University of Wyoming Researchers Analyze Economic Effects on Blue Hydrogen Production

Researchers from the University of Wyoming have revealed a study on the economic impacts of federal incentives on blue hydrogen production. This pivotal study may pave the way for cheaper, cleaner energy, supporting the U.S. Department of Energy’s ambitious Hydrogen Energy Earthshot Initiative.

In a significant stride towards cleaner and more affordable energy, University of Wyoming researchers have released a study examining the economic implications of federal incentives on large-scale blue hydrogen production. The analysis, led by Haibo Zhai, the Roy and Caryl Cline Distinguished Chair in Engineering and a professor of environmental engineering at the University of Wyoming, is expected to revolutionize the future of hydrogen energy.

The study, titled “Technological Evolution of Large-Scale Blue Hydrogen Production Toward the U.S. Hydrogen Energy Earthshot” and published in the journal Nature Communications, was primarily authored by Wanying Wu, a doctoral student under Zhai’s mentorship. It offers a detailed assessment of the economic advantages from deploying blue hydrogen projects and evaluates the role of tax credits in promoting this energy source.

Launched in 2021, the U.S. Department of Energy’s (DOE) Energy Earthshots Initiative aims to make clean hydrogen production more accessible and economical, targeting an ambitious reduction in hydrogen production costs to $1 per kilogram within a decade. The initiative’s objective is to stimulate breakthroughs in clean energy solutions by leveraging technology and economic strategies.

“Currently, the cost of hydrogen is high, especially when produced from renewables,” Zhai said in a news release. “However, blue hydrogen — that is, hydrogen produced using fossil fuels and paired with carbon sequestration — has the potential to significantly reduce the costs of production, substantially lower emissions and support new economic opportunities in line with the goals of the Energy Earthshots Initiative so long as the tax incentives and infrastructure funding remain available to technology developers. This study is an important snapshot of where we are and where we could be in the future while building out clean hydrogen systems.”

Blue hydrogen stands as a promising solution due to its dual benefits of cost-effectiveness and emissions reduction. The researchers applied experience curves to estimate the evolving costs and further examined the economic effects of the Inflation Reduction Act’s tax credits for carbon sequestration and clean hydrogen production.

“We concluded in our models that the break-even cumulative production capacity required for gas-based blue hydrogen to reach DOE’s $1/kg H2 target is highly dependent on tax credits, natural gas prices, inflation rates, carbon capture uncertainties and learning rates,” Zhai added.

Despite these variables, the study infers that large-scale blue hydrogen projects could maintain cost-competitiveness and experience definite cost reductions, aided by extended tax credits for carbon sequestration.