Pittsburgh Companies Want a Place for Coal Gas and Other Resources

Pittsburgh Companies Want a Place for Coal Gas and The State’s Other Resources in Hydrogen Incentives

ANYA LITVAK

Pittsburgh Post-Gazette alitvak@post-gazette.com

MAR 29, 2024

A slew of Pittsburgh area companies, trade and labor groups are advocating that Appalachia’s proposed new hydrogen economy can be built using an undesirable byproduct from its coal-mining past and present.

Coal mine methane — natural gas released from coal mines — is a climate menace. Most of it vents into the air, liberating a greenhouse gas that is many times more powerful at trapping heat than carbon dioxide. The venting prevents its accumulation inside mines, which would pose a danger to workers, and is required for safety.

But the gas also leaks from abandoned mines, and there are no financial penalties for these releases.

“Unfortunately, as of today, there is no clear economic incentive to capture (coal mine methane) for productive use,” wrote Cecil-based natural gas producer CNX Resources, which got its start as a subsidiary of coal miner Consol Energy.

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CNX drilled gas wells where Consol was mining to degasify the mine space. Even after Consol sold its Buchanan Mine in Virginia in 2016 and after it split with CNX the following year, the gas producer continued collecting mine methane from Buchanan, the gassiest mine in the U.S., according to federal data.

CNX is one of the companies involved in a tri-state collaboration to establish a hydrogen production hub in West Virginia, Pennsylvania and Ohio. The effort, called Arch2, is one of the regional hydrogen hubs envisioned by the Infrastructure Investment and Jobs Act of 2021, which allocated $8 billion for the establishment of these networks. Last year, Arch2 was approved to receive up to $925 million of that money.

But it’s the Inflation Reduction Act of 2022 that can arguably provide the biggest boost for hydrogen production. That legislation includes a federal income tax credit of up to $3 per kilogram of “clean hydrogen.”

What qualifies as clean hydrogen is the devil in the details that project developers say will make or break the emerging industry.

The Treasury Department is finalizing that question now.

CNX and other Pittsburgh-area interests were among some 30,000 to submit comments to the agency, hoping to shape what qualifies for a 10-year tax credit.

“Captured CMM (coal mine methane) provides an ultra-low carbon intensity feedstock option for clean hydrogen production, especially within the Appalachia region where CMM is most prevalent, and significant,” CNX wrote.

In joint comments, the Allegheny Conference on Community Development, the Pittsburgh Regional Buildings Trades Council, and the Allegheny/Fayette Central Labor Council, AFL-CIO, wrote that outside investor interest in this region has more than doubled since it was selected for a hydrogen hub.

“This ability to turn a harmful emission into a productively used commodity not only creates an important solution for the enormous challenges coal regions face, but it also improves those regions’ attractiveness for new investments,” the coalition wrote.

The group said that it has identified over 30 unique projects, each with the potential to create almost 20,000 direct, indirect and induced jobs.

“These projects, however, can only happen with Treasury’s intentional recognition of the climate-positive impacts of methane abatement and the beneficial use of fugitive CMM.”

The other gas question

Hydrogen is a no-carbon fuel source that can be made by splitting water atoms in a process called electrolysis, or by breaking apart natural gas molecules. Using natural gas generates carbon dioxide emissions that companies like EQT Corp. plan to capture and sequester.

Downtown-based EQT is worried about another provision of the proposed tax rule — one that assigns an average leakage rate to oil and gas production across the U.S. That leak rate goes into a formula that determines the carbon intensity of the fuel used to make hydrogen. Only a process that produces four kilograms of carbon dioxide for each kilogram of hydrogen qualifies for the credit.

EQT along with other Appalachian operators argues that it has invested a lot of effort (and money) into reducing its emissions and directly measuring them to prove much lower leakage rates than the average included in the model. It should be allowed to use those hard-fought improvements in its calculations, EQT said. Also, national

assessments have shown that Appalachian leak rates are much lower than those in oilier basins.

The company described how its planned Low Carbon Energy Complex, to be built somewhere in this region, will make hydrogen out of natural gas with carbon capture utilization and sequestration. The hydrogen will be used to produce low-carbon aviation fuel and other products, EQT said.

The Airport Authority of Allegheny County said its interest in developing demand for sustainable aviation fuels prompted it to submit comments to the Treasury as well. The agency argued for the inclusion of coal mine methane as a qualifying fuel under 45V.

Pennsylvania Gov. Josh Shapiro also wrote in to advocate for the inclusion of coal mine methane and carbon capture and sequestration, and to argue against a requirement proposed by the federal government that says only new sources of carbon-free electricity can supply the power for electrolysis. This, he argued, will jeopardize the other hydrogen hub slated for Pennsylvania, Mach2, which plans to rely in part on existing nuclear energy sources.

“Our state has a strong backbone of existing generation resources and being unable to utilize those assets over the initial decade of hydrogen development, either directly or as a backstop to renewable sources that power electrolysis, will significantly impede our ability to roll out hydrogen on an impactful scale in Pennsylvania,” Mr. Shapiro wrote.