'We can meet the US Treasury’s strict standards for clean hydrogen — others can do it too': Air Products
Industrial gases firm is one of the few H2 developers to back the ‘three pillars’ for the clean hydrogen production tax credit at hearing over draft guidance
Industrial gases firm Air Products has called for the US government to ignore industry complaints about draft guidelines for the clean hydrogen production tax credit, arguing in the first day of a public hearing that it is already developing projects with these rules in mind — and so should others.
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“We applaud Treasury and the Internal Revenue Service (IRS) proposed guidance for imposing strict standards for the 45V hydrogen tax credit which should deliver real and verifiable emissions reductions from Day One,” said Eric Guter, the firm’s vice-president for hydrogen, in his testimony.
This includes strong support for hourly matching of renewable power to hydrogen production from 2028, as well as clauses for additional renewables to be built on the same regional grid as a project’s electrolysers.
“For hydrogen to truly be clean, all three pillars must be implemented together. Without one, the system falls apart and risks increasing emissions on the backs of taxpayers,” Guter said.
He added that the company would oppose any extension of the phase-in period past the end of 2027, grandfathering or exemption clauses based on hydrogen project construction dates, or exceptions based on the use of otherwise-retired power plants, curtailed energy, or conducting modelling to prove zero-emissions power.
In his testimony, Guter argued that the tax credits set out by Inflation Reduction Act should come with strict standards to ensure the end goal of net zero by 2050 is met: “At its heart, the IRA is climate and clean energy-driven legislation. And US taxpayer dollars should not be used in a way that does not uphold that spirit.”
Proposed US guidelines on green hydrogen production
The US Treasury's proposed guidelines on green hydrogen production, published in December, call for three requirements or "pillars" that will ensure H2 is truly green and will not lead to increased emissions: additionality, temporality, and deliverability.
“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.
For this pillar, the Treasury wants hydrogen producers to source their power from zero-carbon projects built within three years of the H2 project.
“Temporality” 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.
Here, the Treasury is calling for renewable power to matched on an annual basis up to 2028, and then hourly from then on.
"Deliverability" — or geographic correlation — relates to how physically close the hydrogen-producing electrolysers are to the source of renewable energy they use. 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.
The US Treasury wants green hydrogen projects to be within the same regional grid as the renewable energy projects powering them.
‘False claims that would increase emissions’
In one of the more inflammatory sections of his testimony, Guter specifically called for the US government to be sceptical around industry claims that the rules will increase costs and prevent projects from being built.
“During these days of testimony, you will hear from a range of companies. Some of these companies are the largest and most technically capable organisations in the world — but claim they can’t do what Air Products is already doing,” he said.
“Even more of the companies you will hear from have no experience in the hydrogen industry. They have never produced a molecule of hydrogen.”
“They are asking for you to lower the bar and subsidise, at taxpayers' expense, investments in hydrogen that will increase emissions.
“I urge you to be skeptical of false claims that would increase emissions on the grid, in violation of the spirit of the IRA, which at its heart, is climate and clean energy legislation.”
Guter also noted that changes to the three pillars would disadvantage project developers, such as Air Products, that had already committed to staying compliant with these rules.
Trade with Europe
The industrial gases firm is already planning to build ammonia terminals at the ports of Rotterdam in the Netherlands, Hamburg in Germany, and Immingham in the UK by 2026, with an eye to importing cheap green molecules from the US and Saudi Arabia.
However, the EU itself has set a switch from monthly to hourly matching from 2030 rather than 2028, and has also included a transitional phase exempting projects built before 2028 from needing to draw from newly built renewables until 2038.
“We believe the US must promulgate strong rules for 45V to ensure our industry has ready access to the European clean hydrogen market,” Guter added. “This will ensure the United States will be part of a globally harmonised clean hydrogen certification system, important for global energy trade and broader market lift-off.”
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