Clean Hydrogen Deployment Act of 2021
This bill requires the Department of Energy's Office of Fossil Energy and Carbon Management to establish a pilot program that supports the development of clean hydrogen as an energy source. Under the pilot program, the office must enter into contracts with entities to pay for their costs associated with the production or purchase of clean hydrogen. Clean hydrogen must be produced with at least 80% fewer greenhouse gas emissions than conventional hydrogen.
[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5965 Introduced in House (IH)]
<DOC>
117th CONGRESS
1st Session
H. R. 5965
To direct the Secretary of Energy to establish a pilot program to enter
into contracts for payment of costs associated with using eligible
hydrogen, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
November 12, 2021
Mr. Tonko (for himself and Mr. McKinley) introduced the following bill;
which was referred to the Committee on Energy and Commerce
_______________________________________________________________________
A BILL
To direct the Secretary of Energy to establish a pilot program to enter
into contracts for payment of costs associated with using eligible
hydrogen, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Clean Hydrogen Deployment Act of
2021''.
SEC. 2. CLEAN HYDROGEN CONTRACT FOR DIFFERENCES PILOT PROGRAM.
(a) Establishment of Pilot Program.--The Secretary, acting through
the Assistant Secretary of the Office of Fossil Energy and Carbon
Management and in consultation with the Assistant Secretary of the
Office of Energy Efficiency and Renewable Energy and other relevant
offices within the Department of Energy, shall establish a pilot
program to enter into contracts, on a competitive basis, with entities
for payment of costs associated with the production or purchase of
eligible hydrogen that is used in projects carried out by such
entities.
(b) Selection.--
(1) In general.--Not later than 2 years after the date of
enactment of this Act, the Secretary shall enter into at least
5 contracts under the pilot program established under
subsection (a), with each contract term for a period of no
longer than 5 years.
(2) Applications.--In selecting entities to enter into
contracts with under the pilot program established under
subsection (a), the Secretary shall ensure--
(A) at least 1 entity selected will carry out a
project that uses eligible hydrogen as a feedstock in
an industrial application, such as synthesis of
ammonia, fuels, or chemicals;
(B) at least 1 entity selected will carry out a
project that uses eligible hydrogen as a fuel in an
industrial application;
(C) at least 1 entity selected will carry out a
project that uses eligible hydrogen as a fuel in a
transportation application, including use at a
transportation hub, such as a port, transit depot, or
distribution center;
(D) at least 1 entity selected will carry out a
project that uses eligible hydrogen as a fuel in a
power application;
(E) not less than 2 entities selected will carry
out a project that uses eligible hydrogen produced
using electricity, or thermal energy, generated from
zero-emission energy sources; and
(F) each entity selected addresses any necessary
hydrogen storage and infrastructure needs associated
with the project, including by procuring those services
from other entities.
(c) Contract for Differences.--
(1) Payment.--The Secretary shall provide at least one
payment annually to an entity with which the Secretary has
entered into a contract under the pilot program established
under subsection (a).
(2) Amount.--Except as otherwise provided in this
subsection, the amount of a payment, with respect to eligible
hydrogen used by a project over a designated period of time, as
determined by the Secretary, to an entity with which the
Secretary has entered into a contract under the pilot program
established under subsection (a) shall be--
(A) with respect to an entity carrying out a
project using eligible hydrogen produced using
electricity, or thermal energy, generated from zero-
emission energy sources, an amount equal to--
(i) the cost of such eligible hydrogen that
is produced or purchased, and then used by the
project; minus
(ii) the applicable fair market value, as
determined by the Secretary, to produce or
purchase an equal quantity of conventional
hydrogen; or
(B) with respect to an entity carrying out a
project using any other type of eligible hydrogen, an
amount equal to--
(i) the number that is equal to--
(I) the cost of such eligible
hydrogen that is produced or purchased,
and then used by the project; minus
(II) the applicable fair market
value, as determined by the Secretary,
to produce or purchase an equal
quantity of conventional hydrogen;
multiplied by
(ii) the number that is equal to--
(I) 1; minus
(II) as determined by the
Secretary, the number that is equal
to--
(aa) the quantity of the
greenhouse gas emissions, on a
life-cycle basis, associated
with such eligible hydrogen
that is used by the project;
divided by
(bb) the quantity of
greenhouse gas emissions, on a
life-cycle basis, associated
with an equal quantity of
conventional hydrogen.
(3) Alternative amount calculation.--With respect to an
entity with which the Secretary has entered into a contract
under the pilot program established under subsection (a) that
will carry out a project that uses eligible hydrogen to
displace a nonhydrogen fuel or feedstock, the Secretary may
determine and apply a formula that is different than the
otherwise applicable formula under paragraph (2) for
calculating payments to such entity, taking into consideration
the differences between the eligible hydrogen to be used in the
project and the nonhydrogen fuel or feedstock being displaced
with respect to--
(A) cost;
(B) emissions; and
(C) heating value, as applicable.
(4) Additional payment.--To the extent appropriations are
available, and notwithstanding subsection (d), the Secretary
may provide a payment to an entity with which the Secretary has
entered into a contract under the pilot program established
under subsection (a) at the beginning of such contract--
(A) that is additional to any other payment under
this subsection;
(B) that is not more than 50 percent of the
expected total payments for the first year of the
contract; and
(C) for capital expenditures or procurement of
services related to the project carried out by such
entity, including equipment and infrastructure for
storage, delivery, and distribution of eligible
hydrogen.
(5) Applicable fair market value.--Before entering into a
contract with an entity under the pilot program established
under subsection (a), the Secretary shall communicate to such
entity the expected dollar amount of, and method for
calculating, the applicable fair market value of conventional
hydrogen or a relevant displaced fuel that will apply for the
duration of such contract for the purposes of this subsection.
(d) Maximum Payment Per Year.--
(1) In general.--The amount of payments to an entity under
a contract entered into under this section (other than a
payment described in subsection (c)(4)) shall not exceed
$50,000,000 per year.
(2) Payment adjustment.--Subject to the availability of
appropriations, the Secretary may increase the maximum amount
of payments described in paragraph (1) to an entity to up to
$100,000,000 per year, as determined appropriate by the
Secretary.
(e) Applications.--To be eligible to enter into a contract under
this section, an entity shall submit an application to the Secretary
that includes--
(1) a description of the applicable project;
(2) the location of any facility included in the project;
(3) the method of production, including expected
feedstocks, and expected cost, of eligible hydrogen to be used
in the project;
(4) a description of any infrastructure and equipment
investments, including modification, conversion, and retooling,
that will be done to support increased use of eligible hydrogen
at any facility of the project;
(5) an estimate of annualized expected greenhouse gas
emissions associated with the production of the eligible
hydrogen expected to be used in the project, calculated using
methods and procedures determined appropriate by the Secretary;
and
(6) any additional information determined to be appropriate
by the Secretary.
(f) Priority.--In selecting entities to enter into contracts with
under this section, the Secretary shall give priority to an entity
based on--
(1) with respect to the project to be carried out by such
entity using eligible hydrogen, the extent to which such
project would--
(A) use hydrogen as a fuel or feedstock as a
portion of total fuels or feedstocks used at the
facility;
(B) use eligible hydrogen as a portion of total
hydrogen used at the facility;
(C) support or encourage future use,
commercialization, or cost reduction of eligible
hydrogen and associated infrastructure, including
development of centralized hubs for hydrogen
production, distribution, delivery, and storage and use
of existing infrastructure;
(D) reduce greenhouse gas emissions;
(E) seek to mitigate emissions of nitrogen oxides
from the production and use of eligible hydrogen; and
(F) seek to source fuels and feedstocks used in the
production of eligible hydrogen that are associated
with fewer greenhouse gas emissions; and
(2) the extent to which such entity commits to making or
contracting for additional investments to support the
production, distribution, delivery, storage, and use of
eligible hydrogen, including modifying, installing, and
constructing equipment and infrastructure.
(g) Assurances.--Before entering into a contract under this section
with an entity that will produce or purchase, and then use eligible
hydrogen produced from fossil fuels where carbon capture technologies
are used during the production of such eligible hydrogen, the Secretary
shall secure a written assurance from such entity that such entity
shall seek to ensure--
(1) the reduction of upstream fugitive greenhouse gas
emissions associated with any feedstock used in the production
of such eligible hydrogen; and
(2) with respect to the carbon dioxide captured from the
production of such eligible hydrogen, the long-term storage or
utilization, if such utilization results in long-term storage,
of such captured carbon dioxide, where such captured carbon
dioxide is stored in a manner that the Secretary determines is
consistent with existing relevant regulations for long-term
storage of carbon dioxide and is otherwise appropriate.
(h) Report to Congress.--Not later than 1 year after all funding
made available for the pilot program established under subsection (a)
is expended, the Secretary shall submit to Congress and make available
to the public a report that describes--
(1) any challenges or benefits that entities under such
pilot program reported with respect to the integration or use
of eligible hydrogen;
(2) an assessment of the national market potential for
eligible hydrogen;
(3) an assessment of barriers and opportunities for
widespread use of eligible hydrogen;
(4) recommendations for how future Federal, State, and
local programs can best support the adoption and widespread use
of eligible hydrogen; and
(5) any other data and analysis the Secretary determines to
be necessary to describe the implementation, outcomes, or
effectiveness of such pilot program.
(i) Definitions.--In this Act:
(1) Conventional hydrogen.--The term ``conventional
hydrogen'' means hydrogen produced from steam methane reforming
of nonrenewable feedstocks, such as natural gas, where carbon
capture technology is not used during such production.
(2) Eligible hydrogen.--The term ``eligible hydrogen''--
(A) means hydrogen, the production of which
releases at least 80 percent less greenhouse gas
emissions into the atmosphere per kilogram of hydrogen
as compared to the production of conventional hydrogen,
as determined by the Secretary taking into
consideration greenhouse gas emissions released from--
(i) the applicable hydrogen production
facility;
(ii) the production of electricity consumed
in the applicable hydrogen production process;
(iii) conventional hydrogen production
facilities; and
(iv) the production of electricity consumed
in conventional hydrogen production processes;
and
(B) includes hydrogen produced using electricity,
or thermal energy, generated from zero-emission energy
sources.
(3) Secretary.--The term ``Secretary'' means the Secretary
of Energy.
(j) Authorization of Appropriations.--There is authorized to be
appropriated to carry out this Act--
(1) $375,000,000 for fiscal year 2022; and
(2) $250,000,000 for each of fiscal years 2023 through
2026.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Energy and Commerce.
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