Lawmakers encourage U.S. Treasury to adopt strong climate standards

The Clean Hydrogen Production Tax Credit incentivizes and rewards new clean hydrogen projects, which will encourage the adoption of greenhouse gas emission-free energy.

Environmental groups, consumer advocates and forward-thinking hydrogen companies alike have stressed the importance of ensuring hydrogen fuel is produced from clean energy sources, rather than unabated fossil fuels, coal plants or other energy sources.

U.S. Reps. Jamie Raskin of Maryland and Don Beyer of Virginia and 44 colleagues wrote the U.S. Treasury Secretary Janet Yellen and Climate Counselor Ethan Zindler encouraging the Treasury Department to adopt strong climate standards when implementing the Inflation Reduction Act’s Clean Hydrogen Production Tax Credit.

“The IRA’s incentives for clean hydrogen and other emerging technologies offer great promise in reducing emissions in difficult-to-decarbonize sectors,” the lawmakers wrote. “As the administration finalizes rules for the IRA’s 45V Clean Hydrogen Production Tax Credit, we strongly urge you to ensure that the guidance results in a net decrease in greenhouse gas emissions.”

The lawmakers wrote that policymakers “must be attentive to the negative consequences of weak 45V rules for hydrogen production, which would imperil our climate goals and lead to significant U.S. emissions increases, including from Regional Clean Hydrogen Hubs recently announced by the Department of Energy. Hydrogen production is extremely energy intensive, and absent strong rules, clean hydrogen production could result in emissions that are equivalent to running 26 more coal plants, taking us in precisely the wrong direction in our transition to clean, renewable energy. Strong rules will allow the U.S. to harness hydrogen’s most promising climate, health, and economic benefits, setting up our domestic clean hydrogen industry for long-term success.”

Specifically, Raskin and Beyer express support for:

• The three pillars of sustainable hydrogen production endorsed by climate groups,  consumer advocates, environmental justice organizations, renewable energy companies, state legislators, and forward-thinking hydrogen companies, which include:
  • Additionality: Hydrogen should be generated using new, “additional,” renewable energy sources, not just the limited renewables currently supplying our power grid. Without this requirement, the energy-intensive hydrogen production will significantly increase energy usage and redirect the limited clean electricity towards hydrogen production, leaving polluting sources such as coal and natural gas to meet energy demand.
  • Deliverability: Power generated by clean energy must be able to reach hydrogen production projects. Without deliverability requirements, clean energy produced in one region will not reach the hydrogen production plant, forcing local and dirtier generators to fill the gap and increase overall emissions.
  • Hourly time-based matching: Hydrogen should be produced during the same hours that the clean electricity is being generated. This ensures that hydrogen production does not increase the use of energy from dirtier sources available at other times of day. Absent this requirement, hydrogen project operators may use up the limited low-cost clean energy resources for hydrogen production, forcing families to pay for higher-cost energy from fossil fuels.

• Preventing heavily polluting fossil fuel-based hydrogen projects from engaging in greenwashing and claiming the 45V credit.
• Ensuring that hydrogen projects accurately account for their total greenhouse gas emissions across their full lifecycles and do not cause spikes in electricity grid emissions and prices (as, for example, cryptocurrency mining has done).

“Strong rules are crucial to ensuring a successful hydrogen sector that catalyzes cutting-edge electrolyzer technologies and enables the creation of truly clean global hydrogen markets, in line with international partners. In the EU, some industry groups fought hard against the 3-pillars, but after their announcement quickly changed focus to implementation. Even in the few months since the announcements, we have seen hundreds of millions of dollars of investments made into 3-pillar compliant projects in Europe and steady growth in announced projects,” said Killian Daly, an industry expert at EnergyTag.

Synergetic CEO Mike Sloan said that implementing the three pillars would send a clear message.

“Many companies are eager to innovate, deploy investment in U.S. manufacturing and production, and ensure this public investment in decarbonization is a bridge to somewhere,” Sloan said. 

Tyson Slocum, Energy Program Director at Public Citizen, said they also “urge Treasury to protect families from potential energy price spikes by implementing the three pillars of 1) additionality, 2) deliverability, and 3) hourly matching for electrolytic hydrogen producers seeking the 45V credit.”