Why new tax credits for clean hydrogen sparked heated debate

aloalo567gh

The Biden administration today proposed new tax guidelines aimed at making hydrogen production cheaper as a cleaner alternative to fossil fuels. The tax credit comes with strict stipulations on using newly built clean energy sources to produce hydrogen, rather than more polluting sources. The guidelines sparked strong reactions from clean energy advocates and the industry today, some celebrating, others outraged. Some experts said new barriers are needed to ensure that the Biden administration's push to develop a domestic hydrogen supply chain does not inadvertently increase pollution. Meanwhile, clean energy trade groups argued that the tax credit is now too restrictive to allow clean hydrogen production to flourish.

Combustion of hydrogen releases water vapor, instead Romania Phone Number List of planet-warming carbon dioxide emissions. The problem is that today, most hydrogen is produced with the help of fossil fuels, mainly through a process called steam-methane reforming that produces carbon dioxide emissions. Methane is an even more potent greenhouse gas than CO2 and typically escapes throughout the supply chain, from production to end use. US Secretary of Energy Jennifer Granholm called hydrogen “a Swiss Army knife” Fortunately, there is a more sustainable way to produce hydrogen. An electrolyzer can split water into oxygen and hydrogen molecules.



Additionally, it can run on electricity generated by renewable energy or carbon-free nuclear energy. It turns out that this tactic is significantly more expensive, making tax credits crucial. Hydrogen produced from renewable energy can cost up to $12 per kilogram, compared to hydrogen made from methane which costs less than $3 per kilogram. The Clean Hydrogen Production Credit was established by the Inflation Reduction Act, the largest investment the United States has made yet to address climate change. The Bipartisan Infrastructure Act also set aside $8 billion to create hydrogen production “hubs” across the United States. Clearly, the Biden administration sees hydrogen as a key piece of America's clean energy future.