US likely to phase in strict rules for green hydrogen production, suggests White House advisor
The US Treasury is due to announce a new definition for clean H2 this month, setting the regulations that producers must follow in order to claim tax credits
The US government is apparently edging towards a compromise position on its clean hydrogen production rules — due to be unveiled this month — which will define the steps that producers must take to qualify for tax credits of up to $3/kg.
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Podesta, who has been described as President Joe Biden's point man on clean hydrogen, has further signalled that the Treasury’s rules would “create the cost reductions that we need for electrolysers, but do it in a way that puts us on a path to having the highest standards for green hydrogen going forward during the course of this decade”.
An anonymous senior official was also reported to have confirmed that this would mean a phase-in of rules over time.
The Delegated Acts also require geographical correlation — for the clean energy to be produced and used in the same electricity bidding zone — and monthly matching of production and renewables generation up to 2030, when the two must take place within the same one-hour period.
However, other lobby groups are already accepting a compromise position.
The American Clean Power Association (ACP) has suggested similar rules around geographical correlation and additionality to those in the EU, but calls for renewable power generation and hydrogen production matched within the same year up to the end of 2028, with hourly matching brought in from 2029.
While the 45V tax credit expires in 2033, there is also room for future administrations to extend it fully or partially — as has taken place with wind and solar tax credits over the past three decades. As such, the rules decided today could have lingering consequences beyond the next ten years.
(Copyright)Additionality, time-matching and geographic correlation
“Additionality” means that the green hydrogen would have to produced from new renewables projects, so that they do not utilise existing clean electricity facilities that would otherwise help decarbonise the power grid.
“Time-matching", or "temporal correlation”, relates to how frequently producers would have to prove that their electrolysers have been powered by 100% renewable energy — usually hourly, weekly, monthly or annually — and therefore to what extent they can use grid electricity at times when the wind isn't blowing and the sun isn't shining, and then send the same anount of renewable energy back to the grid at a later date.
"Geographic correlation" refers to how close the hydrogen-producing electrolyser is to the source of renewable energy it uses. Distances can be set to ensure that an electrolyser in, say, Texas, is not powered by solar panels in California through renewable energy credits, which in practice could mean that green power is sent to a grid that doesn't need it, with the electricity actually used by the electrolyser coming from fossil-fuel power plants.
All three rules would prevent fossil-powered grid electricity being used directly or indirectly to produce "green hydrogen".