U.S. incentives, 45Q tax credit and project-level economics likely to yield favorable returns
CALGARY, Alberta (Dec. 6, 2023) — Enverus Intelligence Research (EIR), a subsidiary of Enverus, the most trusted energy-dedicated SaaS platform, has released a new report that explores blue hydrogen production technologies and incentives available in the U.S. and models the resulting project-level economics.
“Although more carbon intensive than green hydrogen production, blue hydrogen projects provide a practical and economical pathway to clean hydrogen adoption,” said Alex Nevokshonoff, senior associate with EIR.
“Projects claiming the 45Q tax credits are likely to yield favorable returns and even out-compete existing gray hydrogen economics in certain situations. Nevertheless, project economics rely on the success and cost of sequestering CO2 which will vary widely by region, and thus should be a primary concern when choosing project locations,” said Nevokshonoff.
Key takeaways from the report:
- EIR finds that blue hydrogen provides a pragmatic transition to green hydrogen, offering 2x-3x lower unsubsidized levelized cost of hydrogen (LCOH) but elevated emissions intensities.
- The 45Q tax credit can be secured for each tonne of CO2 captured and sequestered to unlock syngas-only capture from steam methane reforming plants, the most carbon-intensive yet least capital-intensive scenario.
- Developers seeking the least-emission-intensive scheme with the strongest returns should explore autothermal reforming plants with carbon capture and storage (CCS).
EIR’s analysis pulls from a variety of Enverus products, including CCUS Analytics and Enverus Infrastructure.
Members of the media should contact Jon Haubert to schedule an interview with one of Enverus’ expert analysts.
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