Hydrogen startups are widely seen as a promising way to eliminate fossil fuels from heavy industry and long-haul transportation. But they have been stuck in limbo for the last couple years, waiting for official guidance from the U.S. Treasury on lucrative tax credits.
The wait ended today, with the Treasury announcing final rules for hydrogen producers to qualify for tax credits under the section 45V of the Inflation Reduction Act.
“We’re grateful to have a final rule,” Beth Deane, chief legal officer at Electric Hydrogen, told TechCrunch. “Without that, the industry is just kind of dead in the track.”
The rules, which have been over two years in the making, relax some parts of the draft proposal, giving existing nuclear and fossil fuel power plants a bit of a reprieve.
Because hydrogen can be made in so many different ways, the resulting rules are a complex maze of regulations designed to ensure that hydrogen producers receiving the credit aren’t inadvertently causing more pollution.
There are two main sources of hydrogen: that which is produced by electrolyzers, which use electricity to split water molecules into hydrogen and oxygen, and that which is generated by steam reformation, which uses steam and heat to break methane molecules, producing hydrogen and carbon dioxide.
But both of those have myriad variations. Steam reformation can dump carbon dioxide pollution to the atmosphere (producing so-called grey hydrogen in the process) or it can capture and store it (blue hydrogen). Electrolyzers can be powered by renewable energy (green hydrogen) or nuclear power (pink hydrogen). If you really want to dig deep, there are so many flavors of hydrogen that people often refer to them all as the hydrogen rainbow.
At its core, the 45V rules seek to ensure that new hydrogen production doesn’t result in additional greenhouse gas emissions on the grid. To do so, the Treasury Department requires producers to track the emissions generated by each kilogram of hydrogen throughout its lifecycle. That means, for example, blue hydrogen producers must account for the planet warming effects …