Several Democrat senators, who hold the balance of power in the US Senate, have come out against a potential “additionality” clause in the forthcoming definition of clean hydrogen, which the Treasury Department is due to publish next month.
Additionality means that renewable electricity used to produce green hydrogen must come from new power plants that were not already supplying clean energy to consumers. The EU has already included an additionality clause in its own definition of green H2.
The idea behind it is to ensure that green electricity currently being consumed is not diverted to green hydrogen production, which would require additional power to meet the needs of the grid — with this extra electricity expected to largely be supplied by ramping up fossil-fuel power plants, and thus increasing overall greenhouse gas emissions.
The Natural Resources Defense Council (NRDC) has said that such a scenario could increase emissions by about 420 million tonnes of CO2-equivalent over the course of the ten years of hydrogen production tax credits.
But building new renewables projects would make it harder and more expensive to produce green hydrogen, critics argue.
Additionality was never mentioned in the Inflation Reduction Act (IRA) that created the clean hydrogen production tax credit of up to $3/kg, and one of the Demoractic senators who was key to passing that bill — Joe Manchin — is vehemently opposed to such a measure being introduced, calling it “crazy”.
“[Additionality] was never in the bill, never talked about,” Manchin told US website E&E News. “I guarantee there’ll be a lot of problems if they go down that path. A lot of problems.”
The clause in the IRA that led Energy Secretary Jennifer Granholm to ask the Treasury’s Internal Revenue Service to write a definition for clean hydrogen, states: “The Secretary shall issue such regulations or other guidance as the Secretary determines necessary to carry out the purposes of this section [which is about the clean hydrogen tax credits].”
And while Manchin — a 75-year-old coal millionaire who represents the Trump-supporting state of West Virginia — has often proved to be a thorn in the side of left-leaning Democrats, especially when he held the swing vote in the Senate last year, this time he has more centrist Democrats on his side.
Democratic senators John Hickenlooper and Tom Carper have also tentatively come out against the notion of an additionality clause.
A Carper aide told E&E News: “We have seen this with other industries that if you put so many hurdles in front of them, they never take off.”
Hickenlooper expressed similar concerns. “We don’t want to put the cart before the horse,” he said.
“We want to make sure that this works, so it actually achieves what it’s set out to do and basically leads to less carbon emissions. But you know, carts and horses have an order.”
Democratic senator Ron Wyden, who chairs the influential Senate Finance Committee, says he has been in close contact with the White House to find a middle ground that allows the hydrogen industry to take off, while also limiting carbon emissions.
“I’ve been very supportive in working with John Podesta [the White House deputy chief of staff] and the administration in order to make sure that we deal with some of the concerns that have been raised,” said Wyden. “But I think there’s a win-win in this.”
No specific middle-ground option has yet been publicly proposed, however.
And it is also worth noting that any clean hydrogen produced in the US could only be sold in the EU if it meets Europe’s own definition of green H2 — which includes additionality.
Rachel Fakhry, policy director for emerging technologies at the NRDC, pointed out that whatever decision is made will be of huge impact.
“We’re currently not only defining how much money goes to potentially increasing emissions, but also defining the entire course of the clean hydrogen industry in the US,” she said. “Hydrogen is going to be an important climate solution, and this is a very critical juncture.”