Federal Infrastructure Investment and Jobs Act. The federal Infrastructure Investment and Jobs Act (IIJA) of 2021 provides $8 billion over five years to support at least four regional clean hydrogen hubs to demonstrate the production, processing, delivery, storage, and end-use of clean hydrogen. The U.S. Department of Energy (DOE) must solicit proposals for regional clean hydrogen hubs by May 15, 2022, and select the four hubs one year later.
According to DOE, electrolysis is a promising option for carbon-free hydrogen production from renewable and nuclear resources. Electrolysis is the process of using electricity to split water into hydrogen and oxygen. This reaction takes place in a unit called an electrolyzer.
Energy Facility Site Evaluation Council. Created in 1970, the Energy Facility Site Evaluation Council (EFSEC) is the permitting and certifying authority for siting major energy facilities in Washington. An EFSEC site certification agreement authorizes an applicant to construct and operate an energy facility in lieu of permits or documents required by any other state agency or subdivision. Energy facilities of any size that exclusively use alternative energy resources, such as wind power, can also opt into the EFSEC review and certification process.
Utility and Transportation Commission Energy Decarbonization Study. In the 2021-23 operating budget, the Legislature provided the Utilities and Transportation Commission (UTC) funding to examine feasible and practical pathways for investor-owned electric and natural gas utilities to contribute their share to the statutory greenhouse gas emissions reductions limits and the impacts of energy decarbonization on residential and commercial customers and the utilities that serve them. The results of the examination must be reported to the Legislature by June 1, 2023.
Tax Exemptions for Renewable Hydrogen. Certain aspects of the production of renewable hydrogen are exempt from retail sales tax, use tax, and, where the renewable hydrogen is produced at a facility operating pursuant to a lease of public lands, leasehold excise tax. These exemptions expire July 1, 2025.
Renewable hydrogen is defined as hydrogen produced using renewable resources both as the source for the hydrogen and the source for the energy input into the production process.
Office of Renewable Fuels. The statewide Office of Renewable Fuels (Office) is established within the Department of Commerce (Commerce). The Office must report to the director of Commerce and may employ staff to carry out the Office's duties, subject to the availability of amounts appropriated. The purpose of the Office is to leverage, support, and integrate with other state agencies to:
The Office must:
The Office may take all appropriate steps to seek and apply for federal funds, grants, and donations. These funds must be deposited in the Renewable Fuels Accelerator Account (Account).
Regional Clean Energy Hub. The Legislature finds that Washington State is strongly positioned to develop a regional clean energy hub meeting the criteria of the IIJA and that through state funding assistance may help to promote and strengthen applications to DOE for federal funding.
Subject to funds appropriated, the director of Commerce must seek to enter agreements with one more nonprofit entities or public agencies for the purpose of preparing an application to secure federal funding to develop a regional clean hydrogen hub in Washington. If the director determines that a single agreement with an entity to prepare an application will be more competitive for federal funding than supporting multiple applications, the director may choose not to make more than one award of funding.
The director must seek to enter a funding agreement with an entity whose proposal demonstrates a broad assembly of participants in developing and implementing the infrastructure of a regional hydrogen hub, a strong and timely application, and commitments from manufacturing industries, transportation, utilities, and other sectors to incorporate hydrogen fuels into their transition to cleaner energy.
In addition to application assistance, the Legislature intends that the state fully support a regional clean energy hub with further direct financial assistance in developing the hub and the acquisition of hydrogen fuels for state agency and local government uses.
Utilities and Transportation Commission Hydrogen Fuel Study. By December 1, 2024, the UTC must submit to the Legislature a report addressing the following:
Energy Facility Site Evaluation Council. Renewable or electrolytic hydrogen or energy storage facilities are eligible to opt-in to the EFSEC review and certification process.
Public Utility Districts—Electrolytic Hydrogen. Public utility districts are authorized to produce, use, sell, and distribute electrolytic hydrogen to the same extent that they are currently authorized to produce, use, sell, and distribute renewable hydrogen.
Municipal Utilities—Renewable Hydrogen and Electrolytic Hydrogen. Municipal utilities are authorized to produce, use, sell, and distribute renewable hydrogen and electrolytic hydrogen to the same extent that they are currently authorized to produce, use, sell, and distribute gas and electricity.
Renewable Fuels Accelerator Account. The Account is created in the state treasury. Revenues to the Account consist of appropriations made by the Legislature, federal funds, gifts or grants from the private sector or foundations, and other sources deposited in the Account. Moneys in the Account may be spent only after appropriation. The director of the Office, or director's designee, may authorize expenditures from the Account for the Office.
Electrolytic Hydrogen. Electrolytic hydrogen is defined as hydrogen produced through electrolysis and does not include hydrogen manufactured using steam reforming or any other conversion technology that produces hydrogen from a fossil fuel feedstock.
The committee recommended a different version of the bill than what was heard. PRO: We need to unleash the marketplace for hydrogen. Washington has private sector leadership and large scale customers interested in hydrogen, including maritime, aviation, long-haul trucking, energy storage, and industrial manufacturing. The state needs to be the thought leader for renewable hydrogen and to create a strong ecosystem. The office will bring parties together to apply for regional hub grant. The office reporting date should be moved up if a grant is won. The $500,000 might not be enough money. There is lots of interest in hydrogen in Washington and we would appreciate having someone in the state to talk to. Businesses are thinking about moving to Washington given the new policies. Zero emission aviation is technically viable. Washington has the best business case in the nation to develop green hydrogen. We have advantages with the Climate Commitment Act. We have the potential to create more green electrons with our water and clean electricity. Hydrogen is a molecule that serves as a battery. Supporting hydrogen does not conflict with concerns about grid reliability. Hydrogen production is a perfect fit for when electricity is not needed and helps utilities respond to moment-to-moment demands in generation. Innovation is as important, or more, than top down regulation. Hydrogen is one element of decarbonization. This bill positions Washington as a candidate for federal funding. The food industry can use hydrogen for fueling stations. Other business are looking at how to blend hydrogen, how it will provide alternative heat when the power grid is not available, and the creation of appliances to work with new renewable fuels. This is a way for small businesses to participate in climate change.
OTHER: We support creating an office in Commerce and appreciate that it focuses on all renewable fuels. The state energy strategy points to hydrogen and we want to make sure investments in hydrogen are as effective as possible. The Office should report to Commerce, and the Joint Center for Deployment and Research in Earth Abundant Materials should be allowed to get funding. The tax incentives should be harmonized with other bills.
PRO: Hydrogen is a clean energy that must play a role in the move to become carbon neutral. We are home to many of the world's non-fossil hydrogen firsts. This bill furthers our front-runner status. This bill is a way to help transition our economy off of fossil fuels. The bill helps give us the ability to discuss with customers about the fuel choice that will work for them. This bill allows us to help the small business convenience workforce transition to new sources of energy that are right for them. This bill is vital in establishing Washington as a leader in electrolytic hydrogen. This bill helps the hydrogen industry develop. We are pleased to see a coordinated application to the federal government.