Forrest in 2022. Photo: Martin Ollman/Getty Images
An energy and metals giant says it will halt its U.S. hydrogen investments unless the Biden administration changes implementation of a new production tax credit.
Why it matters: If Fortescue follows through, large "green" industrial projects in swing states could be in doubt months before election day.
Driving the news: Fortescue executive chair Andrew Forrest told Axios that "projects we have across North America will stop" without alterations to regulations for the Inflation Reduction Act's hydrogen tax credit.
- It wants to tone down provisions in the regulations that require plants to use new renewable energy sources and eventually track power by the hour.
Among Fortescue's many U.S. investments in progress: a $550 million hydrogen plant under construction in Arizona, a federally backed hydrogen facility in Washington state and an auto manufacturing site in Detroit.
- Without changes to the hydrogen credit rules, Forrest said the projects may "get suspended" over what he called a "slimy, sideways attack on 'green' hydrogen."
Catch up quick: The requirements on time-matching and new power generation have climate-minded criteria intended to reduce energy consumption, requiring plants to use new renewable energy sources and eventually track power by the hour.
- Industry has seen this as a slight against proposed hydrogen plants that would rely on existing nuclear and hydropower generation that is carbon-free.
- Some companies — namely Exxon and Constellation — have signaled hydrogen investments may be at risk from the regulations. The situation has caused a surge in lobbying.
Zoom in: Fortescue says it's being undermined by these requirements and wants a more lax approach.
- Its Washington hydrogen plant — key to the administration's Pacific Northwest hydrogen hub — partially relies on existing hydropower, which is having a tough time getting included in the credit.
- And Forrest told the administration in March that complying with the hourly matching would increase costs 140% at its Arizona facility.
What's next: The Australian commodities magnate says he wants to talk directly about the credit with White House climate czar John Podesta — and any other politician who will help.
- In addition, he said: "I think Congress should … knock out these woodworms that have been deliberately laced into the IRA."
What they're (not) saying: The White House and federal agencies overseeing the hydrogen credit — the Energy and Treasury departments — did not immediately respond to requests for comment.
What we're watching: whether Democratic lawmakers intercede.
- Sens. Maria Cantwell of Washington and Gary Peters of Michigan were among the nearly dozen senators who pushed for looser requirements on the hydrogen credit late last year.
