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IRA's hydrogen credit haggling

Feb 6, 2024
illustration of a hydrogen atom being cast in purple light from a red spotlight and a blue spotlight in each corner

Illustration: Tiffany Herring/Axios

Hopeful hydrogen fuel producers remain mired in internal conflicts over their industry's new tax credit.

Why it matters: Constraints on the credit intended to conserve fossil energy use may hamper the short-term availability of U.S.-produced hydrogen.

  • At least that's what business groups said in response to the Biden administration's rollout of climate guardrails on the IRA hydrogen credit.
  • But challenging the Treasury Department's implementation of the credit is coming with, well, some challenges.

Driving the news: Industry sources tell Axios they're still trying to find the right favors to ask of Treasury, whose team may only have this year to field requests (depending on the November elections).

  • Government affairs reps said they're still in the process of gauging what requests work with the people they represent.
  • So far, ideas that industry sources have floated include a midpoint review of the IRA credit program (a la auto emissions standards) and lenience for companies in states that have existing decarbonization plans.
  • "We're more than happy to get into a dialogue with the White House and Treasury about what's possible," said Marty Durbin, vice president for policy at the U.S. Chamber of Commerce.

Remember, the deadline for comments on the proposed hydrogen credit rulemaking is Feb. 26. Here's our explainer.

Sources said it's been difficult so far to find a Goldilocks balance on suggestions to Treasury. They're still trying to find what can help industry while actually standing a chance at getting granted.

  • "Are there enough reasonable positions where there is a set of suggestions to Treasury that constitute a consensus?" said Frank Wolak of the Fuel Cell and Hydrogen Energy Association.

Zoom in: Part of the problem is that the entities opposed to the IRA rollout fall into two camps — fossil-friendly and zero-carbon energy.

  • These industries have split priorities on decarbonization, and so may not be able to put up a fully unified front on asks to Treasury.

Take, for example, the idea of providing lenience to hydrogen producers in states with tight carbon-cutting measures in place.

  • Such a request serves hydropower and nuclear energy, spaces that felt shafted after Treasury proposed "additionality" requirements that favor companies using newly built renewable energy facilities.
  • But Wolak declined to say if his group would back the idea: "I can't really gauge if there's enough consensus around it."
  • The notion of a mid-program review — which the Chamber wants to see — got a lukewarm response from Benton Arnett at the Nuclear Energy Institute, who said he doesn't want more "uncertainty."

What we're watching: When lawmakers get involved in the process.

  • Sources told Axios they've been in touch with the litany of senators who weighed in throughout the crafting of the proposed rulemaking.
  • Senate EPW Chair Tom Carper told Jael in early January that the proposed rule "raised concerns among some of my Democratic colleagues and me."
  • "We're going to see if they [Treasury] take into heart the feedback [we've given] them," he said.

What Treasury's (not) saying: The department didn't immediately respond to a request for an estimated timeline for a final rulemaking.

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