By Blanca Bergert bberget@politico.com

PUBLISHED POLITICO Pro, October 13, 2023

The White House announced Friday that California will receive up to $1.2 billion in funding from the Department of Energy to produce and create a market for renewable hydrogen.

What happened: DOE awarded money from last year’s Bipartisan Infrastructure Law to California’s Alliance for Renewable Clean Hydrogen Energy Systems (ARCHES), a statewide public-private partnership led by the Governor’s Office of Business and Economic Development, the University of California, the California State Building Trades Council and the Renewables 100 Policy Institute.

The DOE funding will support hydrogen production as well the development of markets to use the fuel. ARCHES has emphasized the power sector, heavy duty transportation and ports as primary targets, as well as aviation and agriculture.

“In order to achieve our goals, we have to address these intensive industries,” said Gov. Gavin Newsom, who joined a press call Friday morning with the ARCHES leadership.

Background: The money is coming out of a $7 billion pot in the bipartisan infrastructure law for “clean hydrogen hubs.” California submitted a funding application in April and today was awarded funding along with six other hubs out of the the 33 groups that were encouraged to file a full application after nearly 80 submitted initial concept papers.

ARCHES CEO Angelina Galiteva said the group received over 100 project proposals for California and selected 39 to submit as part of the application.

Environmental and environmental justice groups have criticized ARCHES for what they say is a lack of transparency around the kinds of projects and project locations it’s considering. They’ve also expressed concerns about pollution from hydrogen-fueled power plants, as well as ARCHES’ plan to use trees and other biomass to produce hydrogen, which they argue results in air pollution and higher carbon emissions.

While ARCHES has ruled out using fossil fuels to produce hydrogen — unlike several other hub projects around the country — it’s also come out against strict requirements on electricity sourcing aimed at preventing hydrogen production from overburdening the grid and increasing emissions.

Reaction: Rep. Katie Porter (D-Calif.), who is running to succeed the late Sen. Dianne Feinstein (D-Calif.) in next year’s Senate race, lauded the award Friday. She pointed to DOE standards that require the hydrogen hubs to devote at least 40 percent of their benefits to disadvantaged communities.

“Today’s landmark award will help promote innovation, reduce pollution, and create tens of thousands of good-paying jobs,” she said in a statement.

What’s next: State and regional hub projects selected today will receive some portion of the grant for planning and analysis; state officials didn’t say how much they would receive up front. They will have to go through additional phases and negotiation with DOE in order to access the rest of the funding and start building out the hubs.

“We’ve just entered the competition phase of this process; now we’re really in the collaboration phase with DOE,” said GO-Biz spokesperson Willie Rudman. “You can expect a lot more outreach, engagement with stakeholders. This year will be really busy in terms of laying the foundation to go forward.”