The Biden administration on Friday finalized fairly stringent climate change rules for the nascent hydrogen energy industry. But the rules include new flexibilities and are expected to be less stringent than the administration's original proposal.
A final rule issued by the Treasury Department on Friday will determine which facilities qualify for favorable tax credits for hydrogen energy.
The tax credit is part of the Biden administration's climate plan, as hydrogen power could be an important tool for reducing carbon emissions from industries such as aviation, steel and cement, where emissions are particularly difficult to reduce. It is considered an important issue.
Tax credits are key to making hydrogen from low- or no-emission sources economically viable.
Hydrogen energy can be produced by separating hydrogen from water molecules in an electrolytic cell using electricity or by reacting methane with steam.
Although the use of hydrogen energy itself does not produce emissions that cause global warming, the process of using steam to produce hydrogen and to generate electricity to power electrolyzers does. It is possible.
Electrolysers consume so much electricity that the Biden administration proposed guidance earlier this year that would require hydrogen produced in this way to meet certain criteria to qualify for the credits. He said that there is.
In particular, it was necessary that this type of hydrogen be combined with an additional new energy source to provide its electricity, and that this electricity be produced within the same time period and in the same region as the hydrogen energy is produced.
Friday's final regulations largely keep those safeguards in place, but also add some industry-friendly carve-outs.
This includes new provisions allowing existing nuclear power plants that were at risk of retirement without providing hydrogen energy to count as new power sources, as well as a delay in hourly matching requirements. .
The final rule also eases standards for methane-based hydrogen, which is made from sources such as fossil gas and biogas.
White House climate adviser John Podesta said in a written statement that the changes will “give hydrogen producers the confidence they need to move forward with their projects and make the United States a true global leader in green hydrogen.” ” he said.
Industry praised these changes as necessary to get the emerging industry off the ground.
Frank Wallach, president and CEO of the Fuel Cell and Hydrogen Energy Association, said in a written statement that the administration has “made significant improvements compared to the original proposal.”
“There are also several areas where implementation and timing will depend on the incoming Trump-Vance administration,” he added. “The issuance of this final rule concludes a long chapter, and the industry looks forward to future conversations with the new Congress and administration about how federal tax and energy policy can best advance hydrogen development in the United States.” You can.”
Given the change in administration, the future of the tax credit and the guidance surrounding it remains uncertain.
Republicans have indicated they intend to eliminate some, but not all, energy tax credits that are part of Democrats' 2022 Climate Change, Taxes and Health Care Act. Hydrogen energy is likely to be avoided completely, but it is not clear whether any changes will be made.
