Tanya Peacock, Managing Director at EcoEngineers and chair of the California Hydrogen Business Council, elaborates, in this VX News interview, on 1) the policies driving investments in low carbon intensity hydrogen – i.e.. the 45V Hydrogen Production Tax Credit, 2) the status of ARCHES—with its $1.2 billion commitment from the federal government—and, 3) the prospects for international and subnational leadership post-election on transitioning energy reliance to renewables. Peacock also highlights First Public H2’s leadership in growing California's market for hydrogen and the technology's enormous potential for decarbonizing heavy-duty transportation and industry. Peacock lastly offers her insights on both California's climate disclosure rules and opportunities to standardize carbon accounting protocols to ensure accuracy and reliability.
Tanya, it’s been some time since our last VX News interview, so please update our readers on your responsibilities with EcoEngineers.
I lead the hydrogen practice for EcoEngineers and the broader California sustainability practice. EcoEngineers is a consulting, auditing, and advisory firm 100% focused on the energy transition and decarbonization. We are based in Des Moines, Iowa, with 125 employees around the country and increasingly around the world. We are growing quickly, and have a strong presence in California, Texas, and New York, in addition to Canada and Europe.
Why has EcoEngineers chosen those office locations?
A lot is happening in those areas around clean energy development, with a focus on decarbonization. We have offices where our clients are and also have remote employees based around the world serving our global clients.
Is California your largest market?
California is a large market with the Low Carbon Fuel Standard (LCFS) and ambitious climate and clean energy goals. With the recently enacted climate reporting and accountability laws (SB 253, SB 261, and SB 219, Wiener 2024) requiring large companies to disclose Scope 1, 2, and 3 emissions and report climate financial risk, our California practice will continue to grow. We also see growth in Texas with lots of renewable energy and hydrogen projects happening.
Pivoting, as you’re also chair of the California Hydrogen Business Council (CHBC)—please, elaborate on its focus.
The California Hydrogen Business Council is the largest and most well-established hydrogen trade association in California. Our 110 members cross the hydrogen value chain including vehicle and fuel cell manufacturers, utilities, transit agencies, technology providers, and project developers.
We are the lead hydrogen advocates in California educating policymakers and stakeholders on the benefits of hydrogen for decarbonization and air quality. We supportive policies and collaborate with numerous other organizations to put those policies in place.
And of course, funding is always a priority. We advocate for the availability of state and federal funding for hydrogen production, delivery and use. And we advocate for technology-neutral climate policies and incentives so that clean hydrogen can play a role in decarbonization.
What's top of the agenda?
Top of the agenda is policy development and advocacy, ensuring clean energy and climate policies are supportive of hydrogen.
The Inflation Reduction Act’s 45V Hydrogen Production Tax Credit gives qualified projects that begin construction before 2033 a tax credit for 10 years after startup with up to a $3 credit per kilogram of hydrogen. The draft guidance was issued in December 2023 and the final rules have not yet been released. The draft guidance is overly restrictive in some areas. CHBC aligned with other hydrogen stakeholders, testified in Washington, and filed comments on the draft regulations.
Changes to the LCFS regulations were finalized on November 8, 2024, and the CHBC participated actively, including coordinating with other hydrogen stakeholders and filing several sets of comments.
We also work with the California Energy Commission on various grant and funding programs.
How might the outcome of the Nov 5th election impact these priorities?
Uncertainty adds to the challenges of project development. This past year we saw lots of project announcements in the U.S., but the number of projects reaching the final investment decision stage is still small. At least some of the delays can be attributed to uncertainty around the future of the 45V tax credit, including what the final guidance looks like.
Currently, some companies are filing for the tax credit based on the draft rules, which is permitted. But if the final rules don’t come out, and if uncertainty around staffing levels at the U.S. Department of Energy (USDOE) and the Environmental Protection Agency (USEPA) continue, those factors will influence project development decisions going forward.
Is hydrogen and the 45V Production Tax Credit a partisan issue?
There is support for hydrogen across party lines, and that can be seen in my clients as well. I work both with small companies and large companies. For them, it’s not about politics. It's about producing clean fuel and ensuring there is a market. For the people I work with, energy security, jobs, and decarbonization are not partisan issues.
What’s the status of ARCHES? When will shovels be in the ground?
Hopefully soon.
ARCHES received a $1.2 billion award from the USDOE. There are millions of additional private sector dollars in matching funds that will be invested as well. The CHBC collaborates with ARCHES, and some of our members have projects that have been selected for participation and will receive funding. A key focus of ARCHES is decarbonization at the ports of Los Angeles and Long Beach. That includes port operations, cargo handling, equipment, drayage trucks, heavy-duty trucks, and infrastructure for refueling.
ARCHES has committed to buying 1,000 fuel-cell electric trucks and buses. Transit agencies are a beachhead for hydrogen use in heavy-duty transportation because the fueling infrastructure is similar. As more transit agencies adopt hydrogen buses, it demonstrates the potential for hydrogen use in heavy-duty transportation.
ARCHES is setting up their offices on the UC Irvine campus – I got a chance to tour their space. It’s so exciting to see the California H2Hub organization take shape. We have been talking about this for a long time, and now is the time for action, for shovels in the group, and to start building.
As you and your clients well know, the billion dollars in public funding for this hub is expected to be only a fraction of what is and may be invested privately. Address the challenges in scaling private investment into hydrogen.
From clients I hear that a major challenge is securing offtake agreements. There is private capital willing to invest in hydrogen production, but projects are not being built because of the lack of offtake agreements. And that’s why the H2Hubs concept is so important. One of the goals of the H2Hubs is to connect producers and users.
We are seeing innovation at the local level. A Joint Powers Authority (JPA), which is a separate legal entity that allows local jurisdictions to collaborate on specific projects or services, called First Public Hydrogen (FPH2), has been formed. FPH2 includes the City of Lancaster, a leading Hydrogen City.
FPH2 will work with producers to negotiate prices and users to aggregate demand and potentially will transport hydrogen from the production location to where it will be used.
The goal is to create price transparency across the whole supply chain. And since FPH2 is a public entity, the production, transportation, and storage prices will be transparent, which are all the factors that go into the delivered price of hydrogen.
FPH2 expects to be up and running in early 2025. They’ve already issued an RFI for hydrogen supplies. I believe that this local government-driven initiative will be huge for unlocking private capital by helping to connect producers and users.
VerdeXchange recently, in collaboration with EPRI, hosted a delegation from the Dubai Electricity Water Authority (DEWA). Is EcoEngineers working internationally?
We don’t have any projects in Dubai, yet. EcoEngineers’ international client base is growing. In addition to the U.S., we have clients in Canada, Mexico, Europe, South America, and across the Asia-Pacific region. And we work with international companies on their U.S. projects. In some cases, clients are using hydrogen to produce other types of low-carbon intensity (CI) fuels. For example, hydrogen can be used to produce sustainable aviation fuel (SAF), renewable diesel, methanol (used as a shipping fuel), and ammonia (used to produce fertilizer and as energy).
We are seeing a growing interest in electro-fuels in the US and internationally. Using low-carbon hydrogen and then either recycled or a captured source of carbon, you can create a low/zero carbon fuel. Often referred to as e-fuel or synthetic natural gas, it’s a drop-in replacement for fossil natural gas that can be distributed via existing natural gas pipelines or liquified and transported around the world.
Hydrogen is a versatile molecule, making it a powerful decarbonization tool—that's what makes it so exciting.
Is hydrogen viewed by the California Energy Commission as it is by you and the California Hydrogen Business Council?
If only! We can’t achieve California’s ambitious climate and clean energy goals without clean molecules. Demand and competition for electrons is increasing exponentially, from data centers to higher air conditioning loads to climate plans that call for widespread electrification. And then consider transportation decarbonization, particularly heavy-duty transportation. A drive on the 60 or the 5 or the 99 freeways with the endless lines of class eight diesel trucks provides a good visual for the challenge. Powering all those vehicles with electricity - getting enough electricity to charging stations, let alone the weight and charging time requirements is a huge logistical challenge that can be solved with clean hydrogen. Clean transportation corridors with hydrogen refueling infrastructure can and should play a key role in decarbonizing transportation.
ARCHES will go a long way towards proving this concept. Hydrogen is going to play a key role, and I'm cautiously optimistic that the Energy Commission will embrace that.
Pivoting: beginning in 2026, any company doing business in California with a total annual revenue of at least $1 billion must start its annual disclosure for Scope One and Two greenhouse gas emissions. What is the impact of these disclosure rules on your clients and the state’s energy transition agenda?
Mandatory Scope 1 and 2 emissions reporting, per CA SB 219 and SB 251, starts in 2026. Scope 3 reporting begins in 2027. The California Air Resources Board (CARB) is beginning the process of developing regulations and the reporting deadlines will be here before we know it.
These rules will impact any company either located in California or doing business in California with revenues of over $1 billion per year. Even if a company doesn’t meet that $1 billion threshold, it may be providing goods and services to another company that does. Affected companies will look to procure inputs for whatever they are producing that have lower carbon options. There will be more transparency in supply chains and pressure on supply chains to decarbonize.
It's very complex to obtain credible data and to ensure that the reporting is based on real measurements, not just emission factors. As I mentioned earlier, CARB is starting the regulation development process now. They know this is a transition, and it can’t be done all at once, and that getting the rules right is important. The rules need to result in GHG emissions reductions and not just end up being a checkmark exercise based on emission factors. California is taking a leadership role, as it so often does. California and the EU have similar requirements so a significant number of businesses will need to figure out how to comply.
Our clients are asking about how they prepare for this. What kind of plans do they need? Many large companies have been preparing for years, but other companies have not, and smaller companies in key supply chain chains can expect to be getting questions from their customers.
EcoEngineers recently worked with The Climate Registry to publish a white paper. It explains best practices and includes key principles for developing regulations. The paper explains what Scope 1 and 2 are, and how they relate to Scope 3.
Industry groups can work together to develop protocols with consistent ways to measure and analyze emissions from the production of various products and materials. Industry-developed protocols are key because if every company producing similar but different products has to go through an individual life cycle analysis (LCA) modeling exercise to come up with a CI [carbon intensity] score, it’s going to get too expensive.
However, if for example, companies that produce glass for automobile windshields develop a protocol together, the components that comprise a windshield can be analyzed, the emissions factors can be standardized, and there does not have to be a separate LCA model for each supplier of a similar component. It’s important that the real measurements can be traced back and that the process is auditable.
How might the outcome of the Nov 5th election impact whether the nation follows California’s leadership re: disclosure rules?
The U.S. Securities and Exchange Commission (SEC) rules only require Scope 1 and 2 emissions disclosure, not Scope 3. Given the election outcome, it’s likely that those requirements will be removed. California will continue its subnational leadership model.
Lastly, what in your opinion should be on VerdeXchange VX2025 program agenda?
I think the agenda should focus on innovative approaches to getting stuff done. We need specific examples of visionary leadership that enables action and results. First Public Hydrogen is a great case study – the folks at Lancaster Clean Energy saw a problem with respect to connecting clean hydrogen producers and users, and then proceeded to develop and execute a plan to solve it. VX is famous for showcasing optimistic, forward-thinking, and practical, individuals, agencies, and companies. I’d like to see the 2025 program continue to focus on solutions. We have to because GHG emissions reductions today are the most important thing, and we do not have any time to wait.