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Green Hydrogen H2 News

ExxonMobil’s Blue Hydrogen Bid: Clean Energy Savior or Fossil Fuel Subsidy?

Anela DoksoBy Anela Dokso21/09/20233 Mins Read
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ExxonMobil, one of the world’s largest energy conglomerates, is stirring up a contentious debate as it seeks substantial tax credits for hydrogen derived from natural gas, commonly known as “blue hydrogen”.

The company is urging the Biden Administration to recognize blue hydrogen as an environmentally viable option, eligible for tax incentives under the Inflation Reduction Act (IRA). However, this push has ignited a fierce clash between energy interests and environmental advocates over the future of hydrogen as a clean energy source.

The crux of ExxonMobil’s argument hinges on its assertion that blue hydrogen, produced through carbon capture and storage (CCS), can effectively eliminate most emissions. The company has positioned blue hydrogen as a linchpin of its low-carbon solutions division, alongside CCS and biofuels. Blue hydrogen production involves capturing and storing carbon dioxide emissions, thereby mitigating its environmental impact. ExxonMobil believes that this process should qualify its blue hydrogen for significant tax credits under the IRA, a legislative behemoth encompassing nearly $370 billion in climate and clean energy provisions.

The IRA, enacted in August 2022, extends tax credits to various clean energy technologies, including hydrogen. However, detailed guidelines regarding eligibility for these subsidies have yet to be issued by the U.S. Treasury Department. This lack of clarity has spurred ExxonMobil’s lobbying efforts to secure favorable treatment for its blue hydrogen.

Matt Furman, ExxonMobil’s Vice President of Public and Government Affairs, contends that the company’s gas-derived hydrogen can meet the stringent cleanliness criteria required for the highest tax credits under the IRA. Furman points to modeling conducted by U.S. government officials that allegedly supports ExxonMobil’s claims.

ExxonMobil’s CEO, Darren Woods, has taken the helm in advocating for the company’s position, engaging in discussions with White House clean energy advisor John Podesta and key legislators. The company’s central argument is that its natural gas-derived hydrogen can be produced with minimal carbon dioxide emissions, placing it on par with hydrogen generated from water and renewable energy sources.

However, this push has sparked vehement opposition from environmental campaigners. They vehemently argue that extending government incentives to blue hydrogen would essentially bolster fossil fuel production. Granting such tax credits to ExxonMobil could open the floodgates for billions of dollars in subsidies to fossil fuel companies, potentially transforming them into dominant players in the burgeoning hydrogen sector.

Environmentalists are deeply skeptical about whether hydrogen derived from natural gas can genuinely be emission-free. They raise fundamental questions about whether promoting blue hydrogen is merely a form of “greenwashing” that ultimately perpetuates fossil fuel dependency.

ExxonMobil’s bid for blue hydrogen tax credits serves as a microcosm of the larger struggle between the energy industry’s quest for economic viability and the environmental imperative to combat climate change. As the debate rages on, the future of blue hydrogen and its role in the global energy transition hang in the balance.

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