Focus on USA |
Hydrogen Hub (ARCHES); and Pacific Northwest Hydrogen Hub (PNWH2). Two further hydrogen hubs of the envisaged seven-hub programme remain under negotiation: Heartland Hydrogen Hub; and Mid-Atlantic Hydrogen Hub.
Section 45V
Amendments to the IRA could include the potential removal of the Section 45V Production Tax Credit (PTC), which supports green hydrogen production.
The US Treasury and Internal Revenue Service (IRS) have only just released final rules for implementing 45V. This was on 3 January 2025, just over two weeks prior to the Trump inauguration, after over two years of deliberation – including taking on board about 30 000 public comments and intensive collaboration with the DoE and EPA.
These final rules include significant “changes and flexibilities” aimed at helping the US hydrogen industry grow and moving projects forward, while adhering to the law’s emissions requirements
for qualifying clean hydrogen. With the inclusion of these changes, the final rules provide “clarity, investment certainty, and flexibility”, including for participants in projects planned as part of the Department of Energy’s Regional Clean Hydrogen Hubs Program (see above).
The final 45V rules aim to clarify how producers of H2 US Department of Energy: fracker at the helm
The Trump choice of engineer/entrepreneur Chris Wright, founder, CEO and chairman of Liberty Energy (major player in hydraulic fracturing) for US Secretary of Energy gives a clear indication of the new direction of travel. Some recent quotes illustrate Chris Wright’s take on energy issues:
“Energy
matters...energy is hard…and climate change
may not be exactly what you think it is. It’s a real thing, but it’s actually sort of a slow moving in our lifetimes, a relatively modest phenomenon that’s just been wildly abused for political reasons but the cost of that is enormous in human lives and human opportunity.” “I’m one of the rare oil and gas guys who celebrates coal,
it’s been the biggest source of global electricity for 70 years, and it will be for decades more.” “There’s no modern medicine, there’s no internet, there’s no telecommunications,
there’s no people flying…without hydrocarbons. It’s just nobody likes to talk about it. But it’s just true.” “The affordability and the availability of energy is the biggest constraint on the quality of
life of people wherever you live.” “California has gone ridiculous on energy, they’ve made it expensive and unreliable. So
what happened? All the energy intensive manufacturing left the state. If you’re a rich tech or advertising executive, you may have a great life there…but it has the highest adjusted poverty rate of any state in the nation. You know why? If you restrict freedom, and you restrict energy, you just constrain everyone’s opportunities, and you make life smaller and rougher and more difficult. Europe has been doing the same thing for 20 years. They follow just really a nuts energy policy, and they’ve just crushed the birthplace of the Industrial Revolution. The United Kingdom and Germany have just outsourced all of their energy intensive manufacturing and enfeebled their economies.” “I don’t care where energy comes from, as long as it’s affordable, reliable, secure and
betters human lives. That’s what I’m about.” “I am all in on energy from my start in nuclear, solar, and geothermal to my current
efforts in oil and gas and next generation geothermal.” “The one truly transformative thing that happened in energy in my lifetime was the shale
revolution.” “We were the largest importer of natural gas of any country on the planet, just 20 years ago. Today, we’re the largest net exporter of natural gas on the planet.” “There’s no clean energy, there’s no dirty energy, there is no energy transition going on. This is just this crazy term.” “I’m on the board of a small modular reactor nuclear company [Oklo]… I want to see
more energy from anywhere we can that’s affordable and reliable and can change lives. But that is a very hard problem. We don’t have new energy sources that work and that are affordable and reliable. Forcing unaffordable unreliable sources impoverishes people, shrinks opportunity, and just exports industry out of our country.” “For the United States, we’re awash in energy now. That’s awesome. It is economically
transformative. We have lower cost energy, more abundant. But over the last 20 years, we exported most of our energy intensive manufacturing, mostly to China, but also elsewhere in South Asia. But everything today that takes a lot of energy to make, think cement and steel and aluminium, plastics. These are dominantly made in China, and they’re made with Chinese coal. So that’s not a climate policy. If you export your industry from a natural gas burning factory in the US to a coal power plant in Asia or Vietnam or Indonesia or China. That’s not a climate policy, that’s not a clean air policy, that’s just a de-industrialisation policy.”
, including those using electricity from various sources, natural gas with carbon capture, renewable natural gas (RNG), and coal mine methane can determine eligibility for the credit. The rules enable pathways to be established for hydrogen produced using both electricity and methane, providing investment certainty while ensuring that clean hydrogen production meets the law’s lifecycle emissions standards. By law, the tax credit’s value is based on the lifecycle greenhouse gas (GHG) emissions of hydrogen production. To qualify as clean hydrogen under the statute, the lifecycle GHG emissions of the hydrogen production process must be no greater than 4 kg of carbon dioxide equivalent (CO2e) per kg of hydrogen produced. Qualifying clean hydrogen falls into four credit tiers, with hydrogen produced with the lowest GHG emissions receiving the largest credit. Calculation of the lifecycle GHG analysis for the tax credit requires consideration of direct and significant indirect emissions.
Electrolytic hydrogen
For electrolytic hydrogen production (eg, green hydrogen using renewables and pink hydrogen using nuclear power), the final rules incorporate crucial safeguards proposed in December 2023, but with additional clarity and flexibility that will help facilitate clean hydrogen investment. Specifically, the final rules require that taxpayers seeking to use Energy Attribute Certificates (EACs) to attribute electricity use to a specific generator meet certain criteria for temporal matching, deliverability, and incrementality. These safeguards help ensure that electricity consumption for hydrogen meets the statutory lifecycle GHG emissions standards, including that the lifecycle assessment take into account both direct and significant indirect emissions from hydrogen production. As the final regulations explain, without those safeguards, that additional load on the grid from hydrogen production will result in induced emissions. The final rules also reflect a U-turn on the role of existing nuclear power plants, which are now allowed to earn credits for hydrogen production.
Methane based hydrogen The final regulations provide rules for determining eligibility of hydrogen produced using methane reforming technologies, including with CCS (“blue” hydrogen), as well as with the use of natural gas alternatives such as renewable natural gas or coal mine methane. The final rules aim to enhance the accuracy of upstream methane leakage rates used in determining the credit value.
For hydrogen production using natural gas alternatives, the final regulations provide rules on how to calculate lifecycle GHG emissions and claim the credit for alternatives sourced from a wider range of biogas and fugitive methane than
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