Executive Summary

The success of the net-zero transition hinges on appropriate manufacture and use of alternative fuels in combination with a large-scale transition to carbon-free electrical power for much of the current fossil-fuel based economy. “Green” fuels, such as hydrogen and ammonia, are promising alternatives to fossil fuels because, if produced and used appropriately, they can deliver energy in a carbon-free manner. 

The validity of proposals for the use of green alternative fuels hinges on: 

1. Having no greenhouse gas emissions associated with the fuels over their life cycles 

2. Appropriate use of such fuels for energy storage and transfer in a net-zero-emissions economy. 

Moreover, it is important to emphasize that alternative fuels are not a one-to-one substitute for fossil fuels. Not only do they have low energy efficiency, but they also require carbon-free electricity for their production - electricity that could be more efficiently used directly in  electrical applications. A key principle for implementation of alternative fuels like hydrogen and ammonia is to limit their use to applications where direct electrification is not possible. 

When appropriately used, hydrogen production would account for less than 8% of the renewable electricity demand in a 2050 net-zero US economy, and would deliver no more than 3% of the total economy-wide energy demand. Examples of appropriate use of green alternative fuels include long-haul trucking and shipping, aviation, military applications, and the manufacture of steel. 

The production of green alternative fuels must be consistent with “three pillars” as set out in the Hydrogen Production Tax Credits - additionality (new clean electricity supply), deliverability (clean electricity delivered from local sources), and hourly matching (accounting of clean electricity use in hydrogen production on an hourly basis). These guardrails are essential for preventing the undesired effect of an increase in emissions from fossil-fuel-based power generation. To advance the net-zero goal for 2050, the pillars must be a non-negotiable set of conditions upon which all green fuel production is based. 

All fuels are lossy - when they are consumed they do not deliver the total amount of energy invested in their production, distribution and storage. They also can escape into the atmosphere during their production, distribution, storage and use. Preventing leakage of candidate green fuels such as hydrogen and ammonia is challenging. Moreover, leaked hydrogen chemically prolongs the lifetime of methane in the atmosphere, thereby contributing to global warming.

While green fuels can be consumed without producing CO2-equivalent emissions or harmful pollutants, their production can generate significant CO2-equivalent emissions. Moreover, when combusted in air they produce harmful pollutants. The promise of “green” production and “green consumption” is no guarantee that the actual methods of production and use are “green”. Most production methods of alternative fuels involve the use of fossil fuels as feedstock and/or the combustion of fossil fuels to generate the electricity used to produce the alternative fuels. These “gray” methods are often sold as “blue methods” when combined with carbon capture and sequestration, ostensibly to collect all the emissions associated with their production. Closer scrutiny of such proposals reveals that “blue” alternative fuels have significant net CO2-equivalent emissions associated with their production. Truly green alternative fuels require green electricity and carbon-free feedstock.

When green processes are not used to produce them, alternative fuels become false solutions to the problem of lowering greenhouse gas emissions. Manufacturing hydrogen or ammonia from fossil fuels perpetuates fossil fuel production and consumption without providing reductions in greenhouse gas emissions. Alternative fuel production from carbon-free feedstock using electricity from power plants that use fossil fuels also perpetuates fossil-fuel production and consumption. The use of carbon capture and sequestration to reduce the greenhouse gas emissions from the power plants requires considerable energy and does not address the emissions created in the process of extracting and refining the fossil fuels consumed. Such false solutions impede progress towards a net-zero economy.

The severity of the climate crisis, along with the interest in creating incentives to drive needed changes, creates opportunities for exploitation by special interest groups. Such groups propose activities that ultimately do not address the climate crisis and pose risk for exacerbating the situation. Some of these proposals are based on outright falsities and are deliberately misleading - for example, blending of hydrogen with natural gas, carbon capture for oil extraction, and carbon capture for fossil-fuel-fired power plants. Others require questionably large investment for the small potential net benefit - for example, “renewable” natural gas as a significant source of energy, and renewable green fuels as a means to power much of the economy. Proposals for these false solutions are supported by specious arguments made by special interest groups whose actions suggest that their own economic gain is prioritized over achieving net-zero goals. Supporting and implementing such proposals will jeopardize our future.

This paper examines the potential uses of green fuels, the energy and emissions costs of using them, the core principles of using them to best effect, and the limits to their use in a net-zero economy. We conclude that there is a limited role for alternative fuels and that too large a role for alternative fuels could impede the transition to a net-zero-economy. Finally, we provide specific guidelines for how they should be integrated into a net-zero electrified economy, including strict adherence to the “three pillars”.