Why the hydrogen tax credit has become a lightning rod for controversy

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The Treasury still hasn’t released guidance for how the IRA hydrogen tax credit will be implemented. Why energy and climate folks are anxiously awaiting…

The Treasury is tasked with adjudicating how the hydrogen production tax credit included in the IRA will be implemented. It has said guidance on the tax credit will come by the end of the year and energy and climate communities are anxiously awaiting word.

The adjudication of the hydrogen tax credit has become about more than just the hydrogen tax credit, too. It could also set important precedents for how the government decides electricity used from the grid is really"clean." "We have now entered a new phase in the clean energy transition, whereby new solutions and operational paradigms are necessary to accommodate an increasingly renewable grid and catalyze decarbonization. The clean hydrogen tax credits are a major opportunity, and juncture, to start shaping that new phase in the right way,"and the most abundant substance in the universe, but hydrogen atoms do not exist on their own on Earth.

Some hydrogen industry stakeholders want the Treasury to implement strict electricity accounting standards to maximize the likelihood that the tax credits only go to hydrogen that is produced with the least possible amount of emissions. "If we don't deliver on the emissions reduction, we will lose the confidence of society in hydrogen and the energy transition. And as a long-term provider of hydrogen, it's important to us that we get it right and preserve the integrity of the energy transition and the hydrogen industry."Josef Kallo, founder and chief executive officer of H2FLY, beside the HY4 liquid hydrogen powered electric aircraft at Maribor airport in Slovenia, on Thursday, Sept. 7, 2023.

 

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