Economic assessment of clean hydrogen production from fossil fuels in the intermountain-west region, USA

Abstract

The transition from fossil fuels to carbon-neutral energy sources is necessary to reduce greenhouse gas (GHG) emissions and combat climate change. Hydrogen (H2) provides a promising path to harness fossil fuels to reduce emissions in sectors such as transportation. However, regional economic analyses of various H2 production techniques are still lacking. We selected a well-known fossil fuel-exporting region, the USA's Intermountain-West (I-WEST), to analyze the carbon intensity of H2 production and demonstrate regional tradeoffs. Currently, 78 % of global H2 production comes from natural gas and coal. Therefore, we considered steam methane reforming (SMR), surface coal gasification (SCG) and underground coal gasification (UCG) as H2 production methods in this work. We developed the cost estimation frameworks of SMR, SCG and UCG with and without carbon capture, utilization and sequestration (CCUS). In addition, we identified optimal sites for H2 hubs by considering the proximity to energy sources, energy markets, storage sites and CO2 sequestration sites. We included new production tax credits (PTCs) in the cost estimation to quantify the economic benefit of CCUS. Our results suggest that the UCG has the lowest levelized cost of H2 production due to the elimination of coal production cost. H2 production using the SMR process with 99 % carbon capture is profitable when the PTCs are considered. We also analyzed carbon utilization opportunities where CO2 conversion to formic acid is a promising profitable option. This work quantifies the potential of H2 production from fossil fuels in the I-WEST region, a key parameter for designing energy transition pathways.