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What we're watching: The "clean" hydrogen fight

Alan Neuhauser
Illustration of the eagle on the U.S. Department of Energy seal holding a hydrogen molecule in its beak.

Illustration: Gabriella Turrisi/Axios

Fuel producers, energy companies and environmentalists are waging rival campaigns to shape which hydrogen projects will qualify as "clean" under the Inflation Reduction Act.

Why it matters: The outcome will determine which types of projects qualify for the juiciest tax credits — and therefore which get built.

Driving the news: The Treasury Department expects to introduce its rules for the IRA tax credits, including the hydrogen regime known as 45V, in the coming weeks.

What they're saying: "We've suspended the deployment of clean hydrogen technology pending the outcome of the rule," Constellation Energy CEO Joe Dominguez told Washington Post Live earlier this month.

  • The Baltimore power producer wants to use emissions-free nuclear energy to make hydrogen — but has put those plans on hold.

Catch up fast: The IRA, signed last August, set a four-tier system of tax credits for hydrogen producers.

  • The "cleanest" projects with virtually no pollution would get $3 per kilogram. Then it's a steep drop to just $1.

Bottom line: Everyone wants that $3 per kilogram credit. And it's up to the the Treasury Department to set the criteria for who qualifies.

What's happening: One issue is whether the "cleanest" projects should be allowed to rely on existing power plants.

  • Forcing clean hydrogen producers to build new power plants would effectively guarantee that they're using renewable energy.
  • It would also ensure that power-hungry hydrogen sites aren't competing with the rest of the grid for electrons.

Yes, but: Such a strict regime would effectively bar two of the biggest sources of zero-emissions energy — existing nuclear and hydroelectric plants.

Context: Nuclear and hydro generated 25% of U.S. electricity last year — and accounted for 61% of the country's clean energy generation.

Be smart: The core of the disagreement is how to balance rapid deployment with ensuring true decarbonization.

👀 What we're watching: Another flashpoint in the clean-hydrogen debate — whether those projects will be allowed to use renewable energy credits.

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