Nebraska Legislature Tries to Jump Start a Local Clean-Hydrogen Industry

Under LB 1099, Nebraska must seek federal funding to create a regional hydrogen hub. If selected, the state could receive $2 billion to help develop a commercially viable clean-hydrogen industry.

Under a bill enacted into law in March 2022, Nebraska has positioned itself to become a national hub of hydrogen development.

As we described in previous articles (available here and here), Senator Bruce Bostelman introduced LB 1099 to create a Nebraska Hydrogen Hub Industry Work Group. An initial version of the bill would have allowed the Nebraska Department of Economic Development to appoint members to the group. An amendment, however, transferred that appointment power to the Governor. With that amendment, the Legislature approved LB 1099 by a vote of 43-0 (with four abstaining), and Governor Pete Ricketts signed it into law on March 16, 2022. The bill took immediate effect.

Now, under current law, the Governor must appoint members to the work group who represent various sectors of the economy. These include manufacturing or industry, agriculture, transportation, and energy. The group may also include a representative of a clean-hydrogen manufacturer.

The work group’s purpose, under LB 1099, is to tap into federal funding for hydrogen, a resource that has gained popularity as a low-carbon and domestically available source of energy. Hydrogen is a potentially clean fuel that, when consumed in a fuel cell, produces only water. A variety of domestically available resources can aid in generating energy from hydrogen. Fossil fuels, as well as wind, solar, and nuclear power, can combine with hydrogen to efficiently generate energy. For instance, in Nebraska, Monolith Materials manufactures hydrogen using methane pyrolysis. Hydrogen can also be used to store, move, or deliver energy produced from other sources, and it has industrial and agricultural applications, such as in ammonia fertilizer.

In the 2021 Infrastructure Investment and Jobs Act, PL 117-58 (“Act”), Congress incentivized the development of hydrogen manufacturing domestically. The Act directed significant funding to a number of electrification and infrastructure initiatives that will indirectly benefit hydrogen. It also provided direct hydrogen spending in the form of:

• Re-establishing a hydrogen office within the U.S. Department of Energy (“DOE”);
• Directing DOE, in consultation with the U.S. Environmental Protection Agency, to set a carbon-intensity standard for clean-hydrogen production;
• Directing $1 billion to research and develop electrolyzer systems, which separate the hydrogen from water molecules;
• Allocating $500 million to accelerate the domestic supply chain for hydrogen; and
• Appropriating $8 billion to DOE to establish regional clean-hydrogen hubs.

LB 1099 tries to capitalize on this last pot of money. Under section 813 of the Act, now codified at 42 USC section 13131a, DOE must solicit proposals for regional clean-hydrogen hubs. The criteria for selection emphasize diversity in feedstock, end-use, and geography. Each hub must demonstrate the production of clean hydrogen using a different feedstock (fossil fuels, renewable energy, and nuclear energy). The hubs must also be in different regions of the country, at least two of them in regions with the greatest natural-gas resources. Finally, each hub must go toward a different end use (electric-power generation, industrial application, residential and commercial heating, and transportation).

Whether DOE ultimately will select Nebraska among the list of proposed sites is unclear. DOE must announce its selections by May 2023. But LB 1099 demonstrates Nebraska’s intent to support clean hydrogen as a growing industry.

Attorneys at our firm specialize in assisting energy developers using a variety of different feedstocks and models. Please do not hesitate to contact us if you have questions about LB 1099, hydrogen energy more generally, or any other related matter.