The Treasury Department on Tuesday proposed guidance that officials said would ensure the nascent hydrogen industry develops sustainably — rather than becoming a significant contributor to global warming.

But many industry players say the rules could hamper growth.

 Hydrogen could be a key tool to transition industries whose emissions are hard to eliminate to clean power sources. 

The tax credits are key for making hydrogen from low- or no-emitting sources economically viable.

In order to qualify, hydrogen power made from renewable energy will have to:

• Get its power from new energy sources, instead of electricity that’s already on the grid
• Have that new energy source located in the same geographic region as the hydrogen production
• Starting in 2028, have that power be produced in the same hours as the hydrogen production

Officials said they included these guidelines because hydrogen production uses a significant amount of electricity, and they don’t want to pull existing energy from the grid that would increase demand for power overall.

Increased demand for power in general could mean more fossil fuels, they noted. 

Read more in a full report at TheHill.com.