27

2024

-

03

'We can meet the US Treasury’s strict standards for clean hydrogen — others can do it too': Air Products

Author:

Hydrogeninsight


 

Industrial gases firm is one of the few H2 developers to back the ‘three pillars’ for the clean hydrogen production tax credit at hearing over draft guidance

 

Industrial gases firm Air Products has called for the US government to ignore industry complaints about draft guidelines for the clean hydrogen production tax credit, arguing in the first day of a public hearing that it is already developing projects with these rules in mind — and so should others.

 

The guidance, published in December, restricts what power supply can be considered “zero-carbon” when calculating a kilogram of hydrogen’s lifecycle emissions, and therefore whether it qualifies for the maximum $3 tax credit, given the risk that H2 facilities would add to grid electricity demand and inadvertently increase fossil-fired power generation (see fact box).

 

“We applaud Treasury and the Internal Revenue Service (IRS) proposed guidance for imposing strict standards for the 45V hydrogen tax credit which should deliver real and verifiable emissions reductions from Day One,” said Eric Guter, the firm’s vice-president for hydrogen, in his testimony.

 

This includes strong support for hourly matching of renewable power to hydrogen production from 2028, as well as clauses for additional renewables to be built on the same regional grid as a project’s electrolysers.

 

“For hydrogen to truly be clean, all three pillars must be implemented together. Without one, the system falls apart and risks increasing emissions on the backs of taxpayers,” Guter said.

 

 

 

 

 

 

He added that the company would oppose any extension of the phase-in period past the end of 2027, grandfathering or exemption clauses based on hydrogen project construction dates, or exceptions based on the use of otherwise-retired power plants, curtailed energy, or conducting modelling to prove zero-emissions power.

 

In his testimony, Guter argued that the tax credits set out by Inflation Reduction Act should come with strict standards to ensure the end goal of net zero by 2050 is met: “At its heart, the IRA is climate and clean energy-driven legislation. And US taxpayer dollars should not be used in a way that does not uphold that spirit.”

 

The vice-president pointed toward Air Products’ long-running experience with producing grey hydrogen and its $12bn portfolio of clean hydrogen projects, including a 1.4GW green H2 plant in Texas it is co-developing with AES. “Again, this project will be three-pillar compliant. And if we can do it, so can others.”

 

 

 

‘False claims that would increase emissions’

 

In one of the more inflammatory sections of his testimony, Guter specifically called for the US government to be sceptical around industry claims that the rules will increase costs and prevent projects from being built.

 

“During these days of testimony, you will hear from a range of companies. Some of these companies are the largest and most technically capable organisations in the world — but claim they can’t do what Air Products is already doing,” he said.

 

“Even more of the companies you will hear from have no experience in the hydrogen industry. They have never produced a molecule of hydrogen.”

 

Guter continued: “Both groups [ie, experienced and inexperienced H2 producers] are asking Treasury to implement a weak standard for producing electrolytic hydrogen in exchange for the most lucrative climate subsidy in the world.

 

“They are asking for you to lower the bar and subsidise, at taxpayers' expense, investments in hydrogen that will increase emissions.

 

“I urge you to be skeptical of false claims that would increase emissions on the grid, in violation of the spirit of the IRA, which at its heart, is climate and clean energy legislation.”

 

Guter also noted that changes to the three pillars would disadvantage project developers, such as Air Products, that had already committed to staying compliant with these rules.

 

Trade with Europe

 

One reason for Air Products apparent breaking of ranks with other hydrogen project developers is its focus on exports to Europe, particularly since the EU has a target of importing ten million tonnes of green H2 by 2030 that meets its own strict definitions that are very similar to the US Treasury’s draft guidelines.

 

The industrial gases firm is already planning to build ammonia terminals at the ports of Rotterdam in the Netherlands, Hamburg in Germany, and Immingham in the UK by 2026, with an eye to importing cheap green molecules from the US and Saudi Arabia.

 

“A robust US hydrogen market will require that the US hydrogen industry be able to export clean hydrogen to our allies around the globe, including the European Union,” Guter said, citing both the EU’s Delegated Acts on renewable H2 and the carbon border adjustment mechanism as likely to discourage exports of insufficiently green molecules.

 

However, the EU itself has set a switch from monthly to hourly matching from 2030 rather than 2028, and has also included a transitional phase exempting projects built before 2028 from needing to draw from newly built renewables until 2038.

 

“We believe the US must promulgate strong rules for 45V to ensure our industry has ready access to the European clean hydrogen market,” Guter added. “This will ensure the United States will be part of a globally harmonised clean hydrogen certification system, important for global energy trade and broader market lift-off.”

 

Source:Hydrogeninsight

Hot News

FuelCellChina Interviews