Divisions Emerge Over US Tax Credits for Green Hydrogen

The battleground for America’s green hydrogen future is heating up as the proposed guidelines for obtaining green hydrogen exemptions create a rift between supporters and opponents of President Joe Biden’s administration plan.

The plan, designed to set strict rules for developers to qualify for green hydrogen tax credits, has elicited strong reactions, with critics labeling it as “misleading,” “overly restrictive,” and “unworkable.”

At the heart of the controversy are the proposed rules by the US Treasury Department, detailing how taxpayers can use Energy Attribute Certificates (EACs) to qualify for green hydrogen tax credits. The rules focus on three key criteria for green hydrogen producers:

• New Clean Energy: Generators starting operations within 3 years of a hydrogen facility commissioning are considered new sources of clean energy.
• Deliverable Clean Energy: Clean energy must be sourced regionally, following the Department of Energy’s 2023 National Transportation Needs Study.
• Time Matching: Hourly matching of energy characteristic certificates with the electrolyzer’s electricity consumption.

The proposed rules aim to ensure that fossil fuels don’t contribute to the electricity used in tax-credit-supported electrolyzers. The three pillars — new supply, deliverability, and time matching — collectively serve as a robust framework for certifying green hydrogen production in the United States.

While environmentally oriented organizations applaud the proposed measures, the Hydrogen Forward coalition, comprising influential members like Toyota, Hyundai, Cummins, and Linde, criticizes the guidelines. The coalition claims the proposed requirements are “overly restrictive and unworkable,” potentially hindering investment in hydrogen, delaying technology deployment, and impeding progress in cost reduction and climate goals.

On the flip side, environmentally oriented organizations, including the Natural Resources Defense Council (NRDC), view the proposed rules as a victory for climate protection and consumer interests. They emphasize that the three pillars will prevent overwhelming demand on the electricity grid and protect against compromising the clean energy transition in the United States.