A Nebraska coal-fired power plant is getting set for a clean energy makeover. The Nebraska Public Power District is teaming with a California company to produce power from hydrogen. When complete, it would be the largest hydrogen power project in the country.

The Sheldon Station power plant near Hallam in southeast Nebraska has been running on coal since the 1960s. NPPD announced Friday that by 2019, one of the station’s two burners will switch to hydrogen.

The source of the hydrogen will be a new factory to be built next door to Sheldon by a San Francisco-based Monolith Materials.

Monolith makes a product called carbon black, which is basically pure carbon powder. Carbon black is used by manufacturers to add black color to everything from tires, to phones, to ink.

Rob Hanson of Monolith says most carbon black today is produced from partially combusted oil.

“So about half of that oil is converted to CO2, CO, sulfur dioxide, and that they leave as pollution,” Hanson said.

Hanson said Monolith is the only company making carbon black by using electricity to separate molecules of natural gas.

“The carbon is never converted to carbon dioxide, so it’s never emitted as a greenhouse gas,” Hanson said. “The hydrogen passes on and is going to be used by Sheldon Station to generate 125 megawatts of clean electricity. That makes this a very clean process.”

It is, however, energy intensive. Hanson predicted Monolith will immediately become the largest electricity customer of the Norris Public Power District, and eventually the largest power customer in Nebraska.

The company searched the country for a place to put its carbon black plant. Hanson said Monolith chose Nebraska because electricity rates are expected to stay low long-term, and because the state offers tax incentives for job creation.

Monolith plans to create 100 direct jobs at their new plant.

Governor Pete Ricketts said up to now, carbon black production has been shifting overseas.

“Rob was just telling me we used to produce 25 percent of (carbon black), now we’re down to producing 10 percent of it in the United States,” Ricketts said. If it’s going to shift back to the United States, he’s glad to see it end up in Nebraska. “It’s the opportunity to create a new product for Nebraska.”

Besides economic investment, the payoff for NPPD is a drop in carbon emissions at a time when the federal government is taking a harder line on coal power.

NPPD board member Mary Harding said switching from coal to hydrogen, even at one plant, will make a big difference.

“The only byproduct of power combustion will be water,” Harding said. “So this is going to keep more than a million tons of carbon out of the atmosphere.” That’s about 10 percent of NPPD’s annual carbon emissions.

The Environmental Protection Agency is working to finalize it’s Clean Power Plan (pdf)which is expected to limit carbon pollution from existing power plants, perhaps up to 30 percent. Fifteen states, including Nebraska, are challenging that proposal in court. Whichever way the lawsuit goes, NPPD CEO Pat Pope says the utility is now in a better position.

“We’re going to get very close in the next few years to the majority of our energy coming from non-emitting resources,” Pope said. “It positions us very well regardless of what comes out of the (EPA) rule.”

The partnership with Monolith was a closely held secret for the public utility. That concerned some Nebraska environmentalists.

“They are a public power district, not a private utility. The public should have had opportunities for engagement long before they made this announcement,” Ken Winston of the Nebraska Sierra Club said in a statement.

Winston also praised the switch to hydrogen, and urged NPPD to continue on a path toward clean energy.