Today, the Biden administration issued draft implementation guidance for the Clean Hydrogen Production Tax Credit (45V), passed as part of the Inflation Reduction Act. The guidance focuses on the criteria necessary for establishing the lifecycle greenhouse gas emissions intensity of produced hydrogen, which research has shown can result in starkly divergent climate outcomes depending on approach.
Below is a statement by Julie McNamara, senior energy analyst and deputy policy director of the Climate and Energy Program at the Union of Concerned Scientists (UCS).
“The draft guidance sets a strong foundation for accurately capturing the true climate impact of hydrogen production projects. Rigorous guardrails are necessary to ensure the hydrogen tax credit incentivizes the scale-up of the right hydrogen, not just any hydrogen. No less than whether or not hydrogen actually serves as a tool for climate progress hangs in the balance.
“The science is clear that to fully account for the pollution associated with the production of hydrogen, we need to defend against outcomes that look clean but in fact result in pollution spikes elsewhere on the system. Because using electricity to create hydrogen is such an energy-intensive process, whether or not that electricity is clean is enormously consequential. By outlining a path for rigorous implementation of the “three pillars” of additionality, deliverability, and hourly matching, the draft guidance sets the stage for a final rule that makes sure the underlying electricity is really and truly clean—meaning the resulting hydrogen will be really and truly clean, too.
“However, depending on how open issues are finalized, we’re concerned the tax credit could miss the full pollution impact of fossil fuel-based hydrogen projects. The administration must stay the course and ensure heavily polluting projects cannot suddenly qualify as ‘clean’ simply by outright greenwashing. Fossil hydrogen producers cannot be allowed to claim credit for questionable emissions reductions in entirely different sectors of the economy; this would be completely at odds with the intention of the tax credit, fail to reduce carbon emissions, and indefensibly perpetuate the severe public health and environmental harms caused by these polluters. The emissions calculation is also at risk of failing to accurately capture upstream methane emissions, which could severely underestimate the true climate impact of fossil fuel-based hydrogen projects. These issues require careful resolution.
“We appreciate all the work that has gone into getting the tax credit right. We’re pleased with the progress to date, and we’re committed to working with the administration to see this critically important process through.”
Additional Resources and Analyses:
• A blogpost by McNamara, “Without Sufficient Guardrails, the Hydrogen Tax Credit Could Increase Emissions.”
• A blogpost by McNamara, “Biomethane Threatens to Upend the Hydrogen Tax Credit.”