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Law Puts US in Front on Clean Hydrogen

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Purveyors of clean hydrogen in the US stand to reap some of the most significant benefits from the recently passed Inflation Reduction Act (IRA). IRA provisions — headlined by a generous production tax credit of up to $3 per kilogram of hydrogen — provide lucrative incentives for producers and could accelerate both supplies and the deployment of infrastructure, as demand for clean hydrogen and associated products ramps up. Beyond the tax credit, regulatory certainty for the next decade-plus and a “direct pay” option to maximize tax benefits will give developers more confidence and could help projects get off the ground faster. The IRA is Congress’ latest and most impactful piece of legislation for hydrogen players, coming on the heels of last year’s infrastructure law that allotted $8 billion to help develop regional clean hydrogen hubs across the country. The efforts have made the US into one of the world’s most attractive jurisdictions to build clean-hydrogen projects. After the IRA became law last month, industry group Hydrogen Europe sent a letter to European Commission President Ursula von der Leyen warning of a “mass exodus” of clean-hydrogen developers from Europe to the US due to the “disproportionate” regulatory framework. This week, the European Parliament voted to simplify the rules around clean hydrogen and committed to new renewable targets.

Topics:
Hydrogen, Emerging Technologies, Policy and Regulation, Low-Carbon Policy, Renewable Electricity
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