With Houston at the core, the Texas Gulf Coast region could become the leading hydrogen hub in the U.S. by 2035, if backers of the clean energy source transform plans into reality.

Several pieces are already in place, as highlighted by Brett Perlman, CEO of the Center for Houston’s Future, during the recently held Future of Hydrogen in the Ontario and Texas Economies virtual event.

About half of the U.S. pipeline capacity for hydrogen is in the Gulf Coast region.

The region is home to the second-largest port in the nation, a key advantage for a hydrogen export market, as well as large petrochemical and industrial manufacturing facilities.

Nearly one-third of U.S. hydrogen is produced along the Texas Gulf Coast, mainly through steam methane reforming.

“We also have the opportunity to combine that with carbon sequestration,” Perlman said. “We have a number of opportunities for salt cavern storage, pipelines, to create basically a blue hydrogen industry. So, taking the existing hydrogen production today, which is about a quarter of the industrial emissions, and combining that with the carbon capture for blue hydrogen.”

Given that Texas generates more wind energy than any other state and is second—following California—in solar generation with costs falling, also bodes well for hydrogen’s future. Add to this academic and industrial expertise working together to make it happen.

Texas isn’t alone in its quest to become one of the world’s hydrogen hubs, connecting production facilities to industrial users, infrastructure and export routes. Moves are also being made in Ontario, Canada; Australia and the Middle East—to name a few.

Hopes are high on hydrogen’s ability to decarbonize major sectors of the economy and generate electricity. However, the promise of a burgeoning hydrogen economy could go unfulfilled unless ambitions for cleaner energy help spur a pickup in demand.

Assessing Demand

Data from the International Energy Agency (IEA) show hydrogen demand was about 90 Mt in 2020. Just about all of the hydrogen—produced mainly from fossil fuels—was used for refining and industrial purposes.

Total hydrogen demand from industry could grow 44% by 2030, according to the IEA’s net-zero emissions by 2050 scenario. However, looking at the pipeline of projects, the IEA believes that only about 18% of the demand for low-carbon hydrogen would be met.

Compared to conventional fuel options, low-carbon hydrogen is not cost-competitive, resulting in low demand for the product, said Matthew Slotwinski, senior economic development officer at the Sarnia-Lambton Economic Partnership in Ontario, Canada.

“To ensure competitiveness, hydrogen products must achieve scale, which is influenced most heavily by demand,” Slotwinski said. “In the short term, it’s best to create the low-carbon hydrogen economy where demand is highest.”

That’s industrial applications: fertilizer production, hydrocracking or as chemical feedstock.

“In some cases, local facilities may be able to invest in onsite hydrogen production,” he said.

Like the Texas Gulf Coast region, Ontario, Canada’s Sarnia-Lambton, located on the Canadian-U.S. border at the tip of Lake Huron, has sights on becoming a hydrogen hub. Slotwinski described Sarnia-Lampton’s hybrid chemistry cluster as “Canada’s premier location for development and investment in clean, green and sustainable chemistry technologies utilizing agricultural, waste and other renewable feedstocks.”

He sees immediate opportunities for Sarnia-Lampton, already a significant hydrogen producer in Canada, to leverage existing gray hydrogen production (that’s hydrogen generated from natural gas, or methane) and long-term opportunities associated with blue or green hydrogen production, fuel cells, hydrogen storage and hydrogen blending.

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“Investment and growth in the low-carbon economy can be achieved by creating opportunities for local industry to do better with what they do today based on an incremental and well-defined shift,” Slotwinski said. “Right now, we think that shift is best deployed across the industrial applications of hydrogen.”

He added that many industrial companies have already committed through global corporate strategies to pursue low-carbon hydrogen and a clean fuel economy. The “strong local appetite” is expected to drive investment in the area.

From Gray to Blue, Green

Besides use as feedstock, new applications and integrated processes involving cement and steel—two of the biggest industrial emitters of CO2—could spark demand, according to Perlman, though a manufacturing process redesign would be required.

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“Given the presence of industrial manufacturing facilities and hydrogen production, the Gulf Coast is well positioned to become a hydrogen hub,” he said. “It could even attract new industries such as decarbonized steel industry.”

By 2030, hydrogen demand in the iron and steel sectors would triple to 18 Mt in the IEA’s 2050 net-zero emissions scenario, driven by the subsector’s decarbonization strategy.

Tapping the petrochemical market by converting gray hydrogen into either blue or green, is “one of the low-hanging fruit” that could jumpstart the hydrogen industry, Perlman said.

“We think that by 2035, 45% of the hydrogen used in petrochemical refinery could be converted to low-carbon fuel,” he said.

In Texas, focus is on opportunities within state and abroad.

“We’ve had many discussions with our European colleagues and Japanese colleagues about the potential for creating a hydrogen export market, but export is really only one of the opportunities,” Perlman said. “We have significant industrial demand opportunities in heavy-duty trucking either from the Port of Houston or in the what we call the Texas Triangle—Houston, Dallas and San Antonio. There’s quite a significant amount of traffic between those three destinations, which can provide the demand for hydrogen transportation.”

The center unveiled in 2021 the H2Houston Hub initiative, its roadmap to scale hydrogen in the greater Houston area, working alongside several industry partners and organizations.

“We are just in the process of launching a full set of projects this month to start to take that vision and then make it a reality,” Perlman said.

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Source: Center for Houston's Future

Areas of study include heavy-duty trucking; industrial applications, energy storage and ammonia exports; H2 blending and long-haul light- and medium-duty vehicles.

“If this is successful, you can see that the opportunity to grow the market is quite substantial,” he said. “We could potentially triple the size of the market over some period of time by 2050.”