Technological evolution of large-scale blue hydrogen production toward the U.S. Hydrogen Energy Earthshot

Hydrogen potentially has a crucial role in the U.S. transition to a net-zero emissions economy. Learning from large-scale hydrogen projects will boost technological evolution and innovation toward the U.S. Hydrogen Energy Earthshot. We apply experience curves to estimate the evolving costs of blue hydrogen production and to further examine the economic effect on technological evolution of the Inflation Reduction Act's tax credits for carbon sequestration and clean hydrogen. Learning-by-doing alone can decrease the production cost of blue hydrogen. Without tax incentives, however, it is hard for blue hydrogen production to reach the cost target of $1/kg H2. Here we show that the breakeven cumulative production capacity required for gas-based blue hydrogen to reach the $1/kg H2 target highly depends on tax credit, natural gas price, inflation rate, and learning rates. We make recommendations for hydrogen hub development and for accelerating technological progress toward the Hydrogen Energy Earthshot.

Wanying Wu, Haibo Zhai, Eugene Holubnyak