Biden Administration Unveils Proposed Rules for Hydrogen Production Tax Credits -- OPIS
23 December 2023 - 7:33AM
Dow Jones News
The Biden administration on Friday released its proposed
regulations for receiving tax credits for producing hydrogen,
disappointing some industry groups who say the strict environmental
criteria included in the guidelines will stifle development of
clean hydrogen projects.
The rules, if adopted, would determine who gets lucrative tax
credits provided for hydrogen production under the Inflation
Reduction Act. Environmental groups and industry stakeholders had
been jockeying to have their concerns heard ahead of the release of
the proposed rules.
On Friday, business groups expressed disappointment and said the
proposed rules will steer investment in hydrogen to other countries
and slow American progress in the field.
"The proposed regulations released today by the Treasury
Department...will stunt the growth of a critical industry before it
has even begun," said Marty Durbin, president of the U.S. Chamber
of Commerce's Global Energy Institute.
"In issuing these regulations, the White House failed to listen
to its own experts at the Department of Energy who advocated for
the type of flexible and balanced approach necessary to attract
investment and stimulate demand for clean hydrogen."
Frank Wolak, president of the Fuel Cell and Hydrogen Energy
Association, said the rules ignore Congress' intention when
including the credits in the IRA and are instead being used as a
"backdoor to regulate use of the electric utility grid."
While not directly criticizing the proposal, Dustin Meyer,
senior vice president of Policy, Economics and Regulatory Affairs
for the American Petroleum Institute, called on the administration
"to finalize a policy that fosters more development and flexibility
for hydrogen expansion, not less."
While the administration has focused on electrification as a way
to reduce transportation emissions in the light-duty vehicle
sector, use of hydrogen is seen as critical in powering heavy-duty
vehicles, shipping and industry.
In its announcement about the proposal, the Treasury Department
noted that while using hydrogen power can reduce emissions,
hydrogen production using conventionally produced electricity can
result in "significant climate pollution."
The rules place tight limits sought by environmentalists on the
type of power used by producers seeking the hydrogen tax credits,
which can be as much as $3 per kilogram of hydrogen produced. These
include requiring producers to use power from a clean energy source
that began operations within three years of a hydrogen plant going
into service, requiring that clean power used by the plants come
from the same region as the plant and--starting in 2028--requiring
electricity used to produce hydrogen to be generated within the
same hour that the electrolyzer claiming the credit is operating.
This will likely encourage development and operation of new
regional clean energy projects.
"The Clean Hydrogen Production Credit aims to make production of
clean hydrogen with minimal climate pollution more economically
competitive and accelerate development of the U.S. clean hydrogen
industry," the Treasury Department said in Friday's
announcement.
Once the proposed rules are published in the Federal Register,
the public can comment on them for 60 days.
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Dow Jones Newswires and The Wall Street Journal.
--Reporting by Steve Cronin, scronin@opisnet.com; Editing by
Michael Kelly, mkelly@opisnet.com
(END) Dow Jones Newswires
December 22, 2023 15:18 ET (20:18 GMT)
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