The Biden administration has announced the recipients of $7 billion in new federal funding distributed to renewable hydrogen hubs across the US in a landmark move backing the zero-emissions fuel.
This massive injection of federal money is the culmination of a race by states to attract the promised funding and comes on the heels of several years of strengthening private investment into developing hydrogen energy technology.
So far this year, VCs have invested $2.5 billion across 187 deals for hydrogen startups, while private equity firms have logged $6.9 billion across 29 deals, according to PitchBook data.
“Federal investments attract private sector investment. A lot of it,” President Biden said at an event at the Port of Philadelphia on Friday where he announced the recipients. The administration has estimated that the programs will catalyze $40 billion in private investment.
Seven hydrogen energy production networks are each set to receive hundreds of millions of dollars, which in turn will fund proposed projects run by local utilities and companies including Amazon and ExxonMobil. The seven hubs will aim to collectively produce over 3 million metric tons of clean hydrogen annually.
Earlier this month, Electric Hydrogen was the first green hydrogen electrolyzer startup to reach unicorn status, closing a $380 million Series C with backing from investors including BP, United Airlines and Microsoft.
This relatively untested climate technology has been revved up by financial incentives rolled out in the US Inflation Reduction Act as well as subsequent legislation proposed in the EU and subsidies for green hydrogen in China. As solar panels and electric cars have gone mainstream, startup investors have looked to underdeveloped technology like hydrogen in search of outsize returns.
A hallmark of Biden’s climate agenda is to invest much more in domestic energy production in an effort to curb American reliance on foreign sources of energy and maintain better control over both price and supply as the world works toward the goal of net zero by 2050.
The public and private investment into hydrogen have spurred the growth of a burgeoning industry: Hydrogen energy storage, for example, has made massive technological strides over the past five years and brought in some $3 billion in capital.
Green hydrogen, which is the most well-represented hydrogen production technology, requires that the significant quantity of energy needed to produce the carbon-free fuel is itself produced through sustainable methods. But a more controversial strategy producing so-called blue hydrogen using natural gas has also been making inroads in the market, with backing from oil companies.
While most of the hydrogen hubs will produce the fuel using renewable energy, the Appalachian, Midwest and Gulf Coast hubs will also use natural gas-derived hydrogen.
In his speech on Friday, Biden called climate change “the only existential threat to humanity.”
Related read: Q2 2023 Clean Energy Report
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