Your Guide to Hydrogen Energy in Colorado

Hydrogen. The smallest and most abundant molecule in the universe.

In the face of the climate crisis, some see harnessing hydrogen for energy as a miracle fix, while others think investing in hydrogen-based energy is doing more harm to our health and planet than it’s helping. The issue has been heavily debated since the early 2000s, and now, Colorado research facilities and developers are investigating just how far hydrogen can go.

Not all hydrogen is created equal.

Hydrogen is a secondary fuel, not an energy source, but a carrier of energy produced by solar, wind, fossil fuels, or another power source. Hydrogen is subject to a color labeling system, and we will focus on three: gray, blue, and green.

Gray hydrogen is the most common type produced today, accounting for about 95% of global supply. It uses steam methane reforming, which burns natural gas to produce methane, reacting with steam to produce hydrogen, with carbon dioxide as a byproduct. The environmental drawbacks of gray hydrogen are clear: It keeps us dependent on natural gas, a fossil fuel, and emits carbon dioxide into the atmosphere, contributing to global heating and climate change. But it’s easier, more efficient, and cheaper than other types of hydrogen.

Blue hydrogen is essentially gray hydrogen, plus carbon capture and storage. It’s sometimes referred to as a clean energy source. Still, critics point to the fossil fuel industry’s promotion of blue hydrogen as evidence that carbon capture methods only prolong our use of fossil fuels. Green hydrogen, conversely, uses electrolysis to separate hydrogen molecules from oxygen in a water molecule. This hydrogen fuel is a clean, renewable energy source when powered by renewables.

But high costs are challenging, explained Keith Wipke, Fuel Cell and Hydrogen Technologies program manager at the National Renewable Energy Laboratory in Golden, Colorado. Electrolysis is an expensive and niche technology, making it currently uncompetitive against natural gas-based hydrogen production.

Wipke said NREL researchers mainly investigate electrolysis, which is used in limited contexts to power some industries like transportation and metal production. Their goal is to expand green hydrogen to fill gaps in the energy market where other renewables might not be reliable or efficient enough to fully decarbonize.

“The two big things for getting hydrogen to meet those opportunities are getting the cost of hydrogen down for low-carbon hydrogen and scaling it up so that it is at a scale where it can provide a meaningful contribution to our energy system,” Wipke added.

According to COO Buford Barr, the Denver-based company is working to develop the Colorado hydrogen supply by creating three fuel stations along the Front Range and stimulating the hydrogen demand market through education about hydrogen vehicles.

“[NREL is] a group that we reach out to a lot, some for technical questions, but they’ve been great in helping us get vehicles to show the public,” Barr said. “The reality for us is, unless people can touch and kick the tires, they don’t think this is real.”

New Day Hydrogen’s model will produce hydrogen through electrolysis on-site rather than be transported from an offsite location, which will be produced by hooking up to the existing energy grid. While the grid is still reliant on fossil fuels, so will the fueling station. However, once the grid decarbonizes, hydrogen fuel will be emissions-free.

Green hydrogen is widely considered the gold standard, but blue hydrogen is still an option for some. The Rocky Mountain Institute, a think tank based in Boulder, Colorado, invests in blue hydrogen solutions, such as detailed monitoring of emissions and methane leaks and fortifying hydrogen pipelines to minimize leaks during hydrogen transport.

RMI promotes green hydrogen applications for industries that could be tough to power solely through direct electrification but notes that hydrogen production should not take away capacity from existing renewable energy sources. That’s where blue hydrogen comes in to use already widely implemented steam methane reforming without the emissions.

However, because blue hydrogen projects use natural gas — often more natural gas than gray hydrogen projects because of the need to power carbon capture systems — they are thought to align with the interests of the fossil fuel industry.

RMI’s current hydrogen lead, Oleksiy Tatarenko, worked as a strategist at the oil company Shell for 13 years, prompting bias concerns over RMI’s dedication to blue hydrogen projects.

RMI did not respond to several requests for comment; however, its project descriptions include commitments to clean hydrogen with low carbon and leakage emissions and community investments to promote equity and local perspectives for those living near hydrogen projects.

When hydrogen comes in handy

One of my first questions, when I arrived on the hydrogen scene, was, “Why all the extra steps?” Why not just use the energy made from renewables or even fossil fuels directly rather than doing electrolysis, which is expensive and rather inefficient?

Hydrogen is somewhat like a battery in liquid or gas form. Picture a bright, sunny day with a strong breeze. Photovoltaic cells glare underneath the sun, and wind turbines spin at top speed—energy is flowing. Batteries store a lot of that energy for when we want to use it later, at night, for example.

But those batteries are big, and their size limits their capacity. So hydrogen steps in by storing that excess energy and allowing us to access it during low-energy periods.

“You need multiple-day storage, and even seasonal storage, to use more sunlight from the summer into the dark winter nights,” Wipke said. “Hydrogen can help get that last 10 or 20% of the grid.”

Wipke added that this might be particularly helpful in industries like transportation and fertilizer production, which currently rely heavily on fossil fuels.

Barr said New Day Hydrogen’s hydrogen fueling stations would look and feel fairly similar to a typical gas station, with people using a pump to refuel their vehicles in a few minutes. But for now, most people won’t be able to get far with only a few hydrogen fuel stations across Colorado, so the focus is primarily on commercial vehicles with fixed, consistent routes.

Wipke added that hydrogen might be appropriate for heavy-duty vehicles because it’s very light and can offset the need for large, heavy batteries on board.

“One of the challenges we’re going to face early on is the lack of infrastructure,” Barr said. “Right now, if you go on a trip, you don’t worry about ‘I guess I should plan this out and know where my gas stations are.’ There are very few places in this country where a gas station isn’t within 10 miles. That won’t be the case for the foreseeable future with hydrogen.”

Wipke said another hydrogen focus is blending hydrogen into existing natural gas lines, similar to how ethanol is mixed into gasoline.

The idea is to use hydrogen to displace some of the natural gas’s carbon emissions. Still, the amount of hydrogen that can be mixed into natural gas is very limited, said Chuck Kutscher, a fellow and senior research associate of the Renewable and Sustainable Energy Institute at the University of Colorado Boulder.

Kutscher explained that hydrogen carries about one-third of the energy of natural gas by volume, so whatever percent of hydrogen goes in, only one-third of it comes out as usable energy. If you mix 21% Hydrogen into the gas pipeline, you will reduce carbon emissions by 7%.

“Climate change is a crisis; you’re not going to solve climate change by reducing emissions by 7%,” Kutscher added.

This strategy is further complicated by the fact that, like other high-temperature combustion processes, burning hydrogen produces nitrogen oxides, a category of harmful air pollutants. Because hydrogen burns at higher temperatures than natural gas, it could produce comparably higher NOx emissions.

This is not the case when hydrogen is used in a fuel cell, like in many hydrogen cars. In that application, water vapor is the only byproduct.

Kutscher said that to truly use hydrogen to address climate change, we need to focus on replacing all active gray hydrogen production with green hydrogen.

“It doesn’t make a lot of sense to produce green hydrogen and use it in other ways when it could be used to replace the steam methane reforming hydrogen,” Kutscher added.

Hydrogen’s holdups

However, the effort to replace other hydrogen projects with green hydrogen faces major roadblocks.

Electrolyzers are expensive to operate, and the cost is offset only by the hydrogen they produce. While supply and demand for hydrogen remain low, electrolysis is a huge expense, and the desire to bring the cost down could reduce the incentives to produce solar and wind power, Kutscher said.

“The challenge with producing green hydrogen is that if you say, ‘I’m just going to use cheap electricity when solar is being curtailed,’ that basically doesn’t allow you to pay off the cost of the electrolyzer,” Kutscher added.

Hydrogen will also always and forever be a secondary fuel source and an energy carrier, whereas solar and wind are primary energy sources. It takes a lot more energy, roughly three times as much, to use hydrogen to power a car as opposed to a battery.

Kutscher said that’s both expensive and inefficient. California invested $257 million to create 200 hydrogen fueling stations by 2025. Currently, the state has only 55 stations. As of August 11, 2024, 11 stations were unavailable, and 21 were partially or fully offline, according to real-time data from the Hydrogen Fuel Cell Partnership.

Fueling stations are expensive for developers to keep open and expensive for consumers to use. According to Bloomberg, filling up a passenger hydrogen vehicle costs a California driver about $200, equivalent to paying $14.60 for a gallon of gas.

By comparison, California operates more than 105,000 charging stations for electric vehicles.

“It’s a lot easier to build megawatt charging stations on the electric grid than it is to come up with whole new infrastructure to transport hydrogen,” Kutscher said. “And you still have the problem of all that electricity that has to be consumed to produce the hydrogen.”

Additionally, transporting hydrogen is risky and inefficient because the molecule’s small size means it often leaks through stainless steel carrier vessels, Kutscher said. Not only is hydrogen lost during transportation a big waste after so much energy was used to create it, but hydrogen is also highly flammable and can cause a fire or explosion if there is a spark.

Kutscher added that this is dangerous not only for workers at hydrogen plants but can also create risk for hydrogen vehicle owners.

“If you have a hydrogen fuel cell vehicle parked in your garage and it leaks hydrogen, anything from 4% to 75% hydrogen in the air, if it gets a spark, it could ignite.”

Hydrogen also poses health risks, particularly for people with preexisting health conditions like asthma or COPD, children, the elderly, and pregnant people, said Lauren Swain, coordinator for Colorado Physicians for Social Responsibility.

Flammability poses an obvious danger, but emissions from both hydrogen leaks and nitrogen dioxide from hydrogen burning also can contribute to illness, Swain explained. Additionally, the emissions from gray and blue hydrogen contribute to global heating and climate change, which have associated health risks from frequent heat waves and air pollution.

Swain added that these risks need to be effectively considered and communicated when proposing and developing new hydrogen projects, particularly since the consequences typically disproportionately impact vulnerable communities.

“They aren’t able to effectively resist or even become informed of the threats,” Swain said. “Anytime heavy industry comes into being, there’s a threat that disproportionately impacted communities will not be able to be fully informed or give full consent.”

Swain said these community impacts recently came to light with a proposed Xcel Clean Heat Plan to mix hydrogen with natural gas to heat buildings in Hudson, Colorado.

PSR pushed the company to submit to a Colorado Public Utilities Commission proceeding, a review by the regulatory body for public industry in Colorado, because of concerns that the surrounding community would be harmed by the project. The commission voted the project down and refused Xcel Energy the required permit.

Kutscher also submitted detailed written testimony to the commission against Xcel’s plan, expressing his concern that it would only increase natural gas use in the state.

Swain said any public hydrogen projects should be vetted and approved, with community engagement and sufficient knowledge of the potential side effects.

“What would that permitting process be like? How transparent is it? Would it be inclusive? Those are major, major considerations,” Swain added. “Even if it’s very transparent and very inclusive, it’s also going to be very dangerous.”

Climate solution or fossil fuel windfall?

Kutscher said the hydrogen industry remains primarily focused on blue hydrogen, which aligns with fossil fuel company interests to keep the energy sector dependent on fuels like natural gas.

But, especially with green hydrogen, using hydrogen technology to aid sectors that may struggle to electrify can still help the grid convert. With the climate crisis advancing, we will need to use every resource at our disposal to adapt, Wipke said.

“We need a lot more renewables. We need them as fast as we can get for everything,” Wipke said. “Singling out hydrogen and saying, ‘Well, you’ve got to be pure from the beginning, which is a very high bar.”

Investments from the 2022 Inflation Reduction Act and The U.S. Department of Energy help make advancements in hydrogen possible, like the electrolysis work at NREL, which is funded by the U.S. DOE’s Hydrogen and Fuel Cell Technologies Office.

The DOE announced its Energy Hydrogen Earthshot in June 2021, an ambitious goal to reduce the cost of clean hydrogen by 80% to $1 per one kilogram in one decade. The Hydrogen Shot establishes a framework for clean hydrogen projects (hydrogen produced with a carbon intensity equal to or less than 2 kilograms of carbon dioxide) and a financial investment of about $400 million.

The IRA stipulated a $0.12 to $0.60 hydrogen tax credit for hydrogen produced in the next decade after December 31, 2022 — the biggest hydrogen subsidy in the world.

But while hydrogen is on the rise, everything has limitations. New Day Hydrogen’s Barr said the industry needs oversight, regulations, and a healthy dose of realism.

“We’re not trying to sell a silver bullet,” Barr said. “If anyone comes to you and says, ‘My solution solves everything,’ they’re lying to you.”