Graphitic Energy is opening a pilot plant in San Antonio, Texas, to make clean hydrogen and graphite.gettyClean hydrogen has the potential to power a number of industrial activities. Interest in its production amped up under President Joe Biden, whose administration earmarked billions of dollars in federal subsidies to help companies make it from things like water and renewable power. Some of those projects are at risk as the Trump Administration reverses course on clean power and climate policy, but Bay Area-startup Graphitic Energy says it has a method of generating hydrogen thats not only affordable and cleanit simultaneously produces valuable graphite.Best of all, it doesnt need federal funding.Graphitic, which has raised $65 million from backers including Bill Gatess Breakthrough Energy Ventures, Energy Capital Ventures and Trafigura, extracts hydrogen and carbon molecules from natural gas with a method that uses a relatively small amount of electricity, CEO and cofounder Zach Jones told Forbes. Rather than releasing climate-warming carbon, which happens with traditional hydrogen production, or pumping it underground to keep it out of the atmosphere, which some big energy companies are doing, Graphitic turns it into graphite that it intends to sell to industrial customers. The mineral, which can sell for more than $2,500 a metric ton, is predominantly produced in China right now.Graphitic's pilot plant in San Antonio begins operating this week.Graphitic EnergyTo validate its technique, the company is opening a pilot plant this week at the Southwest Research Institute in San Antonio, it says can make 400 kilograms of hydrogen a day and 1,000 kilograms of synthetic graphite. The plant was built without government assistance. Relative to traditional forms of industrial hydrogen production, Graphitic estimates its process reduces CO2 pollution by 90%. If all goes well, it plans to open its first large-scale facility in 2027.For the latest in cleantech and sustainability news, sign up here for our Current Climate newsletter.Hydrogen is the universes most abundant element and powers our sun, but finding cheap, clean ways to make it is tricky. It has great potential as a carbon-free energy source to clean up the production of steel, chemicals, ammonia and other dirty industries, but most of its now made by splitting natural gas at high temperatures with steam, releasing lots of carbon dioxide in the process. Graphitic reduces the amount of electricity needed by siphoning off some of the hydrogen extracted to help power the process, and this efficiency means its not worried if the electricity doesnt necessarily come from a renewable source.CEO and cofounder Zach JonesGraphitic EnergyIn the places where we think there are markets for [hydrogen] you might not have access to renewable electricity, Jones said. So you really need to figure out how to power the whole thing with natural gas.The graphite it makes from carbon isnt high enough quality for use in things like lithium-ion batteries but is in demand for things like industrial lubricants. Hydrogen also has potential as a vehicle fuel, especially for heavy-duty trucks, though right now most of the 10 million metric tons used in the U.S. annually is for oil refining and ammonia production.The company is awaiting a $53 million grant from the Energy Department, part of the federal Hydrogen Hub network created by the Biden Administration, though its fate isnt entirely clear, said Jones. Its not a huge problem if it gets killed, as Graphitics ability to produce valuable graphite is what makes its process cost competitive with traditional, dirty gray hydrogen production, he said.Based on what it learns from the pilot facility, Goleta, California-based Graphitic, which just changed its name from C-Zero, plans for its next commercial plant to produce 100,000 metric tons of hydrogen annually, which will cost about $100 million to build, Jones said.More From Forbes