Oil made Texas an energy giant, but even this petroleum powerhouse is working hard to secure a footing beyond fossil fuels. It already generates more wind energy than any other U.S. state, and soon the mighty air that lashes its high plains will power a novel new process: the production of vehicle fuel from water.    

Scientists say this technology, called “green hydrogen,” plays a big part in the world’s hopes to transition from fossil fuels and reduce carbon emissions.

Until recently, green hydrogen fuel production cost too much to compete with gasoline or diesel. But that is changing quickly thanks to steep subsidies offered in the federal Inflation Reduction Act passed in June. 

One project, announced last month in north Texas, hopes to be the country’s first large-scale producer of clean hydrogen from water. Its developers, Air Products and AES, expect to begin operations in 2027. With government support, planners hope an ecosystem of engines, pipelines and fueling stations built for hydrogen will follow. 

“This is definitely going commercial,” said Joe Powell, director of the University of Houston Energy Transition Institute and a former chief scientist at Shell. “Until you can mass produce it, the costs are a bit high. That’s where some of the government incentives come into play to get us over that curve.”

Hydrogen fuel isn’t new, it just hasn’t been clean. For decades, hydrogen has been produced from petroleum gas, using steam to break methane molecules, leaving behind a high-carbon waste that’s either released into the air or, very recently, injected underground. 

But hydrogen, the most copious element in the universe, can also be mined from water through a high-powered process called electrolysis, which leaves only oxygen behind. When run on renewable electricity, the process is totally clean (though the supply chain is not). 

The hangup: it needs enormous amounts of energy. 

The North Texas project plans to build a 900-megawatt wind farm, on par with the largest in Texas, plus a 500-megawatt solar farm for a total of 1.4 gigawatts, substantially more energy than the city of Austin consumes. 

With it, the project will produce 200,000 kilograms of hydrogen per day, enough fuel to meet 0.1 percent of daily U.S. diesel demand. 

It will also be eligible for tax credits of up to $3 per kilogram of hydrogen produced, without which the enterprise would not be economically viable.

Powell said the project’s 1.4-gigawatt power input “would rank at the top of the range of proposed projects in the U.S.,” though green hydrogen proposals in Europe, Australia, Africa and the Middle East range from 10 to 67 GW. 

“They’ve been working on hydrogen in Europe for a long time and I think we’ve got to play catch up here,” said Hugh Daigle, an associate professor of petroleum and geosystems engineering at the University of Texas Energy Institute and a former Chevron scientist. “The IRA is enabling the development of these large-scale facilities that are going to be necessary to transition us to low-carbon energy.”

The large-scale facilities are only part of the puzzle. A hydrogen market will need pipeline infrastructure, similar to the huge networks that currently carry oil, gas and water. And at the other end, it will need customers—fuel cell engines that run on chemical energy, with no combustion involved. 

“There still isn’t that much of a market,” said Daigle. “When that market does ramp up, they’ll be ready to be supplying the fuel.”

According to Michael Lewis, a researcher with the University of Texas Center for Electromechanics, just a few thousand hydrogen cars exist today—mostly in California, mostly made by Toyota. 

A few trains in Europe run on hydrogen. But for the most part, medium and heavy-duty hydrogen vehicles haven’t hit the market yet. 

“They’re in the very early stages of getting that technology commercially ready for large scale deployment,” said Lewis, who helped design a prototype hydrogen-fueled delivery van for UPS. “Everybody has developed one but they haven’t really started to sell them yet.”

AirBus is designing an airplane powered by both hydrogen combustion in modified gas turbine engines and hydrogen fuel cells that generate electricity. A Norwegian company already operates a small hydrogen-powered ferry, and other ship makers are racing to apply the technology to long-distance freight. 

“This market is going to grow substantially by 2030,” Lewis said.

Hydrogen fuel provides an alternative to electrification for vehicles that must travel long distances without charging, or fleet vehicles handed off between shifts without time to charge, Lewis said. 

Beyond vehicle fuels, hydrogen can be used to run power plants, although with much lower efficiency. In those cases, electricity is used to produce fuel, which is transported and burned to produce electricity. Users are better off drawing power directly from renewable sources, said Abbe Ramanan, a project director with the Clean Energy Group based in Maryland.

“It just doesn’t make sense to use it for power generation,” she said.

Although green hydrogen production is a clean process, its supply chain isn’t. Windmills and electrolyzers still have carbon footprints, especially if produced overseas with coal power. 

Some critics say that renewable energy consumed to produce green hydrogen should be fed to the power grid instead, supplanting old fossil fuel plants and charging electric cars. But for machines poorly suited to electrification, hydrogen fuel provides an important emissions-free option. 

“My personal opinion is you need all of the above,” said Powell, at the University of Houston. “We’re going to be decarbonizing the grid. We need to get started looking at decarbonizing the rest of the sectors.”

AES, a renewable energy company, said the Texas project was not its only green hydrogen venture, though others have not yet been disclosed. Air Products, an industrial gas supplier, did not respond to requests for comment.