A Canadian company’s proposal to help the U.S. get greener by producing clean hydrogen at the former Intalco Aluminum site near Ferndale faces two significant checkpoints before this fall’s U.S. Presidential election.
The first, finalization of tax credit guidelines, and the second, Department of Energy funding agreements.
The AltaGas hydrogen plant, projected to cost between $850 million and $1 billion, is slated to be built on the defunct Intalco smelter area on Cherry Point. Its footprint, however, will only cover about 20% of the 160-acre brownfield site.
These checkpoints are when the AltaGas team can evaluate the project’s status to determine if it’s still viable, make changes, or be shuttered.
Once up and running, the facility would produce, store and distribute 100 metric tons a day of green hydrogen — roughly equivalent to an amount that could replace 100,000 gallons of diesel, said Andrea Doyle, Altagas’ manager of stakeholder and tribal relations for Whatcom County..
“That’s enough to reduce CO2 emissions in the region by about 400,000 metric tons below current levels,” Doyle said.
Region’s hydrogen hub
The company’s proposed project in Whatcom County was selected to be included as part of the region’s hydrogen hub. The Northwest hub is expected to receive roughly $1 billion of a $7 billion federal investment.
The hubs are designed to form the foundation of a national clean hydrogen network that will play a substantial role in decarbonizing various sectors of the economy, such as heavy-duty transportation and heavy industries, according to the Department of Energy.
The effort “aims to drive investment in the development of regional hydrogen hubs to achieve the goal of a carbon-free electric grid by 2035 and a net zero emissions economy by 2050,” according to the Pacific Northwest Hydrogen Association.
In the Pacific Northwest, the hydrogen projects are focused on leveraging renewable resources to produce hydrogen through electrolysis — an energy-intensive process of breaking down water into oxygen and hydrogen molecules.
But, the projects — like the industry itself — are in early stages.
“Electrolysis at this scale is not widely deployed,” AltaGas Senior Director of Emerging Ecosystems Bruce Leonard told Cascadia Daily News. “It’s definitely got a challenge from a scale standpoint.”
There are also significant hurdles in matching supply with demand. While there is demand in the industrial market, the power and transportation markets are still emerging spaces, he said.
While those challenges are ahead, the company is focused on planning and preparation until it gets more guidance from the federal government.
First of two checkpoints
The first of the two checkpoints for AltaGas is the U.S. Treasury finalizing its guidelines for the Clean Hydrogen Production tax credit, often referred to as 45V. The credit plays a crucial role in determining the financial bottom line for companies, as well as how much hydrogen ends up being produced.
The Internal Revenue Service’s proposed guidelines, published in December, were met with criticism from political and industry leaders. One core concern was limitations on tax credit availability for hydrogen produced from coal mine methane, nuclear power and natural gas processes that can prove low carbon intensity.
Investments and jobs in communities would not fully materialize unless the Treasury “significantly revised” its guidance, according to a February letter to the Secretary of the Treasury from leaders of the regional hydrogen hubs, including Pacific Northwest Hydrogen Association Chair Chris Green.
“Many of the projects generating these investments and supporting jobs will no longer be economically viable,” the letter stated.
Leonard said he expects 45V guidance to be finalized this summer.
Unlike some of the other proposed plants, the Cherry Point facility will be producing “clean hydrogen.”
“One of the key distinguishing features that makes our project a clean hydrogen project is our commitment to use renewable energy to operate the electrolyzers,” said Doyle.
The Pacific Northwest Hydrogen Hub is currently finalizing its $1 billion award negotiations with the Department of Energy, confirmed Doyle.
“Our Ferndale project is positioned to receive a substantial chunk of that $1 billion,” she said.
The funding agreements for sub-recipients within the hydrogen hubs are the second checkpoint for AltaGas, explained Leonard. He said efforts are underway to have those in place ahead of the election in November.
The company estimates that it will create 350-400 construction jobs during the multi-year building process. Once running, the plant is expected to create 40 permanent positions.
“We’re committing to make investments in workforce development, job training, bringing equitable benefits to historically underserved communities that have been left behind by some of the energy projects of the past,” Doyle said.
“Some of the other economic benefits associated with the project are going to be co-developed with the community,” she added.
Part of the role of the yet-to-be-formed community benefits advisory group will be to help determine these economic benefits. AltaGas is currently accepting nominations for organizations and individuals who want to serve on the committee.
The company said it was committed to inviting both the Lummi Nation and Nooksack Tribe to serve on the advisory group.
“We have been in early and regular communications with the Lummi Nation,” Doyle said. “We absolutely value their perspectives in this project development process.”
Cherry Point, also known as Xwe’chi’eXen, is a sacred place to the Lummi and a critical part of their treaty fishing territory.
“Any new development, or development of existing facilities, needs to be carefully vetted and studied by the Lummi Nation for its impacts to this sacred place and must in no way violate our treaty and inherent rights,” Lummi Nation Chairman Tony Hillaire said.
Doyle said that AltaGas provided early information about possible locations for the project to the tribe.
“We’ve received some early input from them that is already helping shape the way we look at the redevelopment of that Intalco site,” Doyle said.
Isaac Stone Simonelli is CDN’s enterprise/investigations reporter; reach him at isaacsimonelli@cascadiadaily.com; 360-922-3090 ext. 127.
