The role of hydrogen in global energy mix continues to grow. Emerson has been working with technology providers to enable more efficient and reliable production of hydrogen to continue to drive this trend. One example is the recent news, Emerson and BayoTech Team to Accelerate Scaling Production and Distribution of Low-Cost, Low-Carbon Hydrogen.
In this special Emerson Automation Experts podcast, I’m joined by BayoTech’s General Council and Head of Policy, Andrew Leedom.
We discuss their technology innovations in modular, smaller scale & localized hydrogen production, the reduction in carbon intensity, and policies here in the U.S. at the federal and state levels to continue to foster hydrogen’s increasing role as an energy carrier.
Visit the BayoTech website for more on their distributed hydrogen production, storage, transport and fueling solutions and see the solutions for the Hydrogen Fuel industry on Emerson.com.
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Transcript
Jim: Hi, everyone. I’m Jim Cahill with another “Emerson Automation Experts” podcast. You may have heard the news of Emerson and BayoTech teaming up to accelerate the delivery of low carbon, hydrogen, an important and growing energy carrier in the global energy mix. BayoTech specializes in localized hydrogen production as a more efficient and less expensive alternative for hydrogen supply. Today, I’m joined by BayoTech’s Andrew Leedom, general counsel and head of policy. We’ll be discussing priorities to ensure a bright future for hydrogen as an energy carrier. Also, I want to make note that Andrew has his own podcast, “Everything About Hydrogen,” which you’ll find to be an excellent source of learning. I listened to one of the recent episodes, “Hydrogen Technology: The Engineer’s Perspective,” and found it to be quite informative. Welcome, Andrew.
Andrew: Thanks, Jim. It’s a pleasure to be here.
Jim: Well, it’s great to have you here with us today. Well, let’s get started by asking you to share your background and path to your current role at BayoTech.
Andrew: Sure, yeah. And, again, I just wanted to say thank you to you and the team at Emerson for having me on the show. I’m, you know, delighted to have the chance to be on this side of the podcast microphone. I have to say it’s a change. So we’ll see how it goes. But, yeah. I’m really excited to be here to speak with you guys about hydrogen and where BayoTech fits into the evolution of the hydrogen economy. So, thanks, again, for having me. On my side, I suppose my path to hydrogen, as it were, was probably a bit circuitous and meandering. So, I think, maybe the long and short of it is, you know, I’m an attorney, originally. And I started out actually in the telecom space, working on IP licensing and portfolio… worked for a licensing company that had a portfolio of telecommunications patents. And that was just after law school. And through a series of various circumstances, I found myself returning to school to get a master’s in International Economics and Policy. And then, while I was there, I ended up being primarily interested in energy, resources, and environment, which is a specialty in the program I was in. And that led me eventually to take a position as an in-house attorney for an energy services firm, actually, based in an office of theirs in Angola. Now, that’s sort of my path to the energy sector.
And then eventually I ended up going to work for renewable energy and infrastructure consulting group based out of London. And I started there. I focused on transportation electrification, which, you know, of course, is a hot topic in and of itself. But I joined, let’s see, probably 2018, 2019. So, right, when I joined, you know, hydrogen was really hitting its stride, and the electrification and the transportation world has kind of taken the energy world by storm in the last couple of years. So it started to really dominate a lot of the work we were doing, focusing in the transportation sector and understanding where hydrogen fits into that space. And that’s also the time, I think I would be remiss if I pointed out everything about hydrogen, while I appreciate the credit, Jim, is not entirely my podcast. I have two co-founders of hydrogen and media that actually convinced me to join the podcast originally. There’s Chris Jackson at Protium and Patrick Malloy at the Breakthrough Technologies Group at RMI. So I got involved in the podcast with them, just trying to explore the hydrogen world. I wasn’t entirely convinced that people would listen to it, but it turns out it’s been actually incredibly successful, at least relative to what we had expected venture, and, you know, I’m really excited about it.
So, you know, at one point, I was working at this consulting firm. I decided that I really wanted to return to the law but stay in the energy sector. And one of our original guests on the podcast, probably the first three or four, was a gentleman by the name of Mo Vargas, who was running a young hydrogen company based out of Albuquerque called BayoTech. And Mo had made a pretty convincing case to me, or, you know, made a pretty convincing case on his appearance on the podcast. But this was the space to be in, and BayoTech was the company to be at. So, one day I was actually shopping for plants with my partner at the local garden center and shot an email over to Mo, asking if BayoTech was looking for an in-house attorney. And, you know, to my surprise, I got an email back before I even got home. And that I can’t remember the exact words, but it’s something to the effect of “Yes, but what will it cost me?”
So, we eventually landed on a number, and, you know, I joined the BayoTech earlier this year. It’s only been eight months ago, and it’s been a wild ride. When I joined BayoTech, we were 27-ish employees. As of today, we’re over 100 employees and planning on building 50 of our hydrogen generation hub sites over the next three years across the United States and in the UK. So that’s kind of a long way of telling you how I got there and what I do today. I think it would be no surprise to most people who would hear my title, so general counsel and head of policy. So, it’s a little bit of a two-fold job. You know, day-to-day, my work is legal work. That probably would bore most non-lawyers to death, but which I find that incredibly compelling and fun to work on. And then the other half is looking at, and handling, and interacting with policy at the federal and state levels, which as hydrogen grows in prevalence, and as part of the energy mix of the energy transition, is becoming a bigger and bigger lift. So, those are my two roles. And, yeah, that’s it.
Jim: Well, that could be the most fascinating background, you know, Iaw school to economics, and a degree there, and the other things along the way, and a podcaster. And sorry, not to give credit to your fellow cohorts.
Andrew: No, no. I will take it, Jim. I will certainly take it.
Jim: So, that’s just a really neat background, and I appreciate you sharing that. Let’s get into it a little bit. So why is there so much excitement around hydrogen as an energy carrier and people so excited about everything?
Andrew: Yeah, I think the question has a potentially very long answer, but, again, I’ll try and hit the highlights. I think where we start here is, of course, that hydrogen, whether run through a fuel cell or combusted, however you want to extract the energy from it, emits no carbon, right? It’s a zero-carbon fuel source. Now, if you combust it you could get some NOx emissions, right? But through a fuel cell and combusted, it emits no carbon as a fuel source. So, that’s point one. That’s why we’re looking at it. It’s also the most abundant resource in the universe. So, there’s a lot of it, but it does not occur naturally as a gas in nature. It has to be extracted from another medium, right? You know, the other interesting thing about hydrogen, and we’ve talked about it on my podcast or our podcast in the early days, this is not a sector that has never been considered before. This has been around… you know, fuel cells have been around for decades.
It’s a technology that has been proven and tested. What’s different now is the technologies around producing it and that they’re reaching a cost point, we’re trending towards a cost point. That means that the next few decades, or excuse me, in the next decade, for instance, and even today, with sources like BayoTech and other producers working in the modular distributed space, we can get some cost reductions for affordable production, right? So, in any event, the downward trend in pricing is another component of what makes it attractive today as opposed to in the past. I think its versatility, as an energy carrier, makes it remarkably unique. It can be generated and transported long distances and stored long-term if so needed, which is something that cannot be said about electricity through transmission lines, right? It has to be used or stored in a battery or whatever other medium you want to consider. But hydrogen can be stored for quite a long time without dissipating, and it can be transported long distances as well. So, it has a lot of unique capabilities in that way.
It is also an effective route for decarbonizing hard electrified components, and sectors, and uses, so heavy-duty transport, aviation, maritime, industrial processes, manufacturing. Some other more niche applications are out there but those headline sectors are quite dramatic and amongst the largest carbon-emitting sectors in the world. And in that, for instance, let’s take heavy-duty transportation. Batteries don’t scale well when it comes to heavy-duty transportation. They’re a great solution for your personal passenger vehicle on a daily basis, in terms of trying to do long-haul trucking in Class A truck. Good luck. It’s, you know, we’re talking about a six-ton battery with a lithium-ion technology. So, diminishing returns, as you build a bigger and bigger battery. It’s incredibly heavy. With hydrogen, you can solve that issue because you are not… with a hydrogen fuel cell vehicle, you’re carrying around a lot of hydrogen and a relatively small battery. You can get longer distances, shorter refuel times. So, it offers capabilities at hard to decarbonize industries that other electrification solutions do not. So, I think those are the headline issues. I think there’s quite a bit more that’s contributing to it as well, but I think those are the key components.
Jim: If you think about going straight to electricity like the wind really blows in West Texas, and there’s a lot of wind turbines out there. But transporting it over the great distances to the metropolitan centers, you really do lose a lot of that energy. So, yeah. It is natural to look at something like hydrogen, which you made a great point about it holding and not dissipating like a battery will or other ways. So, can you share with us more about BayoTech and the value you bring to hydrogen consumers?
Andrew: Yeah, yeah, absolutely. So, I think, let’s, again, maybe start with the headlines here. The headline is that BayoTech’s goal is to become the largest distributed hydrogen company in the world, right? So we take small goals here, Jim. But we are very much focused. Our core tenet is focused on making hydrogen solutions easy, and making sure that they are affordable, accessible, and adaptable, right? So we want to make hydrogen available to customers and off-takers where they need it, when they need it, and also at a price point that actually makes it attractive to them, right? There are some solutions today in the hydrogen space that are great, in theory, but incredibly expensive. And thus, not attractive to the demand side of the equation. To kickstart the hydrogen economy, you’d need to make it an affordable fuel source. BayoTech, so you need… in the last question, I was saying that one of the reasons hydrogen is of interest today is because, over the coming years, we will see that cost decline trend play out. But here’s the thing is that BayoTech is producing, you know, low cost, low carbon hydrogen today. We can do it today. We’re building the hubs now. We just announced a hub in Albuquerque in partnership with New Mexico Natural Gas. We’re working with fantastic companies like Emerson to make this rollout of the hubs possible.
And, you know, what BayoTech’s core technology does, we offer… you know, our base is around the Sandia National Labs Tech with proprietary technology that allows us to scale down the centralized hydrogen production facilities of the past to something that can be dropped on-site and use local feedstocks. So that means if it is an SMR [steam methane reforming] plant that takes natural gas, or renewable natural gas and biogas. So whatever feedstock we can use at the local location and the community, we can drop that and use it as feedstock through the reformer and produce that hydrogen on-site, which means that it’s going to be cheap and accessible for our customers. So that’s the value proposition. And also that locality allows us to use sources and feedstocks like renewable natural gas. And renewable natural gas, as you may or may not know, or as the listeners may or may not know, can produce hydrogen with a carbon intensity that is negative. So, electrolysis using purely renewable energy and producing hydrogen with a carbon intensity of zero at its limit, using renewable natural gas allows BayoTech to go carbon negative, so it’s the cleanest hydrogen available today.
Jim: Well, that kind of leads into my next question, you know, because that steam methane reforming technology has been around for decades and decades, and it’s traditionally been the most common method of producing hydrogen. But the process is really been quite large, and centralized, and requiring transportation to move it from point A to point B where it’s needed. You alluded to it some with Sandia, but what’s BayoTech doing to change this production method to become more efficient and less carbon producing?
Andrew: Yeah. And I realized I got ahead of myself and you were asking about BayoTech’s value proposition, and I moved into carbon intensity. So let’s go down that road. Yeah, absolutely. So the proprietary technology out of Sandia National Labs is a bayonet design. That’s where the name BayoTech comes from. And what it does is it allows us to scale down what you referred to the centralized steam methane reformation hydrogen production facilities of the past are huge, absolutely massive. So, you know, a reformer could be as tall as eight stories. It could be a massive piece of infrastructure. Our technology allows us to scale down that production plant to something that fits effectively. We have a testing site, an R&D site, at our headquarters in Albuquerque, just behind the building from the street. You can’t even see it. Really, it fits on site. So it can be dropped next to a dispensing or a fueling location, or right at an industrial offtake point. But what that reduction in scale allows us to do is produce hydrogen much more efficiently. We can recycle some of the traditionally lost energy that large-scale plants suffer from when going through the reformation process because we don’t have so much of the heat loss that comes with a large plant. It’s compact, so we don’t have to deal with that problem. So, from Jump Street, we have a more efficient process, so that brings down our carbon intensity at the start.
Now, because we are at an onsite and modular solution, and because it’s small scale, we can also pair… So, if we are in a site that’s using natural gas, a standard natural gas from the grid, we can pair our solution with carbon capture technologies as well. And it can be done at a smaller scale, which eliminates some of the challenges that we’ve seen with deploying carbon capture at a larger scale in terms of cost. So, that’s one solution. But there’s a huge value proposition that we are looking at, and that we think is one of the best pathways, as I alluded to it earlier, as you mentioned, and that’s using biogas or RNG feedstocks. And that comes from waste sources such as wastewater treatment facility, landfill gas, theory gas, whatever that waste source is. You know, our CEO likes to say where there are humans, there’s waste, and where there’s waste, there’s a source of biogas, right?
So we can take that biogas which would traditionally be emitted as methane, actually, 83 times worse for the environment, and we can feed that into the reformer… excuse me, 83 times worse for the environment than just CO2 emissions, and we can feed that into our reformers. And we can generate, as I mentioned earlier, carbon-negative hydrogen, which is, again, the cleanest you can go. And the more biogas we use, so at the 100% one, we can go very carbon negative, or we can blend it to get just the carbon zero, you know, with a CI [carbon intensity] score and just zero with the traditional natural gas as well.
So depending on what’s available at the site, we can go anywhere from zero to negative. I’m thinking of it in grams of CO2 per megajoule. So, negative 200-gram CO2 per megajoule, which is maybe not the traditional way of thinking about, but the point is that we can go negative. So that’s the value proposition that the BayoTech offers in that space. I think one other thing that we don’t talk about that much but should talk about is that hydrogen generated from any source, whether it be SMR, whether it be from electrolysis, but hydrogen generated from any source run through a fuel cell is immediately going to have 40% reduction in carbon emissions compared to gasoline in the same end-use application. So, just from the start, hydrogen is a vastly superior energy source of fuel when compared to gasoline or diesel in terms of carbon emissions.
Jim: Well, that sounds like a whole bunch of different ways from that energy efficiency gain because of your scale to just a lot of the others. And even from the big plants that have to transport it from point A to point B, and the biogas, the biomethane, that kind of thing you’re using. So it sounds like there’s a lot of interesting things you’re doing that by scaling it down that way able to take advantage. I want to switch and pick on that head of policy side of you. And maybe could give our listeners some of the recent developments going on here in the U.S. with the current administration in Washington, D.C. as it pertains to hydrogen.
Andrew: Sure, yeah. And before I do that, Jim, I would be remiss, and I’m sure our CEO would berate me if he knew that I had missed the transportation element of the equation that you just mentioned. Yes, by being able to deploy our units locally, we can eliminate one of the additional sources of emissions associated with traditional hydrogen production, which is that it has to be transported long distances. And that results in huge amounts of emissions as well. So we do it locally, we do it with high pressure, and there’s another pathway that we use to eliminate emissions in the hydrogen production and distribution chain. So to your question on policy, yeah, the administration has had a recent, very recent announcement around their efforts to supplement the initiatives that have been put through via the bipartisan infrastructure deal, quite recently. And so the administration itself is looking at a number of initiatives focusing on decarbonizing federal government operations.
So, this program that the White House announced, you know, includes kind of high-level tenants around 100% carbon-free electricity by 2030, you know, at least half of which will be locally supplied energy. It also includes 100% zero-emission vehicle acquisitions by 2035, including 100% zero-emission light-duty vehicle acquisitions by 2027. So, this is talking about, obviously, in terms of government fleet procurement. So they’re looking to only purchasing zero-emission vehicles by 2035, which is a pretty ambitious goal. And I think that net-zero… the next tenant that is in that plan is net zero emissions from federal procurement no later than 2050, and also net-zero buildings portfolio by 2045. So, they have a huge number of high-level goals that they want to meet through this initiative. And, again, I think it’s to build and supplement on the incentives and programs that are built into the bipartisan infrastructure deal. And I assume they are looking towards the passage of the Build Back Better Act, which includes as additional packages of incentives around clean energy, and specifically hydrogen, and I think we may touch on that later. So that’s the high level and the headline items in the announcement. And I think it shows a commitment by the administration to decarbonization goals, and I think it’s a step in the right direction.
Jim: So, why are the government policies and programs necessary to support the scale-up of hydrogen, and what are their overarching goals using these tools they have at their disposal?
Andrew: Yeah. So, you know, again, this is the energy sector, Jim. So this is like steering an aircraft carrier. So the transition in, for instance, the transportation sector, you know, you’ve got all of these different components of what we look at as the overall energy economy. There’s entrenched infrastructure and entrenched commitments to the fossil fuel industry. And the fact of the matter is that moving away from that old infrastructure and that old energy economy requires first movers and first movers with buying power, well, and frankly, legal power to make mandates and to incentivize that transition. So I think the government realizes that it has to be, and it does serve the purpose of, demonstrating the viability of a lot of these technologies, right? It’s always helpful to see clean buses running on batteries or fuel cells deployed in cities. It allows people to become familiar with them.
But then it also, I think, beyond that is just very important that there are incentives to invest in clean energy technologies. These are some of the ways that we got to solar and wind resources that were so expensive previously, and which are now the most affordable source of electricity in the world. So, I think it’s important the government be involved. It’s certainly not the only lever. Private sector and private markets need to pick up the slack and push. And companies like BayoTech and Emerson, and those that are doing their part to help that transition along and make these technologies and these fuel sources available and affordable to consumers and clients today, I think, are the next most important and are the key component of the equation. And I think the government is allowing and supporting that transition.
Jim: Yeah. And it seems like anytime you’re introducing whatever that technology, and it’s on that economic curve where it does need, in some cases, especially, like you said, as massive as the total energy consumption of the planet, you know, some kickstart to get some of those going. So, you had mentioned the infrastructure bill. Beyond the government agencies and what they’re doing, is there anything else in their specific to developing hydrogen?
Andrew: Yeah, yeah. Yeah, the important thing to note around the answer for the administration’s announcement is that they are clean energy and clean transportation. They’re not specific to hydrogen. So hydrogen will be a huge component. It has applications and in what the White House has announced, but it’s not a specific solution that they’re looking at. It’s a component, and that’s important to note. On the bipartisan infrastructure bill, there is hydrogen-specific incentivization and programs there, I think $9.5 billion worth of it. The big ones are the clean hydrogen research and development program, which reestablishes and expands the scope of DOE’s hydrogen research and development program. There’s the Regional Clean Hydrogen Hubs Act, which allocates $8 billion between 2022 and 2026 for the deployment and investment in more regional hydrogen hubs throughout the country. And I think that’s a huge headline grabber. It’s one that certainly we as a company are looking at, and I think everyone in the hydrogen space is really following that one with tremendous interest. The clean hydrogen manufacturing and recycling initiative, which is, you know, another $500 million over the next four years. The clean hydrogen electrolysis program, which allocates a billion dollars for electrolysis research, 2022 to 2026.
It also has something that the United States has not had that many other countries already do have, and we’re behind the curve, which is a clean hydrogen strategy and roadmap that mandates the development of one for the United States. So that has not been done yet, but many countries have already established, published, vetted, and revised their clean hydrogen strategies and roadmap. The United States is one of those that has lacked there. And so this is a step in the right direction. It helps to know where you’re going if you want to get somewhere, right? So that’s been a big addition to the arsenal here. And then it’s also set standards for clean hydrogen production qualifications, which, you know, I think they have put into place clean hydrogen production standards that are ambitious, and I think it’s good to be ambitious. And so I think we’ve struck the right balance here of putting in place some funding and some incentive programs for investment in the infrastructure around hydrogen, as well as some ambitious goals that the private sector should be gearing up to meet.
Jim: Yeah, it sounds like there’s a lot here in the immediate term. You know, I guess, as you look out on the horizon, do you see, or in your crystal ball of further things that might be required from a public policy perspective to advance the use of hydrogen in the overall energy mix?
Andrew: Yeah. Crystal ball gazing these days, particularly at the federal level. Not that I think I ever had the capacity to predict what the federal government would do, Jim, but I don’t know. It might be a little bit of a fool’s errand these days. But let’s take what we have in front of us, and, you know, I think the next big step, of course, at least for the hydrogen world, at the federal level, it depends on the Build Back Better Act, which incorporates the hydrogen production tax credit—45X. And that is a production tax credit that offers the hydrogen producers a tiered tax credit, that depends. So, what level and what percentage of the full tax credit a producer can claim depends upon the CI score of the hydrogen they are producing in a taxable year. So, it’s done on a per kilogram of hydrogen-produced basis. And it can go as high as $3 per kilogram of hydrogen produced at low CI score.
So, I think that’s the next big, big-ticket item on the federal agenda, and it is part of the Build Back Better Act. So, we’ll see what its trajectory is. I think that’s a great start. And I think what we are looking at as an industry, and certainly, as a company, BayoTech, what’s important to us is that the PTC is a step in the right direction, and we think it’s progress. What it does not do, it does incentivize going carbon negative, which is, of course, for the hydrogen world, you know, if you can get to zero, that’s great. We love that. We’re in favor of that. But if you can go carbon negative, and legislators are serious about incentivizing the cleanest possible hydrogen supply and production methods, then that is the next step. And we think that’s something that the bill lacks, but as a general trend, I think it’s the next big thing, and we’re watching very closely.
Jim: Yeah, I put you on the spot there trying to predict what’s going to happen in Washington with all that, but it’s interesting for our listeners to know some of the things that are in their specific towards hydrogen. I’ve also heard…
Andrew: I’m delighted to prognosticate, Jim. I just hope nobody’s relying on my prognostications.
Jim: Yeah, it isn’t like one where we come after and score it, whether you’re right or wrong like they do with predicting football scores. We just wouldn’t do that here. We’ll just let it go into the ether.
Andrew: It’s very kind of you, Jim.
Jim: So, Andrew, what about the U.S. Department of Energy’s Hydrogen Energy Earthshot initiative? What’s that about?
Andrew: Yeah, that was a big announcement earlier this year from DOE. The United States, like, all these things fit together. And DOE has been really making some big moves in the hydrogen space, and DOE has been very active, as one might imagine, over this past year. Now, the Earthshot program is interesting. The Earthshot program is, you know, ambitious energy goals set, and programs set by DOE. Then the very first Earthshot program is the Hydrogen Shot, which we were delighted to see that that was on the top of Secretary Granholm’s list. And the idea behind the Earthshot program is to provide funding and support for projects that DOE…that drive towards the goal of making hydrogen available at $1 per kilogram by the end of this decade, so by 2030, that is an ambitious goal. And when I say $1 per kilogram, I mean, clean hydrogen, and they’re talking about hydrogen that is 1 kilogram of CO2 emitted for 1 kilogram of hydrogen produced. That’s quite a low IC score. It’s ambitious. It’s great. And we think Earthshot is a fantastic initiative. And I think it’s one of the big programs that we’ll be watching over the next decade, and hopefully, you know, BayoTech will be participating. So, they’ve done an RFI already. They had a webinar earlier this week, where they rolled out and announced their hub site mapping tool. And I think it’s going to be a big program for the United States.
Jim: Well, that’s a great look at some of the different things going on at the federal level here in the U.S. I hear your home state of New Mexico has some specific developments pertaining to hydrogen. What can you share with us about that?
Andrew: Yeah, we are a proudly New Mexico headquartered company. We are even further delighted with and proud of our governor and her administration in New Mexico for their ambitious goals around hydrogen, and yeah. To that end, a couple of weeks ago, the governor, Lujan Grisham in New Mexico announced that they would be publishing and sent around drafts of the New Mexico Hydrogen Hub Act, which they hope to pass in this next legislative session early this coming year. And that act, obviously, it’s going through the review process and may change in some ways.
But what we know today is that it offers a number of really attractive incentives for investment and initiatives. And so amongst them is the calibrated qualification structure that promotes the reduction of the carbon intensity of hydrogen production over the next decade, New Mexico is a traditionally oil and gas state. So, they want to leverage the existing resources of the state and the existing skillsets of their workforce. And that means that, for them, some of the hydrogen produced, in the near term, will come from natural gas resources, but they will clean up over time. And we as a company can do our part to make that happen. So, we’re excited about that initiative.
And over the next decade, the CI score and the carbon production in New Mexico, in order to qualify for the incentives under the New Mexico Hydrogen Hub Act will have to meet lower and lower CI scores. And we think it’s a really excellent approach to that transition. As I mentioned, just a second ago, the bill is designed to incentivize and leverage the existing workforce skill set in New Mexico, which a lot of hydrogen production, the skillsets for workers in the field that do the technical operations are similar and transferable to the oil and gas sector. So, you know, the act is designed to be not just a job creator but a job preserver that can transition that workforce.
And then there are investment and tax credits for clean and qualified hydrogen facilities. And there’s a series of attractive tax deductions associated with the sale of hydrogen molecules, and hydrogen-fueled products and equipment, as well as for services provided in the construction and development of hydrogen generation facilities and hydrogen power generation facilities. So, there’s a number of different things included, again, in this bill. And we think, you know, it’s designed to be supplemental with the federal incentive programs and tax programs. So, we think the governor has taken a really impressive approach and has really set some very ambitious goals for her state.
Jim: Yeah. And that’s really neat that you’re there centered where a lot of that action is going on. And I know many of the other states are doing different things, California being one of them. Can you just give a thumbnail of some of the things that they’re doing?
Andrew: Yeah. So, last time we did a review of this, I think we numbered the full slew of bills that include, you know, maybe not hydrogen focus bills, but bills that include hydrogen programs or hydrogen components in California that were either under consideration or enacted somewhere around 56. So, I think maybe we’ll look at the one that most people probably associate with California and what makes it very attractive for the hydrogen industry other than being the fifth largest economy in the world. That’s obviously a good starting point. The low carbon fuel standard is the primary program that is bringing in hydrogen investment in the transportation sector in California. And essentially, the low carbon fuel standard has been around for some time. I think it was enacted in 2009, or around there. Its sole purpose is to drive down the GHG emissions from transportation fuels in California benchmarked against 2011 levels. The goal is to drive those down by 20% by 2030.
And the way they do that is a credit and deficits system. So, those companies or those producers that bring fuel into the California transportation fuel mix that are below a CI score set by the state each year, they generate credits. Those who bring in cell fuels that are above that CI score generate deficits. And those companies or producers that have deficits to meet the CI score, you know, those goals, by purchasing the credits from those who hold those producers that hold credit. So, it’s a little bit different way of looking at the system. It’s not an incentive program. It is traditionally… you know, it’s not something like a production tax credit. It is a market-based monetization system for these LCF credits. And it actually has some very attractive components and hydrogen producers. We see it as one of the key legislative tools in the California toolbox.
Jim: Yeah. And that whole transportation chain with the infrastructure required and everything else, that seems like something to kind of push and prodded along. That’s really good. Well, let’s start wrapping up. And I guess it’s another one of those crystal ball-type questions about, like, how do you see things unfolding over the next decade, and BayoTech’s role in driving that future that y’all see?
Andrew: Yeah. Well, I appreciate you guys giving me the time to ramble on about hydrogen and BayoTech. So, I think BayoTech’s vision is, as I mentioned, at the top, pretty clear. We want to make hydrogen. Like I said, we have a focus on affordability, accessibility, and adaptability. And we want to make it available to our clients and our customers when and where they need it. I think BayoTech’s role in that transition, and we see hydrogen, obviously, in the bigger picture, we see hydrogen growing as a part of the energy mix dramatically over the next 10 years. And our role in that is not only to make it accessible and to make it’s a fuel source that people rely upon, companies can use to drive down the emissions associated with fleets and operations, it is also to make it affordable today to our clients. And we are doing that, and we are doing that by bringing hydrogen to local production sites. And we hope to scale that up very much so beyond just the United States over the next three years, and starting with the UK, and over time, producing and putting hydrogen sites across the globe.
Jim: We’re really excited too that automation plays a role in this whole effort too, that’s part of it. Well, I always like to just kind of end it with an open-ended thing. Is there anything else that you’d like to share with our listeners today, maybe that I didn’t ask you?
Andrew: No. I think we’ve covered quite a bit of ground, Jim. And I will wrap up by saying, absolutely, you know, that automation component, where this partnership with BayoTech and Emerson that was recently announced, has been an incredible partner to work with. And to your point, at BayoTech, our goal is to be able to automate and monitor our production systems anywhere in the world, 24 hours a day, 7 days a week. And that’s a key part of our value proposition, not only for us when we own and operate the sites but for our customers who own and operate sites that they’ve purchased from us. We can support them 24 hours a day. So, having a company like Emerson behind us to provide those systems and those services is incredibly important to us. So, thank you to Emerson. And then I think the last thing I would note is we recently announced our first hydrogen hub going into our hometown of Albuquerque in partnership with the New Mexico Gas Company. And that was just last week that we made that announcement, and we’re absolutely delighted to be doing that. I believe that Emerson was there at the kickoff event along with the governor of New Mexico. So, I appreciate your guys’ support. And, yeah. Thank you very much for having me on the show.
Jim: Well, Andrew, it’s been a great pleasure to speak with you today. And I hope our listeners have learned as much as I did, not just on the technology but on all these different policies and things going on. They kind of move this along here. So, thank you so much for joining me today.
Andrew: Thank you, Jim. I really appreciate the time. It’s been a pleasure.
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