The Policy Blueprint for Appalachia’s Clean Hydrogen Success
Examining Coal Mine Methane as an input to hydrogen
March 27, 2024
By Positive Energy Hub Staff
As governments and energy developers advance low-carbon innovations and technologies to build a nationwide hydrogen economy, using captured fugitive methane from coal mines, also known as coal mine methane or CMM, is emerging as a significant pathway to realizing clean hydrogen aspirations in the Appalachian region.
This week, CNX Resources’ Brent Bobsein, Vice President of Sustainable Development, testified before the U.S. Department of Treasury on securing the right tax credit formula (45V) to unlock the full value of CMM-produced hydrogen, which aligns with the Administration’s priorities, creates and preserves local jobs, lowers emissions, and redefines the energy transition in our region.
The following is an excerpt from Brent’s testimony:
CNX has a legacy of CMM capture for beneficial use, and our projects comprise the majority of CMM mitigation in the U.S. today. We are actively pursuing new CMM capture project development opportunities and are the anchor in the Appalachian Regional Clean Hydrogen Hub (ARCH2), which was awarded up to $925 million in funds from the Department of Energy (DOE) under the Bipartisan Infrastructure Law. This follows our extensive work with DOE’s Argonne National Labs, the National Energy Tech Laboratory (NETL), the EPA’s Coal Mine Methane outreach program, and the Global Methane Initiative.
Distinct from coalbed methane, CMM is waste methane that must be liberated for mine safety and is currently responsible for 8-10% of U.S. methane emissions. Notably, CMM emissions are not regulated under any current framework – venting is required by the Mine Safety and Health Administration (MSHA), however, capture rates are low, productive use is declining, and the problem is forecasted to get worse with time.
Abandoned and inactive mines continue to vent CMM decades after mining is complete. CMM capture for beneficial use is a permanent solution to an unabated problem.
Many of the above-mentioned agencies and peer reviewed academic journals note 100% of CMM would be vented if we maintain the status quo, therefore CMM capture to hydrogen is an impactful opportunity for methane abatement that solves a current emissions and pollution problem that won’t simply go away by continuing to ignore it. This is also represented in the CMM and the Waste Methane Capture pathway in R&D GREET 2023.
Utilizing CMM as an input to hydrogen not only makes sense, but can help ensure that the 45V program is an efficient investment into real, actionable, and measurable pollution reductions, while creating jobs in disadvantaged energy communities forced to the fringes by energy poverty. Recognizing the methane abatement benefits of CMM also ensures synergies with other federal programs such as the hydrogen hub initiative.
The Technicalities
In order to fully unlock this hydrogen opportunity unique to Appalachia, we first urge Treasury to follow the lifecycle science that has been part of the GREET (Greenhouse gasses, Regulated Emissions, and Energy use in Technologies) model for a decade. Methane avoidance credits that can lead to negative lifecycle emissions should be established based on rigorous review of hard facts describing counterfactual scenarios, not arbitrary limitations that skew the objective recognition of climate benefits.
This isn’t a nice-to-have; it’s a must have:
- For CMM emissions that are going unaddressed and forgotten by all federal policy – this solution offers significant pollution reduction.
- For CMM to productive use projects that are closing, not opening – this solution offers economic justification to change the course.
- For global CMM emissions, which are getting worse, not better – this offers a sustainable framework.
- For Appalachian communities hardest hit by the energy transition – this offers a lifeline.
If emissions avoidance accounting and blending of carbon intensities (CI’s) is not allowed in the 45V program, no new CMM capture for beneficial use projects will be developed. This is a direct contradiction to the direction established by former Climate Envoy John Kerry and various other policies both nationally and internationally: European and Asian countries recognize methane avoidance accounting as do ISO standards, the World Business Council for Sustainable development, and domestic programs such as the federal renewable fuel standards (RFS) and state-level LCFS programs.
Secondly, Treasury is considering certain limitations on Anti Abuse and perverse incentives for waste generation. Specific to CMM:
- Every cubic foot of methane that is captured for beneficial use from coal mines would have been liberated to atmosphere instead (as established extensively by third-party peer reviewed studies that trace methane in mines).
- Even after a mine closes, abandoned and sealed sections of mines continue to vent CMM to atmosphere.
- Mine operators are obligated to submit a ventilation plan to MSHA that details how and to what degree methane is liberated to the atmosphere.
The question of whether incentivizing waste methane capture at coal mines could result in more coal mining and thus lead to increased indirect emissions from CMM has also been thoroughly reviewed (amongst others, by the California Air Resources Board). It was found that incentivizing the capture and productive use of CMM will not lead to new coal operations.
Capture project operators, the technology deployment, and even the gas itself are often completely independent from the mining operators. The incentives that would be applicable under the IRA would not impact mine operational plans with respect to development or production activities. The value of methane incentives as contemplated in the IRA are not substantial enough to alter mining plans, as new coal operations require billions of dollars of investment per project.
Incentives recognized under the IRA would be used by capture project operators to fund necessary infrastructure for the capture and productive use of waste methane and provide investment justification for new project development.
If deemed absolutely necessary, we request that Treasury examine the practical implementation of any restrictive measures. The Greenhouse Gas Reporting Program (GHGRP) in general, while being an accurate record of obligated reporting, is not a GHG inventory tool, and is not appropriate to be the basis of these provisions because:
- 99% of mines in the U.S., including abandoned mines, surface mines, and certain underground mines are not obligated to report to GHGRP.
- Global Energy monitor estimates that active mine CMM emissions are 2-3x higher than GHGRP.
- The highest fugitive methane volume from CMM production typically occurs within the first six months of the life of a source. If a productive use project were obligated to wait for the mine operator to report the source to GHGRP before connecting to a productive use project, ~50% of the volume associated with the life of the source would be vented to atmosphere prior to a connection to productive use.
- This policy would create the unintended consequence of requiring methane liberation to atmosphere as a pre-condition to subsequent qualifying productive use.
Lastly, the First Productive Use measure cannot be implemented as-is, since it prohibits investment into clean, gas-based hydrogen development. If maintained in any form, additionality must be determined on a borehole-basis, as investment decisions for capture and beneficial use are made per borehole. If, instead, First Productive Use were to be applied at a mine level, it would disqualify the largest and most impactful CMM reduction opportunities. Even existing capture facilities require incentives to continue capturing CMM, as high operating expenses risk the closure of capture and the switch to venting. This is evidenced by the trend of closing productive use facilities (66% over the past 10 years).
In a nutshell, CNX wants to invest in new CMM capture projects for productive use, but cannot currently find the economic justification to do so – the 45V program is uniquely positioned to drive large-scale methane abatement. This is important to us, to our community, to the climate, and to the future of domestic policy.
We applaud Treasury’s recognition of CMM as an important part of the 45V program and Treasury’s process of rigorously analyzed implementation specifics. We again urge Treasury to follow lifecycle science and the lawmaker’s documented intent when authoring the program and look forward to opportunities to bring forth facts in addressing Treasury’s questions.
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