The guidance will set the rules for the hydrogen energy industry as it looks to take advantage of a lucrative tax credit provided by the Inflation Reduction Act.
The rules have the potential to cut emissions from hard-to-abate sectors like the steel, cement and chemicals industries. Still, climate activists warn that if the policy gives the industry too much leeway, it could be a disaster for the warming planet.
Lena Moffit, executive director of climate advocacy group Evergreen, called the forthcoming guidance “the key determinant of whether or not we get truly clean hydrogen in this country — with massive emissions ramifications.”
The Democrats’ climate, tax and health care bill provides a tax credit for low-carbon hydrogen, which is produced using an electrolyzer that sends an electric current through water to separate it into hydrogen and oxygen.
The extent of hydrogen’s climate benefits could be determined by the Treasury guidance, which is due by the middle of August, and set the rules for what a hydrogen producer needs to do to qualify.
Environmental advocates have pointed to research findings from think tank Energy Innovations and the Institute of Physics that putting strict rules on how the industry sources its low-carbon power will have significant emissions benefits. The advocates raised concerns that looser rules could allow hydrogen to compete with other electricity users on the grid for clean power — driving up electricity demand and indirectly spurring more fossil fuel use.
On the other hand, some industry players say the policies favored by the climate movement could stifle the nascent hydrogen industry.
Shannon Angielski, president of the Clean Hydrogen Future Coalition, which advocates for spurring hydrogen energy development, says the immediate goal of the guidance should be to “get this clean hydrogen industry launched with very pragmatic rules of the road so that way it can scale.”
Advocates on this side of the ledger have pointed to an analysis finding that if the Treasury Department takes a stricter position on a key provision in its guidance, it would be “ultimately hindering the economic competitiveness and adoption” of green hydrogen.
Read more when the full story runs tomorrow at TheHill.com.
