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Where natural gas comes from matters for hydrogen production.
Oil giants Exxon and Chevron are among a group of energy companies that could receive up to $1.2 billion in federal grants to make so-called “clean” hydrogen in Texas. Their proposal to produce the clean-burning fuel using natural gas and carbon capture, in addition to other methods, was selected by the Biden administration a year ago to become one of the country’s seven clean hydrogen hubs. But a trio of researchers at the University of Texas at Austin just showed that there’s a dirty paradox at the heart of the plan.
In a study published in the journal Nature Energy on Monday, the researchers show that upstream emissions in the natural gas supply chain in Texas are so high that it’s essentially impossible to make hydrogen from it that would meet federal standards for “clean” hydrogen. But, the authors warn, the government’s proposed method for measuring the carbon intensity of hydrogen overlooks these emissions. That means these Texas hydrogen projects could get millions in public funding in the name of tackling climate change, all while making the problem worse.
“You’re investing so much in developing a hydrogen economy, and then it turns out, 10 years later, half of them are not even low carbon,” Arvind Ravikumar, an associate professor at the University of Texas at Austin and one of the authors of the new paper, told me. “I think that’s a real risk.”
This story might sound familiar. I’ve written extensively about the emissions accounting challenges plaguing another method for making clean hydrogen that requires only water and carbon-free electricity, known as electrolysis. The problem there is that the electric grid still runs largely on fossil fuels, and so plugging in a hydrogen plant will produce indirect emissions, even if the production process itself is clean.
The new study highlights a similar issue with hydrogen made from natural gas. Of course, since this method uses fossil fuels, it’s already substantially more difficult to prove it has any climate benefits at all. In theory, the emissions can be greatly reduced, although likely not entirely eliminated, by capturing the carbon emitted from the plant. The authors show, however, that the more important factor is where the natural gas comes from.
Natural gas is mostly methane, a greenhouse gas more than 80 times more potent than carbon dioxide in the short term, and leaks are notoriously underestimated. But any assessment of the benefits of hydrogen made from methane must take leakage into account, and some natural gas fields are leakier than others.
The paper analyzes a range of scenarios for two hypothetical hydrogen plants — one on the Gulf Coast that sources natural gas from the Permian Basin, and one in Ohio that gets gas from the Marcellus Shale. The Treasury Department’s draft rules for calculating the carbon intensity of hydrogen for the clean hydrogen tax credit say these two plants should assume that a national average of 1% of the natural gas extracted from the ground is leaked into the atmosphere where it warms the planet. But more than a decade of on-the-ground measurements, combined with more recent satellite data, has shown that methane leaks vary widely from well to well and basin to basin.
Using the more accurate, though still approximate, leakage rates of 5.2% in the Permian and 1.25% in the Marcellus, the authors calculated the carbon intensity of hydrogen produced at the two plants under various assumptions. What if the carbon capture system is more effective? Or less effective? What if the capture equipment is powered by renewables? What if we measure the warming effects of methane over 20 years versus over 100 years?
No matter which variable they changed, one result stayed the same: Hydrogen made from Permian Basin gas greatly exceeded the government’s definition of clean hydrogen, i.e. 4 kilograms of CO2 released per kilogram of hydrogen produced. In fact, the emissions from natural gas production in the Permian Basin alone pushed it over that standard. Hydrogen made from Marcellus Shale gas, on the other hand, has the potential to qualify as clean if at least 90% of the carbon at the plant is captured.
The findings suggest that without enormous efforts to reduce those upstream emissions, which come from leaks, venting, and flaring at the wellhead and along the pipeline system, natural gas-based hydrogen projects on the Gulf Coast should not qualify for federal subsidies.
The authors advocate for the Treasury’s final guidelines for calculating the carbon intensity of hydrogen to account for these regional differences. “I think that, to begin with, will make a huge difference in accurately estimating the emissions intensity of these projects,” Ravikumar said. As new methane regulations from the Environmental Protection Agency go into effect, it’s possible that projects that are not eligible today could become eligible in the future. “But the point is, you’ll only know that if you do your carbon accounting accurately across supply chains,” he said.
One problem with this solution is that hydrogen producers have access to another federal tax credit that doesn’t require any analysis of how clean the hydrogen is — up to $85 for every ton of carbon they capture and sequester underground. Indeed, at least one project developer has already said they will go after that subsidy instead of the one for clean hydrogen.
Ravikumar thinks those developers are facing a major risk. “At the end of the day, you’re going to buy hydrogen from these companies explicitly for its low-carbon attributes,” he said. “Right now we did this analysis, but very soon, you’re going to have satellites that are going to look at all these regions and be able to make emissions information publicly available. And once you’re able to do that, you can’t make up numbers on paper.”
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On the budget debate, MethaneSAT’s untimely demise, and Nvidia
Current conditions: The northwestern U.S. faces “above average significant wildfire potential” for July • A month’s worth of rain fell over just 12 hours in China’s Hubei province, forcing evacuations • The top floor of the Eiffel Tower is closed today due to extreme heat.
The Senate finally passed its version of Trump’s One Big Beautiful Bill Act Tuesday morning, sending the tax package back to the House in hopes of delivering it to Trump by the July 4 holiday. The excise tax on renewables that had been stuffed into the bill over the weekend was removed after Senator Lisa Murkowski of Alaska struck a deal with the Senate leadership designed to secure her vote. In her piece examining exactly what’s in the bill, Heatmap’s Emily Pontecorvo explains that even without the excise tax, the bill would “gum up the works for clean energy projects across the spectrum due to new phase-out schedules for tax credits and fast-approaching deadlines to meet complex foreign sourcing rules.” Debate on the legislation begins on the House floor today. House Speaker Mike Johnson has said he doesn’t like the legislation, and a handful of other Republicans have already signaled they won’t vote for it.
The Environmental Protection Agency this week sent the White House a proposal that is expected to severely weaken the federal government’s ability to rein in planet-warming pollution. Details of the proposal, titled “Greenhouse Gas Endangerment Finding and Motor Vehicle Reconsideration,” aren’t clear yet, but EPA Administrator Lee Zeldin has reportedly been urging the Trump administration to repeal the 2009 “endangerment finding,” which explicitly identified greenhouse gases as a public health threat and gave the EPA the authority to regulate them. Striking down that finding would “free EPA from the legal obligation to regulate climate pollution from most sources, including power plants, cars and trucks, and virtually any other source,” wrote Alex Guillén at Politico. The title of the proposal suggests it aims to roll back EPA tailpipe emissions standards, as well.
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So long, MethaneSAT, we hardly knew ye. The Environmental Defense Fund said Tuesday that it had lost contact with its $88 million methane-detecting satellite, and that the spacecraft was “likely not recoverable.” The team is still trying to figure out exactly what happened. MethaneSAT launched into orbit last March and was collecting data about methane pollution from global fossil fuel infrastructure. “Thanks to MethaneSAT, we have gained critical insight about the distribution and volume of methane being released from oil and gas production areas,” EDF said. “We have also developed an unprecedented capability to interpret the measurements from space and translate them into volumes of methane released. This capacity will be valuable to other missions.“ The good news is that MethaneSAT was far from the only methane-tracking satellite in orbit.
Nvidia is backing a D.C.-based startup called Emerald AI that “enables AI data centers to flexibly adjust their power consumption from the electricity grid on demand.” Its goal is to make the grid more reliable while still meeting the growing energy demands of AI computing. The startup emerged from stealth this week with a $24.5 million seed round led by Radical Ventures and including funding from Nvidia. Emerald AI’s platform “acts as a smart mediator between the grid and a data center,” Nvidia explains. A field test of the software during a grid stress event in Phoenix, Arizona, demonstrated a 25% reduction in the energy consumption of AI workloads over three hours. “Renewable energy, which is intermittent and variable, is easier to add to a grid if that grid has lots of shock absorbers that can shift with changes in power supply,” said Ayse Coskun, Emerald AI’s chief scientist and a professor at Boston University. “Data centers can become some of those shock absorbers.”
In case you missed it: California Governor Gavin Newsom on Monday rolled back the state’s landmark Environmental Quality Act. The law, which had been in place since 1970, required environmental reviews for construction projects and had become a target for those looking to alleviate the state’s housing crisis. The change “means most urban developers will no longer have to study, predict, and mitigate the ways that new housing might affect local traffic, air pollution, flora and fauna, noise levels, groundwater quality, and objects of historic or archeological significance,” explainedCal Matters. On the other hand, it could also mean that much-needed housing projects get approved more quickly.
Tesla is expected to report its Q2 deliveries today, and analysts are projecting a year-over-year drop somewhere from 11% to 13%.
Jesse teaches Rob the basics of energy, power, and what it all has to do with the grid.
What is the difference between energy and power? How does the power grid work? And what’s the difference between a megawatt and a megawatt-hour?
On this week’s episode, we answer those questions and many, many more. This is the start of a new series: Shift Key Summer School. It’s a series of introductory “lecture conversations” meant to cover the basics of energy and the power grid for listeners of every experience level and background. In less than an hour, we try to get you up to speed on how to think about energy, power, horsepower, volts, amps, and what uses (approximately) 1 watt-hour, 1 kilowatt-hour, 1 megawatt-hour, and 1 gigawatt-hour.
Shift Key is hosted by Jesse Jenkins, a professor of energy systems engineering at Princeton University, and Robinson Meyer, Heatmap’s executive editor.
Subscribe to “Shift Key” and find this episode on Apple Podcasts, Spotify, Amazon, YouTube, or wherever you get your podcasts.
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Here is an excerpt from our conversation:
Jesse Jenkins: Let’s start with the joule. The joule is the SI unit for both work and energy. And the basic definition of energy is the ability to do work — not work in a job, but like work in the physics sense, meaning we are moving or displacing an object around. So a joule is defined as 1 newton-meter, among other things. It has an electrical equivalent, too. A newton is a unit of force, and force is accelerating a mass, from basic physics, over some distance in this case. So 1 meter of distance.
So we can break that down further, right? And we can describe the newton as 1 kilogram accelerated at 1 meter per second, squared. And then the work part is over a distance of one meter. So that kind of gives us a sense of something you feel. A kilogram, right, that’s 2.2 pounds. I don’t know, it’s like … I’m trying to think of something in my life that weighs a kilogram. Rob, can you think of something? A couple pounds of food, I guess. A liter of water weighs a kilogram by definition, as well. So if you’ve got like a liter bottle of soda, there’s your kilogram.
Then I want to move it over a meter. So I have a distance I’m displacing it. And then the question is, how fast do I want to do that? How quickly do I want to accelerate that movement? And that’s the acceleration part. And so from there, you kind of get a physical sense of this. If something requires more energy, if I’m moving more mass around, or if I’m moving that mass over a longer distance — 1 meter versus 100 meters versus a kilometer, right? — or if I want to accelerate that mass faster over that distance, so zero to 60 in three seconds versus zero to 60 in 10 seconds in your car, that’s going to take more energy.
Robinson Meyer: I am looking up what weighs … Oh, here we go: A 13-inch MacBook Air weighs about, a little more than a kilogram.
Jenkins: So your laptop. If you want to throw your laptop over a meter, accelerating at a pace of 1 meter per second, squared …
Meyer: That’s about a joule.
Jenkins: … that’s about a joule.
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Music for Shift Key is by Adam Kromelow.
If the Senate reconciliation bill gets enacted as written, you’ve got about 92 days left to seal the deal.
If you were thinking about buying or leasing an electric vehicle at some point, you should probably get on it like, right now. Because while it is not guaranteed that the House will approve the budget reconciliation bill that cleared the Senate Tuesday, it is highly likely. Assuming the bill as it’s currently written becomes law, EV tax credits will be gone as of October 1.
The Senate bill guts the subsidies for consumer purchases of electric vehicles, a longstanding goal of the Trump administration. Specifically, it would scrap the 30D tax credit by September 30 of this year, a harsher cut-off than the version of the bill that passed the House, which would have axed the credit by the end of 2025 except for automakers that had sold fewer than 200,000 electric vehicles. The credit as it exists now is worth up to $7,500 for cars with an MSRP below $55,000 (and trucks and sports utility vehicles under $80,000), and, under the Inflation Reduction Act, would have lasted through the end of 2032. The Senate bill also axes the $4,000 used EV tax credit at the end of September.
“Long story short, the credits under the current legislation are only going to be on the books through the end of September,” Corey Cantor, the research director of the Zero Emission Transportation Association, told me. “Now is definitely a good time, if you’re interested in an EV, to look at the market.”
The Senate applied the same strict timeline to credits for clean commercial vehicles, both new and used. For home EV chargers, the tax credit will now expire at the end of June next year.
While EVs were on the road well before the 2022 passage of the Inflation Reduction Act, what the new tax credit did was help build out a truly domestic electric vehicle market, Cantor said. “You have a bunch of refreshed EV models from major automakers,” Cantor told me, including “more affordable models in different segments, and many of them qualify for the credit.”
These include cars produceddomestically by Kia,Hyundai, and Chevrolet. But of course, the biggest winner from the credit is Tesla, whose Model Y was the best-selling car in the world in 2023.
Tesla shares were down over 5.5% in Tuesday afternoon trading, though not just because of Congress. JPMorgan also released an analyst report Monday arguing that the decline in sales seen in the first quarter would accelerate in the second quarter. President Trump, with whom Tesla CEO Elon Musk had an extremely public falling out last month, suggested on social media Monday night that the government efficiency department Musk himself formerly led should “take a good, hard, look” at the subsidies Musk receives across his many businesses. Trump also said that he would “take a look” at Musk’s United States citizenship in response to reporters’ questions about it.
Cantor told me that he expects a surge of consumer attention to the EV market if the bill passes in its current form. “You’ve seen more customers pull their purchase ahead” when subsidies cut-offs are imminent, he said.
But overall, the end of the subsidy is likely to reduce EV sales from their previously expected levels.
Harvard researchers have estimated that the termination of the EV tax credit “would cut the EV share of new vehicle sales in 2030 by 6.0 percentage points,” from 48% of new sales by 2030 to 42%. Combined with other Trump initiatives such as terminating the National Electric Vehicle Infrastructure program for publicly funded chargers (currently being litigated) and eliminating California’s waiver under the Clean Air Act that allowed it to set tighter vehicle emissions standards, the share of new car sales that are electric could fall to 32% in 2030.
But not all government support for electric vehicles will end by October 1, even if the bill gets the president’s signature in its current form.
“It’s important for consumers to know there are many states that offer subsidies, such as New York, and Colorado,” Cantor told me. That also goes for California, New Jersey, Nevada, and New Mexico. You can find the full list here.
Editor’s note: This story has been edited to include a higher cost limit for trucks and SUVs.