The Biden administration launched long-awaited remaining guidelines Friday for a tax credit score that may ship billions of {dollars} to producers of cleaner hydrogen.
The brand new guidelines drew cautious reward from environmental teams, who mentioned they might doubtless cut back planet-warming emissions however included loopholes that might nonetheless reward producers of soiled hydrogen.
The administration is making an attempt to ramp up hydrogen manufacturing to displace fossil fuels as an power supply for sectors of the economic system that emit large greenhouse gases, but are troublesome to impress, akin to long-haul transportation and industrial manufacturing, together with steel-making.
Most hydrogen right this moment is comprised of pure gasoline, contributing to local weather change. However hydrogen will also be made by splitting water with photo voltaic, wind, nuclear, or geothermal electrical energy, yielding little if any planet-warming greenhouse gases.
A yr in the past, the Treasury Department proposed a tiered system the place corporations that produce hydrogen by splitting water might qualify for the complete credit score of $3 per kilogram.
Now, the ultimate rule might additionally lengthen the complete credit score to corporations that use pure gasoline to make hydrogen in the event that they use expertise to seize and sequester the emissions, and to corporations that make hydrogen from pure gasoline options sourced from wastewater, animal manure, and landfill gasoline. Hydrogen produced from coal mine methane would doubtless qualify for decrease tiers of the credit score.
Administration officers mentioned the credit score is predicated solely on the lifecycle emissions of the hydrogen manufacturing course of, quite than on how the hydrogen is produced. The credit score is a part of the Democrats’ Inflation Reduction Act handed in 2022, but it surely has assist from some Republican members of Congress.
Treasury Deputy Secretary Wally Adeyemo mentioned the act, together with the Bipartisan Infrastructure Regulation, is the world’s most bold insurance policies to assist the clear hydrogen trade.
The environmental group Earthjustice mentioned the foundations assist clear hydrogen tasks that by and huge don’t worsen local weather and health-harming air pollution. However the group mentioned they’re additionally involved that soiled hydrogen producers will take pleasure in the advantages of this necessary local weather program, too.
Conrad Schneider, senior director on the Clear Air Job Drive, an advocacy group, mentioned the ultimate guidelines do profit the local weather. If the hydrogen qualifies for a credit score, meaning it’s being made with decrease carbon emissions than the fossil fuels it’s displacing, he mentioned.
“We’ve numerous trade sectors which are laborious to decarbonize, aviation, marine transport, metal manufacturing, which are at the moment utilizing fossil fuels,” he mentioned. “Having a tax incentive like this for the manufacturing of unpolluted hydrogen will create a gasoline that replaces these unabated fossil fuels and helps the local weather.”
However Schneider mentioned precisely monitoring the emissions of hydrogen produced with pure gasoline may very well be not possible if the Trump administration weakens laws on methane and emissions reporting necessities.
The Gas Cell & Hydrogen Power Affiliation consists of greater than 100 members concerned in hydrogen manufacturing, distribution, and use, together with automobile producers, industrial gasoline corporations, renewable builders and nuclear plant operators. Frank Wolak, the affiliation’s president, mentioned they’re relieved the foundations are lastly in place. The massive query now, he mentioned, is whether or not the tax credit score will transfer the trade ahead and provides corporations the arrogance to make investments, or whether or not the provisions work for some and never for others.
—Jennifer McDermott, Related Press