Energy Reports (Dec 2022)
Repurposing pipelines for hydrogen: Legal and policy considerations
Abstract
As the world looks to implement the Energy Transition, repurposing existing fossil fuel infrastructure to produce or distribute “clean” energy will be critical. The most promising is using natural gas pipelines for moving hydrogen. This is the cheapest and fastest method of transport, and reducing the cost of transporting hydrogen is a key step in making it economically viable. However, while there are technical challenges, the greater challenge is in the legal arena. This paper seeks to outline the numerous legal — treaty, statutory, and contractual — and regulatory obstacles to repurposing natural gas pipelines for hydrogen transport. Gas pipelines exist in a complex microclimate of international public and private law, and domestic law and contracts. Ownership is often layered and tangled; financing doubly so; and myriad state interests compound the private interests, including national security concerns, energy supply imperatives, and geopolitical balance. State aid — investment, subsidies, and tax breaks — may encumber the project with additional legal obligations. And the contracts that control the development of a pipeline project may inject further legal complexity, such as dispute mediation procedures and fora, and applicable law. This paper seeks to map all the likely areas of future conflict or difficulty so that work on developing the requisite legal regime and remedies to permit use of natural gas pipelines for hydrogen transport can begin now. For policy- and lawmakers, as well as the private sector, evaluating these known unknowns is a good starting point for reconsidering legislation, regulation, contracts, and project risk in preparation for the future probability of hydrogen pipelines.
