Clean Power Industry CEO Highlights Fatal Flaw
In the Biden administration’s push to launch a green hydrogen industry, concerns have been raised by Jason Grumet, the CEO of the American Clean Power Association. Grumet pointed out a fixable flaw in the administration’s proposal that must be addressed for the economic, environmental, and climate benefits of scaling a domestic green hydrogen industry.
Most Generous Clean Energy Incentives at Stake
The hydrogen production tax credits, worth up to $100 billion, are some of the most generous clean energy incentives provided by President Biden’s climate and tax bill. This legislation aims to spur the growth of hydrogen generation, a nascent technology that requires significant investment to achieve large-scale production.
Concerns Over Electrolysis and Energy Sources
One of the common pathways for hydrogen production is electrolysis, which splits hydrogen from water using electricity. However, environmentalists argue that relying on hydrogen as a zero-emissions power source becomes futile if the electricity used in the electrolysis process comes from fossil fuel-fired sources.
Clean Hydrogen Production Credit Guidance
The Clean Hydrogen Production Credit aims to make the production of clean hydrogen economically competitive and accelerate the development of the U.S. clean hydrogen industry. However, the guidance includes provisions that have raised concerns:
- Hydrogen producers are only eligible for the highest tax credit if electricity is generated from renewable sources, such as wind and solar, that came online within three years of a new facility’s service.
- Beginning in 2028, hydrogen developers must source their electricity from clean sources on an hourly basis, requiring the electricity generated by electrolysis to be produced within an hour of hydrogen production.
Senate Democrats Voice Concerns
Senators Tom Carper, Sherrod Brown, Bob Casey, and several other Senate Democrats have expressed concerns about the proposed guidance:
- Chairman Tom Carper fears that the proposed rule may miss the mark and jeopardize the clean hydrogen industry’s successful launch.
- Sherrod Brown argues that the proposed rules will undermine the country’s ability to produce affordable clean hydrogen, hindering the energy economy of the future.
- Bob Casey is concerned that the proposal may exclude Pennsylvania workers and businesses that are ready to lead in hydrogen power, potentially harming the economy.
Future Revisions and Calls for Looser Guidance
Before the announcement, Senators Carper, Brown, Casey, and nine other Democrats urged President Biden to issue looser guidance that would progressively tighten over the next decade.
Hydrogen’s Potential to Reduce Emissions
Hydrogen is widely recognized as a key technology for reducing emissions, particularly in hard-to-decarbonize sectors like shipping, heavy trucking, and cement and steel manufacturing. These sectors contribute to nearly 60% of U.S. end-use emissions.