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Hydrogen Industry Draws $41 Million In Lobbying From Fossil Fuel Companies

Above photo: Andy Carter.

Billions of dollars in federal subsidies for hydrogen projects has sparked a lobbying blitz.

The number of companies and organizations lobbying the federal government on issues related to hydrogen increased nearly tenfold since President Joe Biden took office — from about two dozen at the end of 2020 to more than 200 this year, according to an OpenSecrets analysis of lobbying disclosures.

Fossil fuel companies, which have promoted hydrogen as a catch-all solution to climate change, rank among the top spenders and outnumber clients from every industry, including the renewable energy sector, the analysis shows.

Thirty-two oil and gas producers reported lobbying on hydrogen, among other issues, and spent a combined $41.3 million on federal lobbying efforts this year, as of Sept. 30.

The lobbying blitz comes as the Biden administration prepares to direct billions of dollars in federal subsidies to scale up hydrogen production to decarbonize the U.S. economy. Unlike coal, oil and gas, hydrogen does not release planet-warming greenhouse gases when burned.

Many climate advocates support this move but warn against incentivizing hydrogen projects that could prolong the use of fossil fuels.

It is possible to produce so-called “green hydrogen” using water and renewable energy, but about 95% of hydrogen is currently derived from natural gas, which generates large amounts of climate pollution.

The fossil fuel industry has aggressively lobbied the White House, Congress, and Energy and Treasury departments to ensure gas-based hydrogen qualifies for federal subsidies. The industry claims it can produce climate-friendly “blue hydrogen” from natural gas using carbon capture, a nascent technology still in early development.

In 2022, the American Petroleum Institute, which represents nearly 600 oil and gas companies, submitted comments on the Energy Department’s draft National Clean Hydrogen Strategy and Roadmap emphasizing the near-term cost advantages of blue hydrogen. The industry group’s climate action framework, published the previous year, also called for “full government funding” of low-carbon research and development programs and urged policy-makers to adopt a “technology-neutral” approach to the energy transition.

Julie McNamara, the deputy policy director for climate and energy at the Union of Concerned Scientists, a think tank, told OpenSecrets that the government risks “aiding and abetting fossil fuel” interests.

“There are so many ways that hydrogen can go that it just perpetuates the status quo,” she explained.

“That is an extremely lucrative place for the fossil fuel industry to be,” she said. “If we have weak standards, it can mean more use of natural gas for longer with more profit along the way.”

Climate advocates have urged the Biden administration to enact strict guardrails to ensure hydrogen projects deliver on their climate promises. They want the federal government to prioritize the development of green hydrogen and limit its use to heavy industries that cannot be electrified, like aviation and steel. They also emphasize the need to accelerate the buildout of renewable energy infrastructure to meet the demands of green hydrogen production, which requires a significant amount of electricity.

Getting hydrogen wrong, McNamara added, would be a “catastrophic waste of time.”

In response to interview requests from OpenSecrets, the American Petroleum Institute shared a study it commissioned “on the benefits of low-carbon hydrogen.” The study concluded that “uniform incentives” for blue and green hydrogen would lead to the fastest buildout of hydrogen infrastructure.

The American Petroleum Institute spent nearly $4.5 million lobbying the federal government in the first nine months of 2023.

Companies and industry groups report lobbying on dozens of issues, making it difficult to tell from disclosures how big a priority hydrogen was for oil and gas companies. But several leading fossil fuel producers — such as BPChevron and Exxon Mobil — have invested in hydrogen initiatives and made the alternative fuel source a key component of their low-carbon solutions programs.

The companies, which all reported lobbying on hydrogen, also stand to benefit from generous government grants and tax credits intended to phase out fossil fuels.

In October, the Energy Department announced plans to award $7 billion to seven proposed regional hydrogen hubs, including $1.2 billion to a Texas project that counts fossil fuel giants Chevron, Exxon Mobil, Phillips 66 and Shell as partners. BP and Exxon Mobil are also involved in developing a Midwest hub that will receive $1 billion through the same government program.

Three of the hubs awarded federal funding are expected to produce hydrogen from natural gas, according to press releases and publicly available information. The Texas hub will produce hydrogen from natural gas and a renewables-powered electrolyzer, while the Midwest hub will rely on a mix of natural gas, renewable energy and nuclear energy.

A third hub in Appalachia — spanning West Virginia, Ohio and Pennsylvania — will produce hydrogen entirely from natural gas. Project developers include Marathon Petroleum.

In response to requests for comment, a Chevron spokesperson told OpenSecrets that the company is “committed to working with policymakers to help inform well-designed energy policy that effectively reduces greenhouse gas emissions.”

A Marathon spokesperson said the company is seeking “clarity on upcoming regulations.” Other companies named in this article did not respond to requests for comment.

The reaction from climate advocates to the hub announcement was mixed.

“We expected there to be a little more green hydrogen,” said Erik Kamrath, hydrogen policy advocate at the Natural Resources Defense Council. He noted that the Bipartisan Infrastructure and Jobs Act of 2021, which authorized the awards, required only one project producing hydrogen from fossil fuels to be selected.

The awards are still subject to negotiations and environmental reviews, but McNamara said the Energy Department left the door open to “unproductive at best, actively harmful at worst” production methods that rely on natural gas and carbon capture.

“Hydrogen can drive up pollution from fossil-fuel-based uses, and worse, perpetuate ongoing use of fossil fuels,” McNamara said. “That’s not the path we need to be on.”

In an email to OpenSecrets, an Energy Department spokesperson said, “DOE’s Regional Clean Hydrogen Hubs program is essential to achieving the President’s vision of a strong clean hydrogen economy that creates healthier communities, strengthens energy security, and delivers new economic opportunities across the nation.”

The department, which environmental groups have criticized for its lack of transparency, did not answer emailed questions about the hydrogen hubs and instead directed OpenSecrets to online pages containing high-level overview of the agency’s hydrogen hub program and awards negotiation process.

Climate advocates and the fossil fuel industry are also squabbling over additional clean hydrogen tax credits authorized through Biden’s signature climate spending package, the Inflation Reduction Act, passed last year. The tax credit is worth up to $3 per kilogram for hydrogen produced using low-emissions processes.

Green hydrogen produced without fossil fuels is energy-intensive, and climate advocates want to limit the incentive to hydrogen produced using new, rather than existing, clean energy sources.

“We are in a renewables constrained environment,” said McNamara, explaining that if hydrogen production scales up too quickly and relies on existing renewable infrastructure then electricity providers may have to turn to fossil fuels to keep up with energy demands.

Some hydrogen producers and fossil fuel companies who support looser regulations argue that stringent requirements will slow development and delay the U.S. transition to clean energy.

Last week, Bloomberg and Politico reported that leaked draft rules on the tax credits indicated the Biden administration would require producers to rely on newly built renewable energy.

The Treasury Department is expected to formally issue a rule by the end of the year.

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