Two things to start:

On to the newsletter. Today’s Energy Source is focused on two emerging technologies that politicians, industry and activists are betting big on to help achieve net-zero climate goals.

Our first item looks at clean hydrogen, after the US energy department launched an initiative to slash its price by 80 per cent over the next decade.

Our second is on carbon capture and a plan announced by the biggest producers in Canada’s oil sands to double down on the technology in a bid to stay relevant in a low carbon world.

Thanks for reading. Please get in touch at — Myles

In her first day on the job, US energy secretary Jennifer Granholm described her department as the US government’s “in-house solutions powerhouse”.

It would be the DoE, she said, that would lead the charge to reaching a net-zero US economy by 2050, by “developing and deploying the technologies that will deliver a clean energy revolution”.

This week Granholm tapped into that lofty ambition in launching “Hydrogen Shot”, the first of a series of initiatives aimed at driving breakthroughs in clean energy technologies over the next decade.

With “Hydrogen Shot”, the energy secretary wants to slash the cost of clean hydrogen — created from the electrolysis of water using renewable energy — by 80 per cent to $1 per kilogramme in the coming 10 years. At this level it would be cheaper to produce hydrogen from renewables than it is to do so from natural gas.

Driving innovation and commercialisation of new technologies is the most significant way the DoE — whose myriad responsibilities range from managing the US nuclear weapons programme to carrying out environmental clean-ups — can best contribute to the country’s newfound climate ambitions.

But betting big on technologies that are yet to be scaled or commercialised has faced backlash from some in the sector who see it as a risky bet that may not pay dividends in the fight against climate change for years — or ever. John Kerry, the president’s climate envoy, came under fire last month for what activists saw as too much optimism on new technologies’ role in achieving climate goals.

But analysts generally agree that while the ramp up of renewables and the electrification of large swaths of the economy (especially transport) will contribute to significant near-term emissions reduction, the solutions to cleaning up so-called hard-to-decarbonise sectors like heavy industry are less clear cut. And more than half of the emissions that need to be eliminated to achieve a net-zero economy will have to come from technologies that are at a nascent stage today.

So while things like clean hydrogen, carbon capture and sequestration, direct air capture and renewable fuels may not contribute much to cutting emissions in the near term, in the long run, they will be critical.

“I think it’s pretty important to keep hydrogen on the agenda,” said Paul Bledsoe, strategic adviser at the Progressive Policy Institute, and a former climate adviser in the Clinton White House.

The DoE hopes that by cutting the costs of green hydrogen over the coming decade it can drive a fivefold increase in demand. Commercial interest in producing it is already on the rise.

Electrolyser capacity for generating green hydrogen has rocketed in recent months. Until 2019, global capacity was just 200 megawatts, according to consultancy Wood Mackenzie. That has since jumped to 6.3 gigawatts, with 1.3GW added in the first quarter of this year alone.

There has been a “paradigm shift” over the past 18 months, which will see green hydrogen emerge as a key element of the energy transition, said Ben Gallagher, lead analyst for hydrogen and emerging technologies at Woodmac.

Woodmac estimates green hydrogen should be competitive with fossil fuels some time between 2028 and 2033 (assuming a US$30/MWh power price in 2030).

Granholm’s department will be hoping to emulate the success of the SunShot initiative, which under the Obama administration helped slash the cost of utility scale solar power by 75 per cent between 2010 and 2017 to 6 cents per kilowatt hour.

“We didn’t know that solar was going to get this cheap 20 years ago,” said Bledsoe. “You’ve got to keep [the clean hydrogen] option alive, it’s far too important.”

(Myles McCormick)

The oil industry is doubling down on carbon capture and storage (CCS) as pressure to slash the sector’s emissions mounts.

The latest move comes out of Canada’s oil sands, where the five largest producers, covering about 90 per cent of output, have banded together on a proposal to build a new CCS hub in one of the world’s most carbon polluting oil patches.

It is part of a bid, the companies say, to make oil sands operations (though not the burning of their product) net zero by 2050, which could also include using clean hydrogen, electrification or even deploying small modular nuclear reactors to power operations.

What’s the plan? The companies envision multiple oil sands projects around Alberta capturing their carbon emissions and feeding it into a single major CO2 pipeline running to a proposed storage site around the province’s Cold Lake region. The companies say the pipeline could also be used by other industrial sites.

But they said government support will be critical to building the project, which is likely to cost billions of dollars. It is “essential for governments to develop enabling policies” like tax credits and supportive regulations, the companies said in a statement.

The announcement landed just days after the Canadian federal government kicked off consultations for funding a new CCS investment tax credit. Analysts say it could look similar to a tax credit available to US projects known as 45Q, which will offer up to $50 per tonne of captured carbon by 2026.

Oil sands producers are under especially intense pressure to slash emissions.

Investors worry the oil sands’ emissions-intensive production will undermine growth in a decarbonising world and dozens of banks have blackballed the projects for new funding.

The Canadian government, meanwhile, has laid out ambitions ahead of international climate talks later this year to cut the nation’s carbon emissions 45 per cent from 2005 levels by 2030, which critics say could be spoiled by the oil sands.

Even many in the industry doubt the oil sands have much of a future in a decarbonising world. Chevron’s chief executive Mike Wirth said at a conference last week that “absent some real significant progress on carbon capture and storage” the oil sands “becomes really at the margin”. Extracting oil from the region is “more costly, it’s more energy intensive, it’s more carbon intensive” than other areas, he added.

As the industry makes its fresh push on CCS, it appears to be moving towards the large-scale hub model of development.

ExxonMobil floated an idea for a $100bn carbon capture hub system along the Houston Ship Channel in April, which would allow refiners, petrochemical facilities and other industrial operators to feed their emissions into a single pipeline linked to storage under the Gulf of Mexico seafloor.

The International Energy Agency’s recent 2050 net-zero road map carved out a large role for the technology, envisioning massive growth from the end of this decade. The oil industry has long touted CCS as a sort of silver bullet to its emissions problem.

Yet these ideas all remain little more than press releases and CCS projects have been notoriously costly and difficult to pull off. Many in the oil industry are betting big on a breakthrough. (Justin Jacobs)

President Joe Biden’s ambitions to decarbonise America’s power sector could hit an early setback.

The Energy Information Administration’s latest forecast shows coal making a small comeback this year and next, as higher natural gas prices lure the fossil fuel back on to the grid. Coal’s structural decline looks unstoppable as plants continue to shut down. But the government forecaster says “the trend of declining power sector CO2 emissions may change” in the short run as coal pushes out cleaner burning natural gas.

Line chart of Natural gas and coal power generation, bn kilowatthours showing US coal comeback could lift power emissions