Ken Dragoon

A Portland-based renewable energy developer has an ambitious proposal to produce “clean” hydrogen in eastern Oregon and Washington, potentially giving the region’s farmers a source of zero-carbon fertilizer.

Obsidian Renewables has designed what it calls the Pacific Northwest Hydrogen Hub, and hopes the burgeoning market — buoyed by government incentives and laws targeting greenhouse gas emissions — will entice companies to invest billions of dollars in new infrastructure.

If successful, the project would be one of four regional hydrogen hubs funded by the U.S. Department of Energy with $8 billion set aside in the federal infrastructure package.

Energy Secretary Jennifer Granholm said in June hydrogen energy “has the power to slash emissions from multiple carbon-intensive sectors” and will help achieve the Biden administration’s goal of 100% clean energy nationwide by 2035.

While the Pacific Northwest hub would be built in phases, it calls for two hydrogen facilities — one near Hermiston, Ore., and the other near Moses Lake, Wash.

The hydrogen would be transported via 550 miles of pipeline to more than a dozen industrial parks across both states, and could be used to power businesses such as Waste Management’s transfer station in Arlington, Ore., or to replace diesel generators at data centers run by Google, Amazon and Facebook.

“We expect there will be demand at these industrial parks,” said Ken Dragoon, director of hydrogen development at Obsidian Renewables. “A lot of these companies understand they need to get off of natural gas. They’re looking at hydrogen as a substitute.”

What makes the hydrogen “clean,” Dragoon said, is it would be made using electricity generated from wind and solar farms.

The method, known as electrolysis, takes electricity and courses it through water to separate the hydrogen and oxygen molecules. About 95% of the hydrogen produced today comes from natural gas.

Dragoon said the hub would also provide hydrogen to make ammonia fertilizer locally for the agriculture-rich Columbia Basin.

Thanks to production tax credits for renewable hydrogen included in the Inflation Reduction Act, Dragoon said he is optimistic they will soon be able to make ammonia fertilizer cheaper than from natural gas.

Meanwhile, the Northwest hub would protect consumers from the whims of international market prices for natural gas, which accounts for 70-90% of fertilizer costs.

“When there’s a war in Ukraine with Russia, and supplies get cut, the world price of natural gas goes up,” Dragoon said. “The fertilizer prices go up with it. But, if you’re making ammonia from wind and solar power, that has a fixed cost. The cost of ammonia that we are going to produce is going to be pretty stable.”

The hub carries a hefty price tag. Dragoon estimated all equipment and infrastructure adds up to about $6 billion, and though a portion of that funding may come from the Energy Department, he said the project is not entirely contingent on government support.

“We think the economics of this stand on their own,” Dragoon said.

Laura Feinstein, a fellow at the nonprofit Sightline Institute in Seattle, said the cost today of making hydrogen from electrolysis versus natural gas is about twice as high.

However, she pointed to state laws in Oregon and Washington focused on eventually phasing out carbon emissions.

“The economics of using a fossil fuel-based product may seem great today, but you have to plan for some years down the line when there’s a giant tax on those products,” she said.

Some industries may see hydrogen as their next best option, she said.

“There’s this future economy coming that envisions using hydrogen to power things that fossil fuels once did,” Feinstein said. “As the market builds, the infrastructure will grow to meet demand, in theory.”