L.A. needs clean energy. Hydrogen could be the answer — or gas industry greenwashing

BY SAMMY ROTHSTAFF WRITER MARCH 21, 2022 5 AM PT

Southern California runs on petroleum, with a long history of oil drilling and a landscape dominated by cars and freeways.

But Angelenos are also deeply dependent on another dirty fuel.

Every day, millions of homes and thousands of businesses receive more than 15 billion gallons of natural gas, on average, from the nation’s largest gas utility, Southern California Gas Co. Families use the planet-warming fuel to stay warm in the winter and cook dinner on gas stoves. Power plants burn it to generate electricity that powers air conditioners on hot summer days.

Most of the gas flows in from other states via pipeline. Some is tucked away at local storage fields, including Aliso Canyon, site of a record-shattering methane leak. Some of it never reaches the Los Angeles Basin at all, leaking from wellheads or pipelines and rising into the atmosphere, where it traps heat even more powerfully than the carbon dioxide emitted when it’s burned.

Scientists say there’s an urgent need to phase out fossil fuels and end the unprecedented global heating that is driving deadlier and more destructive heat waves, wildfires, droughts and floods. So how will Southern California solve its natural gas problem?

SoCalGas says it has at least a partial answer: hydrogen.

The Sempra Energy subsidiary proposed last month to build “the nation’s largest green hydrogen energy infrastructure system.” Known as Angeles Link, it could include hundreds of miles of pipelines to bring the clean-burning fuel to power plants, factories and the ports of L.A. and Long Beach. SoCalGas customers would bear the cost, which could amount to billions of dollars.

“It allows California to dramatically advance its climate and environmental goals,” SoCalGas President Maryam Brown said in an interview. “It creates a cornerstone for the California green hydrogen economy, and the hydrogen economy in general.”

Gov. Gavin Newsom seems to agree. Asked about Angeles Link at a news conference, he called it “a step in the right direction.”

But is hydrogen a crucial clean energy solution, or a greenwashing boondoggle that would prop up the fossil fuel industry?

It’s a question driving fierce debate among environmentalists, elected officials and labor unions — in Southern California and around the world, as companies plan hundreds of billions of dollars in investments that could launch the hydrogen era.

Los Angeles officials hope to play a leading role — but only if they determine hydrogen will do more good than harm.

“Anybody who says green hydrogen is going to work for sure doesn’t yet know what they’re talking about,” Mayor Eric Garcetti said in an interview. “Anybody who says green hydrogen won’t work for sure doesn’t know what they’re talking about.”

A clean fuel with baggage

Hydrogen, the world’s lightest molecule, has long been used in oil refining and fertilizer production. But there’s been a surge of interest the last few years, with the Los Angeles Department of Water and Power emerging as one of the fuel’s biggest boosters.

DWP has begun the process of converting the city’s largest electricity source — Intermountain Power Plant outside Delta, Utah — from coal to hydrogen. If the first-of-its-kind project goes as planned, DWP hopes to retrofit four gas-fired power plants in the L.A. Basin as well, including Valley Generating Station in Sun Valley and Scattergood Generating Station near El Segundo.

The hydrogen pipelines proposed by SoCalGas would supply those L.A.-area plants, allowing DWP to generate electricity during the rare moments when solar panels, wind turbines and batteries won’t be enough to power the city. It’s the kind of reliable energy resource Los Angeles will need to achieve its goal of 100% clean electricity by 2035, DWP General Manager Marty Adams said.

“Green hydrogen is really the way, unless something comes up that isn’t invented yet,” he said.

The fuel costs far more than fossil gas, but it’s expected to get cheaper as technology scales up. SoCalGas and DWP are working to slash green hydrogen costs from $5 per kilogram to $1.50 by 2030, and the Biden administration has set an even lower target.

Environmental justice activists are skeptical.

They want L.A. officials to follow through on their promise to shut down gas plants — especially Valley Generating Station, which is in a heavily polluted, largely Latino community. Although hydrogen combustion doesn’t produce carbon dioxide, it does generate lung-damaging nitrogen oxide pollution, or NOx — much more than fossil gas, at least using current technology.

“Every day we have some other false solution coming at us,” said Martha Dina Argüello, executive director of Physicians for Social Responsibility-Los Angeles. “The environmental justice problems that we live with are going to continue and get worse.”

Activists do see a role for hydrogen in fighting climate change — but mostly in “hard to electrify” industries where switching from dirty fuels to electric power is expected to be prohibitively expensive, such as shipping, aviation, steelmaking and potentially long-haul trucking. Their preferred technology is hydrogen fuel cells, which produce no pollution and can power heavy-duty trucks.

Outside those industries, though, activists worry about companies using hydrogen as an excuse to keep peddling oil and gas.

SoCalGas, for instance, estimates Angeles Link could help to displace 25% of the gas it delivers today — some, but far from all. And although none of that hydrogen would be used for heating and cooking, SoCalGas has separate initiatives to test out “blending” — mixing small amounts of hydrogen into the pipelines that serve homes, reducing but not eliminating heat-trapping emissions.

That’s a nonstarter for climate advocates. They point to research finding that replacing gas appliances with electric heat pumps and induction stoves is a far more effective climate strategy, and can also reduce indoor air pollution from cooking with gas.

But electrification threatens the gas utility business model, which is why SoCalGas and other companies have fought government policies requiring new homes to be all-electric. A similar battle played out at the ports of L.A. and Long Beach, where an industry trade group whose members include SoCalGas lobbied officials to prioritize biofuels over electric trucks to clean up air pollution.

Some environmentalists worry that hydrogen will become the gas industry’s latest excuse to block electrification.

“I don’t have a lot of trust that this is not another way of getting the camel’s nose under the tent,” Argüello said.

Garcetti has a similar concern. He’s skeptical about using hydrogen for home heating and cooking, saying the city should be “careful to guard against people throwing in a little bit of supposed green hydrogen to greenwash gases that are destroying the planet.”

But as the hydrogen economy grows, Garcetti is hopeful the fuel can help combat the climate crisis and reduce air pollution.

“We want to be the coauthors of this new chapter. We’re not passive bystanders,” he said.

A struggle at City Hall

A few weeks after SoCalGas rolled out its Angeles Link initiative, a related battle roiled L.A.’s halls of power.

The bipartisan infrastructure bill approved by Congress in November included $9.5 billion to drive down hydrogen costs and establish regional hydrogen production hubs — money the Biden administration is now making plans to distribute. Several City Council members introduced a motion this month calling on DWP and the Port of L.A. to apply for some of those funds.

Even before the motion was introduced, it was the subject of furious behind-the-scenes lobbying.

Groups including the California Environmental Justice Alliance and the Sierra Club asked council members to allow only “green” hydrogen, produced from water and clean energy sources such as solar or wind. (Most of the hydrogen in use today is produced from fossil fuels in a highly polluting process.) Environmentalists also urged the city to “make no investments related to hydrogen combustion” at power plants without first addressing several concerns, including potentially high levels of local air pollution.

“Trading our climate goals for our health goals does not make sense,” the Sierra Club’s Monica Embrey said.

The final text of the City Council motion incorporated those points. But some clean energy activists still weren’t satisfied.

Alex Nagy, California director of Food & Water Watch, said she’s “very uncomfortable with L.A. applying to become a hydrogen hub.” She believes DWP hasn’t exhausted other options to phase out fossil gas, including local solar installations, energy efficiency and “demand response” programs that pay homes and businesses to use less electricity when the power grid is stressed.

Meanwhile, SoCalGas stands to make a huge guaranteed profit if state officials approve its Angeles Link hydrogen project.

“It’s this total boon for them,” Nagy said.

Shortly after the L.A. hydrogen hub motion was introduced, Council Member John Lee rolled out a separate resolution calling for the city to support the gas company’s hydrogen project. Lee was quoted in a SoCalGas news release as saying Angeles Link “will help us get one step closer to achieving the city’s goal of 100% clean energy by 2035 without compromising reliability and hurting jobs.”

Jobs have been a political flashpoint in battles over the future of natural gas. When San Luis Obispo officials planned to vote on an all-electric buildings policy early in the pandemic, for instance, Eric Hofmann — president of a labor union representing thousands of SoCalGas employees — threatened a “no social distancing” protest that he said would “potentially [add] to this pandemic.”

The promise of hydrogen infrastructure could ease those battles, offering a lifeline both to SoCalGas employees and to plumbers and pipefitters represented by the politically powerful Los Angeles/Orange County Building and Construction Trades Council.

Still, green hydrogen is no panacea. In addition to local air-pollution concerns, producing the fuel requires lots of water — a resource in ever-shorter supply as the Western U.S. endures its worst drought in at least 1,200 years, fueled by global warming.

The nonprofit Environmental Defense Fund, meanwhile, just released a research paper — currently going through peer review — finding hydrogen can actually worsen climate change in the short term if too much of it leaks from pipelines before it’s burned.

Asked about that research, SoCalGas spokesperson Chris Gilbride said leaks shouldn’t be a major issue for Angeles Link.

“This is a new pipeline designed for hydrogen, so we would not anticipate those problems,” he said.

SoCalGas makes its play

Gas company executives say Angeles Link would transport only green hydrogen, not fossil gas. In addition to local power plants, the pipelines would supply the “hard to electrify” sectors where climate activists generally see hydrogen as a good idea.

But SoCalGas has otherwise offered few details on what Angeles Link might look like. A fact sheet on the utility’s website initially suggested the project could include 200 to 750 miles of new pipeline, although it was later edited to remove those numbers.

Instead, SoCalGas told the California Public Utilities Commission it would like to spend an estimated $118 million in customer money to begin studying and designing hydrogen infrastructure to serve the L.A. Basin. Those funds would cover the project’s first two phases, with a third phase to follow that could cost “several hundreds of millions of dollars” more — all before construction begins.

It’s a lot of money — but for an infrastructure project of this size, “the order of magnitude makes sense,” said Michael Colvin, a former Public Utilities Commission official who now leads the California energy program at the Environmental Defense Fund.

Colvin said he’s intrigued by Angeles Link, calling it “the first step, in terms of new dedicated infrastructure, that’s been proposed like this anywhere in the country.” He said his group will scrutinize the proposal as it’s considered by the utilities commission.

“This is the largest gas company in the country trying to figure out how they go about decarbonizing their system,” he said.

SoCalGas isn’t yet asking for permission to charge customers for hydrogen-related costs — only for approval to open a “memo account” to track spending, which would make it easier for the company to recover those funds from customers later.

But Angeles Link will never get built unless the Public Utilities Commission eventually lets SoCalGas bill ratepayers for the costs.

The project’s fate could hinge on whether the utility can persuade state officials that hydrogen would not only help tackle the climate crisis, but also limit nitrogen oxides and other air pollutants in low-income communities of color. The gas company acknowledges the environmental justice concerns in its Angeles Link application, saying it “does not support relaxation of current NOx emissions standards, and stands ready to provide any technical assistance” on research that could lead to lower emissions.

At the same time, the gas company notes that hydrogen could dramatically reduce hazardous air pollution from heavy-duty trucks, estimating that Angeles Link could deliver enough clean-burning fuel to displace 3 million gallons of diesel each day.

DWP officials have made a similar case, saying hydrogen-fueled power plants could play a role in lessening the region’s infamous smog by ensuring the reliable power grid that’s needed to fuel electric vehicles and ditch cars and trucks that run on oil.

What’s more, those hydrogen plants would serve as an important but rarely used backup on a grid dominated by solar and wind power, meaning they would fire up far less often than today’s gas plants, said Jason Rondou, DWP’s director of resource planning. Turbine manufacturers, meanwhile, are working on technology that would further limit pollution from hydrogen combustion.

“We don’t want to minimize the importance of reducing NOx. But we do want to characterize the contribution as very, very low,” Rondou said. “What moves the needle on local air-quality improvements is the decarbonization of the transportation sector.”

And therein lies the rub for climate activists: They see hydrogen as a potentially useful tool to slash emissions, in L.A. and globally. But they don’t necessarily trust the fossil fuel industry to wield that tool, given its long history of climate denial and obstruction.

As if to underscore that point, just last month SoCalGas was slapped with a $10-million state fine for fighting climate action.

But SoCalGas seems to realize some course correction is needed if it wants to secure political buy-in for its hydrogen plans. After years of fighting local gas bans, for instance, the company recently began suggesting it’s open to widespread adoption of electric heating and cooking. It didn’t appeal the $10-million fine. And it didn’t oppose ending subsidies for gas line extensions to new homes.

The utility also says Angeles Link could be part of “a comprehensive approach to facilitate the ultimate closure” of Aliso Canyon. That’s a possibility SoCalGas had never previously shown a willingness to consider as it defended the lucrative storage field.

“Southern California Gas is an infrastructure company. And we use that infrastructure to be able to meet customers’ needs,” said Brown, the company’s president. “Customers’ needs are changing. We see our customers needing cleaner and cleaner fuels.”

Gary Reber Comments:

The Sempra Energy subsidiary should finance their proposal to build “the nation’s largest green hydrogen energy infrastructure system” using a Consumer Stock Ownership Plan (CSOP) financing mechanism. A CSOP is a plan designed to build capital ownership into politically designated classes of consumers within the jurisdiction of the authorizing government — state, local or federal. As described on the Web site of the Center for Economic and Social Justice at https://www.cesj.org/ch-vehicles/consumer-stock-ownership-plans-csops/, a CSOP does for consumers of public utilities (or members of marketing cooperatives) what an ESOP does for corporate employees. It links capital growth and future investment opportunities in the corporate sector to an expanding base of citizens through access to productive self-liquidating capital credit.

Corporations in the non-competitive, regulated segment of the economy (such as telephone companies, electric and gas production and distribution utilities, mass transit, cable-vision systems) would gain opportunities to fund their expansion through new equity issuances sold to CSOPs and ESOPs, with interest-free credit provided from commercial lenders and repayable with future pre-tax profits.

For their patronage, regular pay users of a service would get back ownership rights, represented by shares released to their CSOP accounts as the CSOP’s debt is repaid with pre-tax earnings paid in the form of tax-deducctible dividends on CSOP held shares. Released shares would be allocated among users according to their relative patronage of the service. Furute dividends on CSOP stock would be used to offset eah user’s monthly bill.

Sempra Energy’s Angeles Link,, which includes hundreds of miles of pipelines, might have 25 percent of its total construction funded by an issuance of equity shares through an ESOP covering all those involved in constructing the system. Another 25 percent could be financed through an ESOP covering its operating and maintenance employees, and the remaining 50 percent financed through a CSOP designed to build equity shares into each of its future regular customers.

The issue of whether utilities should be privately owned by the few, as they are today, or privately by all of their actual ratepayers they serve, or publicly as in the collective government ownership should be a focus of everyone, as everyone is a rate payer and is serviced by utilities. CESJ favors the structure of the ratepayers who are served by utilities owning the corporation with safety and performance regulations overseen by government. A major priority should be to implement a major infrastructure project to underground power and telephone lines throughout the country. This would eliminate a major cause of fires, loss of lives, property and destruction of our environment. The reality is the for-profit model that benefits the few, does not well serve the greater public. For-profit financial mechanisms, such as the Consumer Stock Ownership Plan (CSOP) the Citizens Land Development Cooperative (CLDC), also referred to as the Citizens Land Bank (CLB) or Community Investment Corporation (CIC) are available to empower the ratepayers to acquire and own utilities, using pure interest-free capital credit repaid through the earnings stream paid already by the ratepayers to the few who now own and control.

Whenever feasible, we should transform government-owned enterprises and services into competitive private sector companies, by offering their workers (and customers and other stakeholders in capital-intensive operations like the Tennessee Valley Authority) opportunities to participate in ownership, governance and profits. The potential is virtually unlimited.

Today we accept as normal public ownership of gigantic capital instruments like mass rail, subways, government office buildings, universities, water systems, and power systems. These government-owned enterprises and services could be transformed into competitive private sector companies managed by Private Facilities Corporations with the use of the asset or facility leased to the normal using body. The wages of the Private Facilities Corporation(s) are passed through to the leasing body. This would allow us to build the ownership of what is now public capital into individuals and reduce the cost of government, including public pension systems. Thus, when you build the ownership into the employees of the Private Facilities Corporation(s), who now have a vested interest in its quality of operation and maintenance, the contracted lease rental fee committed by the government entity will give the employee stockholders a reasonable return and lessen or replace the need for supplemental redistribution programs. This would bring about better service and have the concern for the care of the facilities with the new owners and the people using them.

Consumer Stock Ownership Plan (CSOP) financing can simultaneously build the ownership into the consumers of monopolies such as telecommunications, water and power companies, mass transit, and even cable and satellite television, who are the source of all their funding, and dividends paid out to the consumer owners would become an offset to their utility bills.

A Consumer Stock Ownership Plan does for consumers of public utilities (or members of marketing cooperatives) what an ESOP does for corporate employees. It links capital growth and future investment opportunities in the corporate sector to an expanding base of citizens through access to self-liquidating, productive credit.