California’s bill facilitating bid for Regional Clean Hydrogen Hub clears State Senate

On 26 May, the California Senate passed a bill that would mobilise funds from the State Treasury to support clean hydrogen projects and match federal funds granted to a regional clean hydrogen hub. The new bill was introduced on 15 February, the same day the Biden-Harris Administration announced $8 billion for the establishment of Regional Clean Hydrogen Hubs.

The multi-billion-dollar federal move got several states tweaking their legislation and some teaming up in a cross-state effort to become one of the US clean hydrogen hubs.

In March this year, New York, Connecticut, Massachusetts, and New Jersey announced that they had signed a multi-state agreement to develop a proposal for a Regional Clean Energy Hydrogen Hub.

Under the agreement, the four states will, inter alia, seek to integrate offshore wind and solar into hydrogen production.

The new bill in California, SB 1075, was brought before the State Senate in February by several state senators led by Senator Nancy Skinner. Now, as SB 1075 cleared the Senate, it progressed on to the California Assembly, whose legislative session is running until 31 August.

The bill would create the California Clean Hydrogen Hub Fund within the State Treasury under the administration of the state’s I-Bank, the California Infrastructure and Economic Development Bank in the Governor’s Office of Business and Economic Development.

The Clean Hydrogen Hub Fund would be used to provide grants for clean hydrogen projects in California and/or to match federal funds granted to a regional clean hydrogen hub. According to the bill text, the Fund would also be utilised to fund or match research grants that may be necessary to meet the goal of affordably producing hydrogen from renewable feedstock at scale.

SB 1075 requires the Governor to appoint a Clean Hydrogen Hub Director by 1 April 2023 and the I-Bank to coordinate with the director and relevant state agencies in administering the California Clean Hydrogen Hub Fund.

Among other things, the bill requires the State Air Resources Board (state board), the State Energy Resources Conservation and Development Commission (Energy Commission), and Public Utilities Commission (PUC), to consider potential uses for green hydrogen other than energy storage as well as to jointly develop recommendations to the Legislature on definitions for different categories of hydrogen and potential end uses for those categories by 1 June 2024.

The bill also directs the three agencies to develop a definition of renewable hydrogen that, when used in an electrical generating facility, would enable the facility to meet the definition of a “renewable electrical generation facility.”

The above is to modify existing laws on green hydrogen and renewable electrical generation facilities to include different uses of green hydrogen production to qualify for state permits and solicitations.

In the bill text, the authors state that California offers “unique and attractive opportunities to deploy clean hydrogen and its derivatives at scale” as it is well positioned to provide different renewable and clean energy resources to power its production.

Same as the aforementioned New York-led state coalition, California could also see its hydrogen development incorporating offshore wind as one of the resources listed in SB 1075 is offshore wind, which is poised to bring 4.5 GW of installed generation capacity to California as the US Department of the Interior (DOI) plans to hold a lease sale for offshore wind development later this year.

Yesterday (31 May), the Bureau of Ocean Energy Management (BOEM) published a Proposed Sale Notice (PSN) in the Federal Register, opening a 60-day window to solicit public feedback on the details of the proposed lease sale and to qualify new developers that wish to compete for development rights later this year.

This will be the first auction of this kind organised for areas off the US Pacific Coast, which is deemed most suitable for floating wind technology.

The five lease areas offered within two Wind Energy Areas offshore California have already garnered interest from several developers, including big names from both offshore wind and oil and gas industries, some of which already have offshore wind-to-hydrogen projects in development out of the US.

Among 23 companies and consortia BOEM qualified so far (with more potentially to be listed over the next 60 days) are Copenhagen Infrastructure Partners, TotalEnergies, Ørsted, RWE, and Shell – all of whom have green hydrogen projects involving offshore wind, albeit in other countries, and some of these developments being on a massive scale.

In the lease sale planned to be held by the fourth quarter of this year, the US will offer three areas in the Morro Bay Wind Energy Area off central California and two in the Humboldt Wind Energy Area off northern California.

Covering a total of 373,268 acres, the five lease sites could accommodate 4.5 GW of installed offshore wind capacity, expected to fully come from floating wind technology.

Last month, the California Energy Commission (CEC) announced a preliminary planning goal of 3 GW of (floating) offshore wind to be installed off the state’s coast by 2030, with and aim to have up to 15 GW installed by 2045.

The Commission also said technological developments in floating wind could support a faster rate of offshore wind deployment that could support a larger goal of up to 20 GW between 2045 and 2050.