Biden Administration Unveils Hydrogen Tax Credit Plan To Jump-Start Industry

An anonymous reader quotes a report from NPR: The Biden administration released its highly anticipated proposal for doling out billions of dollars in tax credits to hydrogen producers Friday, in a massive effort to build out an industry that some hope can be a cleaner alternative to fossil fueled power. The U.S. credit is the most generous in the world for hydrogen production, Jesse Jenkins, a professor at Princeton University who has analyzed the U.S. climate law, said last week. The proposal -- which is part of Democrats' Inflation Reduction Act passed last year -- outlines a tiered system to determine which hydrogen producers get the most credits, with cleaner energy projects receiving more, and smaller, but still meaningful credits going to those that use fossil fuel to produce hydrogen.

Administration officials estimate the hydrogen production credits will deliver $140 billion in revenue and 700,000 jobs by 2030 -- and will help the U.S. produce 50 million metric tons of hydrogen by 2050. 'That's equivalent to the amount of energy currently used by every bus, every plane, every train and every ship in the US combined,' Energy Deputy Secretary David M. Turk said on a Thursday call with reporters to preview the proposal. As part of the administration's proposal, firms that produce cleaner hydrogen and meet prevailing wage and registered apprenticeship requirements stand to qualify for a large incentive at $3 per kilogram of hydrogen. Firms that produce hydrogen using fossil fuels get less. The credit ranges from $.60 to $3 per kilo, depending on whole lifecycle emissions.

One contentious issue in the proposal was how to deal with the fact that clean, electrolyzer hydrogen draws tremendous amounts of electricity. Few want that to mean that more coal or natural gas-fired power plants run extra hours. The guidance addresses this by calling for producers to document their electricity usage through 'energy attribute certificates' -- which will help determine the credits they qualify for. Rachel Fakhry, policy director for emerging technologies at the Natural Resources Defense Council called the proposal 'a win for the climate, U.S. consumers, and the budding U.S. hydrogen industry.' The Clean Air Task Force likewise called the proposal 'an excellent step toward developing a credible clean hydrogen market in the United States.'

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