Methane pyrolysis (MP) is an emerging clean hydrogen production method that splits methane into hydrogen and solid carbon, avoiding direct carbon dioxide emissions. Unlike other hydrogen production methods, MP has potential to produce valuable carbon co-products, such as carbon black, substitutes for natural, or conventional synthetic graphite, or carbon nanotubes, creating opportunity for a dual-revenue model. This could improve economic resilience and scalability for clean hydrogen.

This report examines MP’s technology landscape, attributes and advantages, engineering challenges, and commercial status. It highlights a growing field of private-sector developers advancing systems capable of flexible deployment models suitable for distributed and on-site hydrogen creation, leveraging available infrastructure.

With public policy support, MP could play a significant role in accelerating clean hydrogen deployment. Targeted federal actions include:

• Research, development, demonstration, and deployment (RDD&D): Federal support through grants, prizes, and partnerships can accelerate innovations for operational performance and the quality of carbon products. Cost-sharing grants and loan support for new projects and domestic manufacturing facilities can help unlock private capital.
• Production tax credits: Production-based tax credits for clean hydrogen and/or MP-derived carbon products are a strong enabler of early technology implementation. Credits should be predictable and durable while also ensuring that resources (e.g., lifecycle methodologies) are updated to accommodate new technologies like MP.
• Support for domestic cleaner hydrogen and carbon products: Demand-side support, from carbon pricing to sector-specific incentives programs, strengthens markets for clean hydrogen and MP-derived carbon products by aligning with broader energy security and economic goals.
• Curbing methane emissions: Policies that reduce natural gas supply chain emissions—via standards, leak detection programs, or performance programs—maximize the value
  of MP.

Taking a Closer Look

Achieving net-zero emissions will require large-scale change across all sectors of the economy, and efforts to drive this transition are intensifying. Over the past several years, through the Net-Zero Pathways Initiative, the Center for Climate and Energy Solutions (C2ES) has engaged closely with leading companies across diverse sectors to examine challenges and solutions to decarbonizing the U.S. economy by 2050. As we laid out in Getting to Zero: A U.S. Climate Agenda, reaching net zero will require large-scale change, but it will also require us to address a number of discrete and urgent challenges. To inform policymakers considering these near- and long-term questions, C2ES launched a series of “Closer Look” briefs to investigate important facets of the decarbonization challenge, focusing on key technologies, critical policy instruments, and cross-sectoral challenges. These briefs explore policy implications and outline key steps needed to reach net zero by mid-century.

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Washington state has demonstrated leadership in bringing together stakeholders across the aviation industry to study, plan, and address the barriers to scaling the production of sustainable aviation fuels within the state. Building on insights from over more than a decade of state-level progress, this brief offers recommendations to federal policymakers to scale sustainable aviation fuel developed in a C2ES roundtable convening hosted in Seattle in April 2024.

Policy Recommendations

• Congress should extend tax credits to cover at least 10 years from when a SAF production facility is placed in service.
• Congress should provide not less than $244,500,000 annually for FAST-SAF.
• Congress should direct the Federal Aviation Administration to allow SAF purchasing and investments in SAF infrastructure as an appropriate use of airport revenue.
• Congress should direct federal agencies administering SAF-related funding to require applicants to consider how the project will support equitable workforce development.

Read the factsheet for this brief for a summary of the recommendations.

About Regional Roundtables

Efforts to accelerate the transition to the low-carbon economy of the future are accelerating across all sectors of the economy. To chart a pathway to sustainable, long-term prosperity, communities must be able to leverage their particular strengths and capitalize on emerging economic opportunities, while addressing barriers that are often unique to their communities. To that end, the Center for Climate and Energy Solutions (C2ES) is hosting a series of regional roundtables to bring together local, state, and federal government, businesses of all sizes, community organizations and nonprofits, academics and issue experts, trade associations, investors, philanthropy, economic development organizations, and individuals working across sectors. These conversations are meant to elevate the perspectives of a diverse set of stakeholders who are deeply embedded in their communities and uniquely positioned to speak to the needs of their states and regions. They are also meant to create opportunities to integrate local perspectives into state and federal policy decisions and identify concrete steps to better align the long-term prosperity of these communities with the urgent task of reaching net-zero emissions economywide.

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Key Recommendations

Below is a list of key recommendations from the discussion. Additional recommendations can be found in each section.

Supply a low-carbon biofuel market

• Congress should reauthorize and fund the following USDA programs, as part of the farm bill’s five-year reauthorization (currently extended until September 2024):
  • Reauthorize the Higher Blends Infrastructure Incentive Program to fund the construction and maintenance of infrastructure compatible with higher blends of ethanol and biodiesel, with a revised prioritization toward freight, rail, and marine infrastructure because of their longer-term reliance on liquid fuel. The USDA should also prioritize funding the replacement of aging infrastructure such as underground tanks.
  • Fund the Biorefinery, Renewable Chemical, and Biobased Produce Manufacturing Assistance Program to assist the development, construction, and retrofitting of new and emerging advanced biofuels technologies.
  • Fund the Advanced Biofuel Payment Program to expand production of advanced biofuels.
  • Fund the Rural Energy for America Program to provide loans and grants to agricultural producers and rural small businesses for renewable energy systems and energy efficiency improvements.
• Congress should extend the duration of production tax credits for low-carbon fuel (the combined duration of 40(b) Sustainable Aviation Fuel Credit and the 45(z) Clean Fuel Production Credit is five years) to a minimum period of 10 total years.

Improve sustainability

• Congress should establish a national clean fuel standard for the transportation sector consistent with achieving net-zero emissions by midcentury. The new technology-neutral fuel standard should credit low-carbon fuels for ground, maritime, and aviation sectors with differentiated compliance obligations for each to accommodate each sector’s respective stages of developing and adopting alternative fuel solutions.
• Minnesota State Government should establish a state clean transportation standard which establishes a compliance market to support in-state production and consumption of credited fuels. The standard should support the long-term competitiveness of Minnesota-produced fuel by adopting carbon intensity benchmarks and methodologies that are robust and consistent with national-level goals (e.g., net-zero by 2050).
• The Minnesota Legislature should amend (or the Minnesota Department of Revenue should interpret) the Minnesota SAF production tax credit to apply to fuel produced using biogenic carbon dioxide and clean hydrogen.
• Congress should clearly designate a federal agency as having regulatory authority over the siting of interstate carbon dioxide pipelines. The federal siting authority should have a formal process for engaging and consulting with Tribal governments.
• Congress should authorize and fund a Conservation Equipment Loan Program under the Farm Service Agency (FSA), either through an existing program or as a standalone endeavor. This targeted loan program should offer financial incentives (e.g., lower interest rates and longer terms compared to traditional FSA loans) to help producers access expensive equipment necessary for climate-smart agriculture such as variable rate application technologies (VRT) or tools like roller-crimpers, which terminate cover crops without soil tillage. The agency should prioritize applications for equipment that directly facilitates greenhouse gas reductions or carbon sequestration. The loan program should be supplemented by an education and outreach program which supports training for the use of loan-eligible equipment and resources for farmers to project the financial costs and returns of implementing related practices.
• Minnesota Government should continue to support the Minnesota Pollution Control Agency’s Nutrient Reduction Strategy (NRS) to identify and scale agricultural best management practices (BMPs). Following the release of the 2024 NRS update, which will mark the 10-year implementation milestone, the Minnesota Government should consider what additional resources can be made available to ensure significant progress in scaling BMPs.

Address community considerations for low-carbon fuels projects & infrastructure

• The Council on Environmental Quality (CEQ) and other federal agencies should provide clear, transparent guidance on Justice40, which commits to assign 40 percent of the overall benefits of applicable federal investments to disadvantaged communities. Clearer guidance can be provided by indicating, for example, how benefits are quantified and in what geographic radius the “communities” are defined. Covered federal programs that are applicable to Minnesota’s communities and biofuel workforce include those under the USDA (e.g., FSA), DOE (e.g., Loan Program Office [LPO]), and DOT (e.g., Federal Transit Administration (FTA), Tribal Transportation Program).
• Congress should establish a funding program through DOE and EPA that facilitates engagement between low-carbon fuel infrastructure developers and communities, including environmental justice groups, tribal communities, and farmers. This program should focus on proposed hydrogen hubs, pipelines, and biorefineries that will be used to advance the low-carbon biofuel economy. Information gained from these engagements should be collected and summarized in a comprehensive report describing community concerns and opportunities related to low-carbon biofuel, while offering recommendations to update regulations and implementation guidelines to better meet the needs of communities.
• Minnesota State Agencies should prioritize and support local capacity building to assist the state and local communities in accessing federal resources, including under the Loan Programs Office Title 17 Clean Energy Financing Program, related to upgrading essential infrastructure, adopting emissions mitigation technologies and practices, and climate resilience preparation.
• Congress should expand U.S. Department of Education resources for career and technical education that can support recent graduates and mid-career workers in skilled trades to acquire expertise relevant to the clean-energy industry. Congress should also fund K-12 outreach programs that educate young people—especially those in marginalized communities—on career opportunities and skills needs in the sector.

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