New Clean Energy Office Targets Rural Areas: Heads Up, Joe Manchin

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The US Department of Energy has apparently had enough of West Virginia Senator Joe Manchin and his love affair with fossil energy. The agency has just created a new $20 billion Office of Clean Energy Demonstrations, aimed at scaling up big solutions to climate problems with a focus on rural communities and environmental justice. Almost 90% of the electricity generated in West Virginia still comes from coal power plants, so it seems the message is aimed straight at Senator Manchin, to the extent that coal holds a place in his financial portfolio.

Like It Or Not, Here Comes Clean Energy

To be clear, the new Office of Clean Energy  Demonstrations could make lots of accommodations for powerful elected officials who have a stake in the fossil energy business, including West Virginia Governor Jim Justice along with Senator Manchin. Among its areas of focus, OCED lists carbon capture and “clean” hydrogen, meaning that hydrogen production from coal or natural gas could be on the table.

However, OCED also lists small modular nuclear reactors among its preferred technologies, and that is a direct threat to the US coal industry. So far the idea of a whole new fleet of nuclear reactors hasn’t earned much love from local communities here in the US, no matter how small and modular they may be. Still, nuclear energy is favored by a number of other nations, which explains A-list investor Bill Gates’s interest in the nuclear field.

Given that context, the Energy Department could be eyeballing the technology export market for the US nuclear industry, at least in the near future. All else being equal, the growing demand nuclear energy overseas would put the squeeze on US coal producers that depend on international trade to stay afloat.

Global Coal Market On The Rocks

To make matters even more interesting, take a look at the timing on Senator Manchin’s opposition to the Build Back Better climate action bill. He has used his deciding vote in the Senate to wring significant concessions from the bill’s supporters. However, Manchin refused to come right out and officially kill the legislation until he issued a definite “no” during a TV appearance on Sunday, December 19. That was about 9 days after word dropped that the President personally ordered an immediate halt to federal financing for coal power plants and other fossil energy projects overseas. The order, sent by diplomatic cable to every US embassy, followed up on a pledge made by the Biden administration last August.

The directive apparently does not apply to projects with carbon capture. Nevertheless, it sure looks like the Biden administration sent a warning to Manchin in August. When that failed to get his vote on Build Back Better they followed through on the threat, thereby demonstrating that the President has the power to help squeeze coal out of the global energy picture regardless of what Senator Manchin does.

Manchin may have thought he won the round on TV, but the Biden administration is not alone. Reuters reports that “nearly all” international development banks are cutting back on coal. Leading investor groups have been also been ratcheting down their coal interests. The pace has been slow and the coal defunding movement could be backfiring in some cases, but the trend appears to have legs. On December 14, for example, HBSC announced a two-step coal financing phase-down beginning with the EU and OECD markets by 2030, and other markets by 2040.

Grid Scale Energy Storage & The Death Of Coal

Where were we? Oh right, the Office of Clean Energy Demonstrations. Small, modular nuclear reactors are not the only threat to US coal stakeholders. Grid-scale energy storage is emerging as another replacement for coal power plants, and natural gas, too.

As of this writing, OCED does not have its own web page on the US Department of Energy website, so for now it’s anybody’s guess what “grid-scale energy storage” means.

The Energy Department does drop a couple of hints, though.

“Demonstration projects prove the effectiveness of innovative technologies in real-world conditions at scale in order to pave the way towards widespread adoption and deployment,” the agency explains.

“The Office of Clean Energy Demonstrations will move clean energy technologies out of the lab and into local and regional economies across the country, proving the value of technologies that can deliver for communities, businesses, and markets,” adds Energy Secretary Jennifer Granholm, who also pointed out that the $20 billion is coming straight from the Bipartisan Infrastructure Law, meaning the federal funding package that passed Congress with Manchin’s help.

No word yet on what the Senator’s fossil stakeholder friends think of all this, but it looks like he has some ‘splaining to do.

Grid-scale energy storage is already here in the form of large lithium-ion battery arrays, but it appears the Energy Department is already looking beyond Li-ion technology to a wider field.

If by grid-scale they also mean long duration energy storage, then gravity energy storage systems, flow batteries, concentrating solar power, and more gravity storage systems, and particle-based gravity systems could all be in the mix. There may even be a place for flywheels in the clean energy grid of future.

OCED could also be eyeballing smart grid technology that enables distributed, small-scale energy storage devices to collaborate. That could include vehicle-to-grid systems that leverage the growing number of mobile energy storage devices on the market.

A Clean Energy Makeover For Hydrogen

OCED is similarly vague regarding “clean” hydrogen. For the record, hydrogen is not “clean.” The leading source of hydrogen today is natural gas, with coal coming in second.

However, that is today. A quick look at the electric vehicle sector indicates how quickly new clean energy technologies can grab hold of the market, even after getting off to a sluggish start.

Electric vehicles first hit the market in the late 19th century, only to fade out of the picture early in the 20th century as gasoline and diesel engines took over. After a long dry stretch General Motors introduced the ill-fated EV-1 in the 1990s. That was 25 years ago, and much water has passed under the bridge since then. Aside from the formidable marketing power of Tesla Motors, GM and other legacy automakers are finally making the pivot to vehicle electrification.

Pew Research recently ran the numbers on EV adoption in the US, and came up with a figure of 1.1 million for the number of 100% plug-in electric vehicles registered in the US as of 2020. That’s a small but significant portion of the 289 million vehicles registered in the US that year, and it looks like the stage is set for rapid expansion.

Edmunds has anticipated that EVs will make up 2.5% of new vehicle sales in 2021, with additional growth to come in 2022. Of an estimated 15.2 million vehicle sales in 2022, Edmunds expects about 4% to be electric vehicles.

All this is by way of putting the hype over clean hydrogen into perspective. It takes time for entrenched technologies to shift out of the market, though government policies along the lines of  “cash for clunkers” can help pick up the pace.

Additionally, if the Office of Clean Energy Demonstrations is seriously considering fossil-sourced hydrogen plus carbon capture, the timeline for commercial viability could stretch well beyond the 2030 window for preventing catastrophic climate change.

That still leaves other, more sustainable, hydrogen sourcing options that are already beginning to emerge on the market. Most of the “green hydrogen” activity is focusing on electrolysis systems that deploy renewable energy to push hydrogen out of water. Sourcing hydrogen from biogas, wastewater, and industrial waste gases is also in the mix.

As for pushing out legacy systems, Mitsubishi and other leading engineering firms are already marketing gas turbines designed for shifting into green hydrogen for power generation as the supply increases. The global steel industry is also eyeballing green hydrogen for its clean energy transition. The shipping industry is pitching in with demand for green ammonia, produced by combining green hydrogen with nitrogen from ambient air, and agriculture stakeholders are testing out the idea of distributed production systems that enable farmers to produce their own green ammonia fertilizer on site.

It remains to be seen whether or not the Office of Clean Energy Demonstrations provides significant funding for fossil-sourced hydrogen projects, but the Energy Department has been focusing more, well, energy lately on green hydrogen, so stay tuned for upcoming news on that.

Follow me on Twitter @TinaMCasey.

Photo: US Energy Secretary Jennifer Granholm via energy.gov.