Hydrogen Hub Projects Announced, What’s Next?

In October 2023, the Biden Administration selected seven hydrogen hub projects to establish regional clean hydrogen hubs across America through the Bipartisan Infrastructure Law. These projects will create networks of hydrogen producers, consumers, and local infrastructure, or a hydrogen “ecosystem.”

WHAT’S NEXT?

The next step for these projects is the negotiation process, which is expected to extend until spring 2024 when the Department of Energy (DOE) will award the projects. Implementation of these projects will follow the awards. Several hydrogen fueling stations exist currently along the West Coast, but these stations are focused on passenger vehicles. The hubs’ focus is on power generation, agriculture, and the heavy-duty sector.

Hydrogen Hub Map

The Biden Administration established seven hydrogen hub projects across the country.

WHAT DOES THIS MEAN FOR A TRUCK STOP OPERATOR?


Five of the seven projects are proposing to supply hydrogen for heavy-duty transportation. Operators located within or near a hub who are interested in being a part of the hydrogen infrastructure should reach out to project coordinators now by finding their specific hub website or contacting the DOE at engage_H2Hubs@hq.doe.gov to express interest. These projects are in the early stages, and it may be some time before hydrogen production is in full swing, but it is important to make hub project developers aware of interested stakeholders in their project area. Getting involved will give operators a voice in where and how the distribution infrastructure will be implemented.


Operators interested in being a part of the hydrogen infrastructure, should reach out to project coordinators by finding their specific hub website or contacting the DOE at engage_H2Hubs@hq.doe.gov to express interest.

Clean Hydrogen Infographic

Source: The Office of Clean Energy Demonstrations

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WHY HYDROGEN?

Many fuel marketers agree that hydrogen is an easier fuel to adopt than other types of alternative fuels, as fueling times and distribution infrastructure may be similar to current diesel fueling operations. Fuel cell electric vehicles powered by hydrogen are zero-emission vehicles that reduce pollution, greenhouse gases, and dependence on petroleum. Hydrogen is a non-toxic, non-corrosive fuel that can be produced from natural gas, biogas, or the electrolysis of water. Hydrogen can store more energy in less weight than batteries, making it suitable for vehicles with heavy payloads and long ranges, such as trucks, buses, and trains. Fuel cell electric trucks (FCET) produce electricity on board using a hydrogen fuel cell.

Hydrogen seems to be more adaptable and similar to how diesel fueling operations work today, and there are state programs (with perhaps federal programs to follow) that also support the production and use of hydrogen fuel, which will work to help support the initiative.

Large corporations, including Walmart and Amazon, are setting goals to transition their transportation networks to zero-emission vehicles (ZEV) between 2030 and 2040. Fleets are under regulatory pressure to transition to ZEV, particularly in California, where the Advanced Clean Transportation (ACT) directs OEMs to sell only ZEV by 2036, and Advanced Clean Fleets (ACF) regulations require OEMs to sell 30–50% ZEV vehicles for medium and heavy-duty by 2035. Along with large corporations and regulations pressuring for ZEV, there are incentives and initiatives in place or are currently being developed:

■Several states, including CA, OR, NY, MA, NJ, CO, WA, and MD, have taken significant steps to promote zero-emission vehicles.

■West Coast low carbon fuel standards—WA, OR, and CA state programs provide credit generation for hydrogen fuels

■Incentives in the works include the Clean Fuel Production Tax Credit (45V)—offering a $3/kg tax credit.

The Renewable Fuel Standard (RFS) does not currently allow for RIN generation from hydrogen fuel, however, with the governmental support for the development of hydrogen ecosystems, there is a possibility for RIN generation for clean hydrogen. A clean hydrogen standard has been proposed by the DOE to establish a target of 4.0 kgCO2e/kg H2 for hydrogen production on a “well to gate” lifecycle analysis. This target is consistent with the Inflation Reduction Act’s definition of “qualified clean hydrogen.” This standard was developed to guide the DOE when making funding decisions.

The “hydrogen shot” is a DOE initiative set in 2021 to accelerate breakthroughs of more abundant, affordable and reliable clean energy solutions. The initiative is to reduce the cost of clean hydrogen to $1 for one kilogram in one decade.

US Hydrogen Strategy

The DOE’s U.S. National Clean Hydrogen Strategy and Roadmap depicts the cost analysis, based on costs in 2016-2021, of a fuel cell system, production, delivery and dispensing, and hydrogen storage.

HOW MUCH WILL IT COST AND WHAT RESOURCES ARE NEEDED?

While hydrogen production plans are getting underway and technology improvements continue for OEMs and equipment manufacturers, the cost of installing a hydrogen fueling station has been estimated to be around $1 million and would occupy up to approximately 13,000 square feet of real estate.

The cost of hydrogen dispensing depends on the type and capacity of the fueling station, the method and distance of hydrogen delivery, and the market demand and supply of hydrogen fuel.

According to some estimates, the levelized cost of hydrogen delivery and dispensing in 2020 ranged from $8 to $11 per kilogram for stations supplied by liquid tankers or gaseous tube trailers, with capacities of 450 to 1,000 kg/day.

If hydrogen is produced via electrolysis (splitting water molecules into hydrogen and oxygen), then water and electricity will be needed. According to one estimate, producing one kilogram of hydrogen by electrolysis would consume about 13 gallons of water. Hydrogen can also be produced from other sources, such as natural gas, biomass, or nuclear energy, which may have different water requirements and environmental impacts.

Current thought is that storing and utilizing liquid hydrogen vs. gaseous or compressed hydrogen would make the most sense to maximize storage capacity as well as improve refueling time.

Hydrogen Dispenser

WHAT IS THE MILEAGE ON HYDROGEN?


The average mile per gallon for hydrogen is not a simple or fixed number but rather a range that depends on many factors. To compare hydrogen vehicles with gasoline or electric vehicles, one would need to consider the entire life cycle of the fuel and the vehicle, as well as the specific performance and preferences of the driver. However, hydrogen OEMs, such as Hyzon, have recently tested models that have a 500- to 600-mile range with a 16-hour continuous operation. Hyzon also provides an option to convert a truck from diesel to hydrogen fuel cell, which involves removing all diesel components and installing hydrogen fuel cell components.

The industry is in the thick of the “Messy Middle,” a term coined by the North American Council for Freight Efficiency (NACFE) that describes the current phase of determining which type of energy will serve the transportation sector. There is considerable technology development and investments happening to advance these emerging fuels. There is not likely one ultimate solution but several depending upon a fleet’s business model. Operators who know their customers and the fuels they are considering in the future and are involved in alternative fuel projects in their area will have the opportunity to be part of the solution and grow with the industry.

Attest Engagements Due Soon! 

Are you working on your attest engagement right now according to the recent RFS streamlining rules? 2023 Attest Engagements for all regulated parties and 2022 Attest Engagements for obligated parties are due June 1, 2024.

As part of the EPA’s recent efforts to alleviate regulatory burden, 40 CFR Part 80 (Renewable Fuel Standard) and Part 1090 (gasoline manufacturer) attest engagement requirements were streamlined as well as adding few new requirements. One of the new requirements includes the 3rd party/independent auditor (required to complete the attest engagement) now must associate with the regulated party (all parties registered under RFS) in the EPA Fuels Program as well as change business activities to reflect the requirement to complete an attest engagement. If you transacted RINs in 2023, you most likely need an attest engagement.

In addition, EPA updates the quarterly and annual compliance RFS reports on a periodic basis, be sure you are using the most recent version of EPA reports by checking here: https://www.epa.gov/fuels-registration-reporting-and-compliance-help/list-quarterly-and-annual-reports-renewable-fuel

Contact Ginger at the Alternative Fuels Council if you need help getting back on compliance track!  Our online system creates a system of record that improves efficiency and transparency for auditors.

Fuel Only Sales Record Keeping and Compliance

Are you selling neat fuel without RINs downstream? If so, are you keeping up with RFS compliance requirements? If the company you are selling the neat fuel to is going to blend into transportation, heating oil, or jet fuel (the blender on record), a “fuel only” product transfer document should be sent to that party indicating that only fuel was transferred to the other party, no RINs. After the transaction, your company’s fuel volume inventory has decreased, but the RIN volume remains the same – changing your account’s ratio of RINs to fuel volume. If your company is a blender on record and blends other volumes of fuel, the RINs may be separated up to a 2.5 ratio at the time of each blend. If your company does not blend volumes of renewable fuel to be able to separate these additional RINs, then the RINs can be assigned to another downstream partner at a higher ratio. Example: biodiesel transactions typically are sent at a 1.5 ratio (8000 gal/12,000 RINs), you can send up to 2.5 RINs with one load: 8000 gal/20,000 RINs. 

If the neat fuel you are sending downstream will be “designated” as transportation, heating oil, or jet fuel or used “as is” without RINs, then your company may separate the RINs upon selling the fuel.

The Alternative Fuels Council RIN management system provides fuel only PTD generation and record keeping for these types of scenarios to help keep you organized and in compliance.

$19 Million in Recent Grants Awarded Under the Higher Blends Infrastructure Incentive Program (HBIIP) – Its not too late to apply!

The most recent award recipients from the HBIIP grant program include Casey’s, Piasa Enterprises, Bulk Petroleum, Love’s Travel Stops, and AC&T for biodiesel and ethanol projects, including E15 and E85 dispensers, B20 dispensers, and ethanol and biodiesel storage tanks. Tristar FLC Inc. will use the funding to build a high-efficiency transload facility in Fontana, CA.  

There’s still time to apply for this grant opportunity for any renewable projects you’ve been considering. The upcoming 2024 deadlines are March 31, June 30, and September 30.  

Both transportation fueling facilities and fuel distribution facilities can apply for this grant, though you will need to pick which type of facility you will be applying for grant funding. This funding is also open to various fuel applications, such as heating oil, on-road transportation, and fleet facilities, including rail and marine.  

The grant awards are cost-share for up to 75% of total eligible project costs, not to exceed $5M – whichever is less.  

Let us know if you need to connect with a grant writer! 

When and Why Do You Retire RINs?

The following are a few scenarios… 

You’re an obligated party, and you must retire for compliance/RVOs:

  • exporting renewable fuel out of the US
  • importing diesel or gas into the US
  • refining fossil fuels in the US

You’re not an obligated party but the renewable fuel/biofuels are being used for something other than transportation, heating oil or jet fuel.  Example:  if the biofuel is being used for dust control, the RINs associated with those gallons would need to be retired.  

Currently, under the Renewable Fuel Standard, if biofuels are being used in maritime operations within US waters, the RINs can be used.  However, for an ocean-going vessel, the RINs associated with those gallons need to be retired as it is equated to the fuel leaving the US.  A bill recently introduced could affect this specific RIN retirement requirement, allowing for RINs to be viable in ocean-going vessels.  

5th Circuit Court of Appeal Ruled EPA’s denial of 6 small refineries’ exemption (SREs) requests under the RFS was contrary to law

The 5th Circuit Court of Appeal ruled in late November that EPA’s denial of 6 small refineries’ exemption requests under the RFS was contrary to law. The EPA had previously used a DOE study and scoring matrix to grant hardship petitions. The Fifth’s Circuit Court rejected the EPA’s recent approach that provided exemption only if their economic hardship was caused solely by RFS compliance costs. The Fifth Circuit Court ruled that the exemption should be based upon not just RFS compliance costs but also local economic conditions or refinery-specific circumstances. It is not yet known how EPA will respond to this decision, nor what will happen to the pending petitions. 

Strategies to Maximize Profit When Volumes Drop

Biodiesel blenders can face challenging times when biodiesel volumes drop, whether due to regulation changes, market demand, or other factors. During such times, biodiesel blenders can take several steps to maximize profits and stay competitive.

Here are some strategies that biodiesel blenders can use to maximize profits during times of reduced volumes:

  1. Diversify your product portfolio

One way to increase revenue is to expand the range of products offered to customers. This could include offering other renewable fuels, such as renewable diesel or ethanol, or diversifying into other products. By offering a broader range of products, biodiesel blenders can maintain sales volumes even if biodiesel volumes drop.

  1. Increase efficiency

During times of lower volumes, looking for ways to increase efficiency and reduce costs is important. This could involve improving supply chain management, optimizing production processes, or investing in new technologies to reduce costs and increase efficiency.

  1. Focus on quality

Biodiesel blenders should always aim to produce high-quality biodiesel that meets the required specifications. By ensuring high-quality production, biodiesel blenders can differentiate themselves from competitors and command higher prices for their products.

  1. Build strong relationships with suppliers and customers

During times of reduced volumes, it is important to maintain strong relationships with both suppliers and customers. By building solid relationships, biodiesel blenders can negotiate better pricing and terms with suppliers while also ensuring a reliable customer base for their products.

  1. Consider strategic partnerships

Biodiesel blenders can consider strategic partnerships with other companies in the industry, such as feedstock suppliers or other biodiesel producers. By pooling resources and expertise, these partnerships can help biodiesel blenders to reduce costs, increase efficiency, and maintain profitability during times of reduced volumes.

Biodiesel blenders can take several steps to maximize profits during times of reduced volumes. By diversifying their product portfolio, increasing efficiency, focusing on quality, building strong relationships with suppliers and customers, and considering strategic partnerships, biodiesel blenders can maintain competitiveness and profitability even in challenging times.

2022 NATSO’s Alternative Fuels Council Renewable Fuels Workshop

On February 21, 2022, NATSO’s Alternative Fuels Council held a Renewable Fuels Workshop at the NATSO Connect conference held at Disney in Orlando. Filling the room to code capacity and having to turn some participants away from the workshop only supported the fact that many fuel retailers and fuel partners are very interested in blending renewable fuels and reaping any benefits available. While EV and other alternative fuel technologies are emerging – biodiesel, ethanol and renewable diesel have been and are being used right now to help lower GHG emissions. All-Line Equipment also presented on their Bio-Blender equipment and technology during the workshop. Please contact Ginger Laidlaw with the Alternative Fuels Council for any questions on the slides from the conference.

24-7 Travel Stores Rolls Out Biofuels, Moves Forward With EV Vision

In the years ahead, there will be many alternative fuel funding opportunities for fuel retailers to consider. These opportunities can help minimize the capital expenditures necessary to adapt to different fuel technologies that will be commercialized in the years ahead. Mark Augustine, president of 24-7 Travel Stores by Triplett Inc., embraces alternative fuels. 

The U.S. Department of Agriculture (USDA) announced recently that it plans to award approximately $22 million in competitive grants to expand the sale and use of renewable fuels, including biodiesel. Specifically, USDA said the Higher Blends Infrastructure Incentives (HBIIP) program aims to encourage a comprehensive approach to marketing higher blends by sharing the costs relating to upgrading fuel dispensers (gas and diesel pumps), related equipment, and other infrastructure required at a location to ensure the environmentally safe availability of ethanol blends containing greater than 10 percent of biodiesel blends greater than 5 percent… 
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RENEWABLE DIESEL: FROM PRODUCTION TO PUMP [WEBINAR]

On September 24, the Alternative Fuels Council in tandem with Eco Engineers offered an in-depth webinar on Renewable Diesel. The webinar covered all aspects of renewable diesel, from its production to its application at the dispenser. Click below to view the slide presentation used during this webinar: 

https://youtu.be/dCUb9CQqyz8