Ohio, Pennsylvania and West Virginia will have a better chance of winning a $2 billion U.S. Department of Energy grant to develop a “hydrogen hub” if they apply together, say top directors at the Battelle Institute, the world’s largest independent research and development organization and manager of eight DOE national labs.

“Battelle believes very strongly, and we’re not alone in this belief, that the best opportunity for success for Ohio and the region is for the three states to work together,” Don LaMonaca, a veteran Battelle director, told Ohio Gov. Mike DeWine and Lt. Gov. Jon Husted Wednesday in a public virtual meeting organized by the 150-member Ohio Clean Hydrogen Hub Alliance.

The purpose of the meeting was to give the governor’s office an update, and, as it turned out, ask for an assist in creating a tristate DOE grant application.

DeWine said his administration is “very interested” in the project and the efforts of Battelle and the hydrogen coalition but did not give a clear commitment to work with the governors of Pennsylvania and West Virginia to win the massive DOE grant.

“Our policy has been, in regard to energy, ‘all of the above.’  We’re very, very interested in in the work that you’re doing in regard to hydrogen and certainly want to hear or more about that. And we’re going to be very, very, very supportive,” he added.

The problem is that a coalition of West Virginia elected officials, including Gov. Jim Justice (R) and U.S. Senator Joe Manchin (D) have already said in an initial filing to the DOE that any hydrogen hub in the region should be in West Virginia.

“West Virginia is the place where this all-important hydrogen hub belongs. As one the world’s energy powerhouses for generations, West Virginia has long served as the home of all kinds of cutting-edge technological advances in energy production, thanks to our rich natural resources and our skilled and dedicated workforce,” Justice wrote in March.  (See DOE Gets Hydrogen Hub Advice from Industry and Others.)

Better Together …

That assertion has not been overlooked by the DeWine administration.

LaMonaca asked DeWine and Husted “to help us get Ohio, Pennsylvania and West Virginia on the same page.”

In response, Husted wanted to know how interested Pennsylvania and West Virginia were in joining with Ohio. He said he suspected Manchin would not have voted for the infrastructure bill “without some kind of reassurance that his state was going to be funded.”

“We’re making good progress,” LaMonaca responded. “I would say Pennsylvania is very interested in a tristate collaborative approach. West Virginia is as well,” he said of businesses that Battelle had already contacted.

LaMonaca also noted that Battelle is aware of West Virginia’s previously announced position and knows that the DOE intends to make awards to proposals represented by a single entity.

He said Battelle understands that the DOE intends to make six to 10 initial grants (not just four) for the “initial launch” of about $400 million to $500 million, up to $1.25 billion, and will reserve $1 billion or $2 billion for future payments “depending on how impressed they are with the applicants,” he explained.

“There will be a 50% cost match that will need to come from the applicants’ team to match the government funding,” he said.

“So that’s why I think it’s important to get West Virginia, Pennsylvania and Ohio [governments] talking because all three states want to have a substantial presence as it relates to the hydrogen hub.

“But I think the only way that all three states get what they want is if all three states work together to coordinate an application that benefits the entire region and each of the three states individually as well.

“The strength of the region grows exponentially if you are able to pull together the resources … that exist within the three states for tristate unified application,” LaMonaca said.

… Or Going It Alone

Justice doesn’t seem to agree with that strategy. His press secretary Nathan Takitch said the governor is now focused on making sure West Virginia is awarded the DOE grant.

“Gov. Justice is one of several signatories to the West Virginia Hydrogen Hub Coalition’s official proposal to the DOE, which was submitted in March 2022,” Takitch said in an email.  “The Coalition’s efforts are currently focused on working together to bring a Hydrogen Hub to West Virginia, as outlined in the agreement.”

A spokesperson for Sen. Manchin also pointed to the efforts the senator has made since February to help the West Virginia Hydrogen Coalition prepare to apply for the grant.

Pennsylvania Gov. Tom Wolf (D) is not ruling out a joint application. “Governor Wolf is certainly open to a joint application that builds on the strengths of the Appalachian [region],” Wolf’s press secretary Elizabeth Rementer said in an email. “The governor remains committed to working with industry stakeholders and partnering regionally to achieve this win for Pennsylvania’s economy, workers and the environment.”

The Biden administration’s objective is to incentivize the development of low-cost hydrogen production and use it in place of coal and natural gas in heavy industry, trucking, trains and buses. The $8 billion in initial funding was authorized by the bipartisan Infrastructure Investment and Jobs Act approved by Congress in 2021.

In Ohio, the Stark Area Regional Transit Authority (SARTA), which operates 20 hydrogen fuel cell buses in its fleet, and an alliance of Ohio industries and gas utilities organized initial support to apply for a hydrogen hub grant. An economic study produced by Cleveland State University found that by diverting just 15% of Ohio’s shale gas output to hydrogen production would meet initial demand. (See Ohio Hydrogen Study: Blue Now, Green in 2050.) Battelle is providing the technical assistance for the grant application.

The meeting with DeWine and Husted represented the first time the coalition had briefed the administration. “We are glad that they participated to learn more about our efforts and are willing to help us out in the future,” SARTA Executive Director Kirt Conrad said.

Another alliance called Appalachian Energy Future (AEF), organized by Pittsburgh-based non-profit IN-2-Market, is taking an industry-led approach to promoting a tri-state solution for a hydrogen hub.  That group was founded with regional shale gas producers and heavy industries, including Marathon Petroleum (NYSE: MPC) which is headquartered in Ohio. Other members included gas producers Equinor (NYSE: EQNR) and EQT Corp. (NYSE: EQT); Mitsubishi Power, U.S. Steel (NYSE: X), GE Gas Power (NYSE: GE) and Shell Polymers (NYSE: Shell).

Michael Docherty, executive director of IN-2-Market and AEF, said that the three-state collaboration should be focused on addressing key enablers across the region.

“There’s going to be intense competition among companies and among the states for projects and funding, but there [are] also important foundational elements that we can work on together to help this region achieve its potential as an important clean-energy ecosystem,” he said.

Toby Rice, CEO of EQT, recently made a major pitch for liquified natural gas and hydrogen made from gas in the region before the D.C.-based Center for Strategic and International Studies. EQT has operations in all three states (See EQT CEO: Shale Gas Key to National Security, Hydrogen Economy.)

The plan in each state is to produce hydrogen from locally sourced natural gas for use in the region and sequester the resulting carbon dioxide in deep injection wells. At least one gas turbine power plant has already indicated it intends to blend small amounts of hydrogen with the natural gas it burns and heavy industry in the region has shown an interest as well.