsaresupposedtodemonstratethecommercialreadinessofexistingtechnologyviaascale-upjumpheavilyfundedbyDOE.Thatreadinessneedstobedemonstratedbythesuccessfulrolloutofaself-sustainingbusinesswhentheplantreachfulloperation.Atthatpoint,nofurthereconomiesofscalecanbederivedfromthatplant,sothereisnopointinsubsidizingoperationsinthehopethatcostswillfallfurther.Marketsforhydrogenareregional—theseare“regionalhubs”—andhencetheyneedtobecomeself-sustainingonaregionalbasis.Theactualmarkettestbeginswhentheplantreachfull-scaleoperations.

Inrarecircumstances,acoreplantmaybewaitingforthefinaldeploymentofanimportantoff-taker(e.g.,completionofapowerplantthatutilizestheplant’sH2production).DOEmayfinditprudenttoprovidesomeadditionalsupportinthosecircumstances.Butingeneral,DOEsubsidiesforfacilityoperationsshouldendatthepointafacilitybecomesfullyoperational.

Infrastructure

Well-establishedeconomicargumentslineupbehindpublicfundingforinfrastructure.Thelikelihoodthatprivateentitiescannotcapturethefullsocialbenefitofinfrastructuredeploymentunderpinstheconceptualframeworkthatsupportspublicinvestmentsinsociallybeneficialinfrastructure.

However,DOEshouldbewaryofover-committinghere.ItsinfrastructurefundswillbelimitedbecausemostfundingwillbecommittedtocoreplantCAPEX.Inaddition,manyinfrastructureprojectswillbecommerciallyfeasible,sotherearerisksthatDOEfundingcouldbeusedtode-riskprojectsthatwouldbebuiltanyway,therebyartificiallyimprovingreturnsforprivateinvestors.

DOEshould,therefore,developamethodologythatmeetstwocorerequirements:First,itshouldidentifyinfrastructureprojectsthataresystemicallyimportantforagivenregionalhydrogenhubthatareinparticularnecessaryforconnectingthecoreplanttoimportantend-usermarkets.Second,itshouldevaluateproposalstightlywithaviewtowardscreeningoutprojectsthatdonotrequireaDOEcontribution.Thelatterisnotasimpletask,thoughitwouldbecomeeasierovertimeassimilarprojectsaredeployedatdifferenthubs.

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However,DOEshouldinprincipleavoidsubsidiesforongoingoperationsforinfrastructureoncetheitisfullyoperational.Whilestart-upsupportforinfrastructureoperationsisappropriateastheplantandinfrastructurerampuptofullcapacity,ongoingsupportatthatpointshouldnolongerbenecessary.SufficientongoingfundingshouldbeavailableviasubsidizedCAPEX.Furthersubsidieswouldbeanunwarrantedblankcheck,andwouldinfactdemonstratethattheregionalhubsarenotself-sustainingovertime.

End-UserSubsidies

DOEshouldinprincipleseektoavoidend-usersubsidies.Thesehavebeendefendedinothercircumstancesasawayto“primethedemandpump,”whichcanleadtofurthersupplyandhenceavirtuouscircleofgrowingscale,decliningcosts,andincreasingdemand.

ButthatisnotthepurposeoftheH2Hubsdemonstrationprogram,whichisprimarilydesignedtodemonstratethataregionalhubcanbeself-sustainingonceascaleof50–100MTdailyinH2productionhasbeenachieved.ThatscaleshouldcuttheresultingpriceofH2substantially,andDOECAPEXsubsidieswillcutthemfurther.Ifthatdoesbuildasufficientvolumeofenduserdemandtodemonstratethatthehubisself-sustaining,thentheprogramwouldhavesucceededinestablishingthatfact.

Notethatenduserswillreceiveanindirectsubsidybecausehalfofthecoreplant’sconstructioncostsandsomeofthehubs’infrastructurecostswillhavebeenpaidbyDOE.Thatreducestheamountofcapitalexpendituresthatmustberecoveredfromendusers,whichisanongoingsubsidy,evenbeyondtheendofDOE’sdirectfunding.

De-risking

Oneofthemostimportantlessonsfrompreviouslarge-scaleenergydemonstrationprojects—suchastheSyntheticFuelsCorporationofthelate1970sandearly1980s,forexample—isthatwhenmarketsturnagainstthem,innovativeprojectsmaynotbeabletorideoutthestorm.Whileitisprobablyimpossibletocompletelyinsulatedemonstrationprojectsfrommarketforces,itisworthconsideringwaysriskscouldbemitigated.Therearethreecriticalmarketrisks:

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Essentialinputssuchasfeedstocksorelectricitycouldbecomemuchmoreexpensive.

Coreplantcomponentscouldbecomemuchmoreexpensive(e.g.,criticalmineralsandcomponents).

Downstreamsalescouldbeaffectedbysignificantcostdeclinesinmarketsforsubstitutes(e.g.,abreakthroughinelectric-vehiclebatteriescouldundercuttheeconomicsofhydrogeninthetransportationsector).

Whilethelasttworisksarerealenough,itisupstreaminparticularwhereDOEorthefederalgovernmentmorebroadlycouldhavearoletoplay.TheshockcausedbytheRussianinvasionofUkrainehasalreadyrippledintonaturalgas(NG)markets,asEUcountriesseektoreplaceRussiangaswithliquifiednaturalgasfromelsewhere,causingasharppricesurgeglobally.

Isthisapermanentshiftinthecostcurveforgas?Noonereallyknows.However,theNGshockalreadyhasclearimplicationsforhubsthatplantouseNGasafeedstock—andalsoforthosewithplanstodeployhydrogenmixedwithNGforpowergenerationorotherdownstreamuses.

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BecauseH2isaninfantindustry,itispoorlyplacedtorideouttheseshocks.Accordingly,DOEshouldconsiderhowitcanbestprotectthehubs.Onewayissimplytosubsidizethecostofinputsoncetheymovebeyondaspecifiedbenchmarklevel.Alternatively,itmaybepossibletohedgeagainstcertainshifts(e.g.,inthepriceofNG)usingforwardcontracts.DOEcouldhelpbyfundingthesepriortohubcompletionsotheeconomicsofthehubscanbedefinedforasignificantperiodinthefuture.Finally,DOEcouldalsoeitherprovideorperhapsorganizeinsuranceagainstshocks,asitislikelybetterpositionedthananysinglehubtoaddresstheserisks.

Inallthesecases,DOEshouldprovidefundingmoreasaloan—orevenagainstequity—ratherthanasasimplegrant,whereverpossible.Ifinvestorsareprovidedwithshockinsuranceofsomekind,fundedbyDOE,theyshouldbepreparedtopayforthatinsuranceatsomepointtobedetermined.

WHOFUNDSWHAT?

IntheNOI,DOEclearlystatesthatitplanstofundhubsviaasingleentity.Anyadditionalfundingbeyondthecoreplantwouldpresumablycomeviasubcontractsselectedandmanagedbythehubs.

Thisapproachhassomeobviousadvantages,asthehubsarepresumablybestplacedtounderstandwhichinvestmentswillprovidethebestbangforthebuck.TheywillalsobeabletoactmorequicklythanDOE,astheywillnotbeconstrainedbycumbersomefederalprocurementrules.AndDOE,ofcourse,willnothavetheburdenofselectionorevenclosemonitoringandsubsequentgo/no-godecisions.

Buttheremaybesubstantialdownsidesforthehubsaswell.Theywouldbeleftwiththechallengingtaskofpickingwhichdownstreamprojectstofund.Thatcouldbeproblematicforcoalitionsthatareonlynowemergingandhavenoinstitutionalhistoryonwhichtorely,andalsohavenotechnicalcapacitytomakefundingdecisions.AndthosedecisionswouldbemadeoutsidetheproceduralprotectionsofFederalprocurementrules.Hubswouldlikelyalsohaveahardtimeenforcinggo/no-gomilestonesforsubcontracts.Regionalhubstaffershaveobservedininterviewsthathubscouldevenbesplitupbyinternalconflictsifforcedtomakethesedecisions.

Giventhesecompetingcostsandbenefits,itmakesmostsenseforsubprojectfundingdecisionstobemadejointlybyDOEandthehubs.Ratherthanmakingasinglegranttohubsthatthenselectsubcontractors,thehubsshoulddefinesubprojectsofvaluetotheregionalecosystem,andDOEshouldthenmakefinalfundingdecisionswithinabudgetshapedbytheoverallamountawardedtotheoriginalhubproposalminusDOEfundscommittedtothecoreplant.Thatwouldensurethatallsubprojectsnationwidearecoveredbyaunifiedsystemoftrackingandevaluation,realgo/no-gomilestonesareinplace,andappropriatedecisionswillsubsequentlybeimplemented.

OnewaytoimplementshareddecisionswouldbeforthehubstoincludeintheirproposalsinfrastructureprojectsthatareimportantfortheregionalecosystemandmeettheDOEfiscaltestforsubsidy.ThiswouldhelpDOEchoosebetweencompetinghubproposalsandsetthestageforasubsequentphasewhereinthoseinfrastructureprojectswouldcompeteforfundswithineach

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hub’soverallbudget,usingnormalDOEfundingprocedures.TheseprojectswouldbesubjecttoDOEmonitoringandevaluation,andDOEgo/no-godecisions.

HOWTOFUNDANECOSYSTEM

WhatCongresswantsfromthehydrogenhubsprogramisclearenough:athrivingregionalhydrogeneconomythatcutsemissions,createsjobs,andopensapathwayintoabiggerhydrogensector.Thequestionishowtogetthere,andspecificallytheroleofDOEandOCEDhydrogenhubsprogram.Ourconclusionsareasfollows:

1.Focusingsolelyonasingleproductionfacilityistoonarrowanddisregardscongressionalintent.Itplacestoomuchemphasisonthecoreandnotenoughonthespokesandnetwork.ItmakesaportfolioapproachtoDOEinvestmentimpossible,andover-emphasizesproductionattheexpenseofdistributionandmarketdemand.

2.DemonstratingH2productionatscaleisexpensive.Asignificantpercentageofhubfundingwillstillneedtogotothecentralproductionentity.ThatentityisalsothefocusforhardtargetsforH2production,costs,andCO2emissions.

3.Ahybridmodelcouldworkbest.DOEshouldconsiderdeterminingthefundingneededforcoreplantCAPEX