CHARLESTON – Two bills that were quickly passed by the West Virginia Senate last week and approved by members of the House Judiciary Committee Monday could open up property owned by the Division of Natural Resources for underground storage of emissions from a possible hydrogen hub project.
The House Judiciary Committee recommended Senate bills 161 and 162 for passage Monday afternoon after the state Senate passed both bills unanimously Thursday, suspending constitutional rules that require bills be read on three separate days in order to speed the bills along.
SB 161 would allow the DNR within the Department of Commerce to sell, lease, or dispose of property under its control. An amendment from the House Judiciary Committee Monday would prohibit the sale, lease, or disposal of property in state parks or forests without legislative approval.
SB 162 would allow DNR to lease state-owned pore spaces beneath state forests, wildlife management areas, and other lands under DNR’s jurisdiction for use in carbon sequestration – pumping carbon dioxide emissions underground. The bill only prohibits DNR from leasing pore spaces beneath state parks.
DNR would have to accept sealed bids and sell to the highest bidder. It would allow pore space to be awarded if both the secretaries of the Department of Commerce and the Department of Economic Development approve by writing when they believe a lease is necessary for a specific economic development project as long as the lease is at market value or a greater royalty.
It was unclear why the bills were being rushed through the legislative process. One source who declined to be identified said the legislation is targeted at a company with a carbon sequestration plan in order to secure their investment in West Virginia, with an announcement forthcoming once the bills pass the Legislature and are signed by Gov. Jim Justice.
James Bailey, the cabinet secretary for the Department of Commerce, remained mum when asked whether the bill was aimed at projects currently being considered. But he said the bills were needed in order to start those conversations.
“There have been a couple other economic development projects that have popped up to where people are interested in property that is not a state park or not a state forest that is completely unused that we would need this (bill) in order to start any conversation or to substantially have the conversation,” Bailey told committee members Monday.
Carbon sequestration has long been talked about by West Virginia state leaders and federal lawmakers as a possible solution for coal-fired and natural gas-fired power plants by taking the greenhouse gases produced by those plants that contribute to global climate change and pumping them underground. But lately, carbon capture and sequestration has been talked about for capturing carbon dioxide produced in the hydrogen production process.
The West Virginia Hydrogen Hub Working Group – made up of state and federal elected leaders — submitted an application to the U.S. Department of Energy last year to land a regional hydrogen hub. U.S. Senators Joe Manchin, D-W.Va., and Shelley Moore Capito, R-W.Va.,were able to insert specific language in the $1.2 trillion Infrastructure Investment and Jobs Act requiring at least one hub to be placed in the Appalachian region.
The federal project is funded with $9.5 billion from the hard infrastructure bill, including $8 billion for the Regional Hydrogen Hub program. Each hub is required to demonstrate the production of clean hydrogen and demonstrate the use of clean hydrogen.
Hydrogen is a clean fuel that can be used to decarbonize manufacturing processes, such as steel and metals production, and heavy transportation. Hydrogen can also be used as a long-term fuel cell to store energy for future use.
One way to manufacture hydrogen is through the blue hydrogen process using the state’s abundant supplies of natural gas. Instead of greenhouse emissions from the process being emitted into the atmosphere, emissions would be collected through carbon capture and sequestration.
In September, multiple natural gas and clean energy companies announced a partnership bring a hydrogen hub to West Virginia. The Appalachian Regional Clean Hydrogen Hub, or ARCH2, would take advantage of the state’s access to natural gas supplies and existing infrastructure to manufacture blue hydrogen and store the carbon emissions underground.
ARCH2 include more than 40 partnering companies in the natural gas, energy, and manufacturing sectors; West Virginia University and Marshall University; local transit authorities; and the federal National Energy Technology Laboratory.
Bailey told committee members that the bills were vitally important as the state seeks to incentivize potential hydrogen manufacturers to the state.
“We’re on the precipice of this being a critical asset that the state holds primarily related to the hydrogen hub,” Bailey said. “Many projects connected to or central to our ARCH2 hydrogen hub proposals. They’ve already begun discussions with the state over the potential to coming to an agreement for this. It models the rights that DNR currently has with mineral rights. The structure and procedures are already there to handle this.”
One of those companies, Houston-based Fidelis New Energy, announced a partnership on Jan. 10 with Denmark-based Topsoe for technology derived from the production of blue hydrogen. Representatives of Fidelis were also present last Wednesday during the Governor’s State of the State address as guests of House Speaker Roger Hanshaw, R-Clay.
The $737 billion Inflation Reduction Act, assigned into law by President Joe Biden last summer and negotiated by Manchin, also expanded the 45Q tax credits for carbon capture and sequestration projects. Changes made to the 45Q tax credit include the dollar amount per ton for storage in saline geologic formations, utilization by industrial and power projects.
The credit is good for 12 years after the project is completed and goes online. Any project that begins construction by 2033 would be eligible for the tax credits. Maryland-based Competitive Power Ventures announced in December it was taking advantage of the 45Q tax credit to build a new 1,800 megawatt combined-cycle natural gas-fired power plant in Doddridge County. The proposed plant will use carbon capture and sequestration to reduce its greenhouse gas emissions.
“In a few weeks when there is a big announcement, inevitably there will be a bunch of publicity, the supermajority will get in line, have their pictures taken, and jump up and down for this economic opportunity,” said House Majority Whip Shawn Fluharty, D-Ohio. “I just want to take an opportunity to thank those probably more responsible for this than we ever could be, and that would be those in the federal government and those being Democrats, particularly Joe Manchin and Joe Biden.”
The two bills will now head to the House floor and will be up for passage later in the week.