Debate Erupts Over Treasury’s Hydrogen Tax Credit Guidelines Amid Concerns on Emissions and Clean Energy Standards

The Treasury Department’s guidance for hydrogen tax credits is sparking debate about how the federal government will measure industry emissions and the role of nuclear power and carbon capture technology in developing “clean” fuel. The tax credit, worth up to $3 per kilogram of hydrogen produced if emissions are low enough with prevailing wages and apprenticeship requirements, can be scaled down to as low as 60 cents for projects with higher emission levels. The Biden administration hopes the tax credit will lower the cost of hydrogen from hydrogen produced with renewable energy and fossil fuels tied to carbon capture to $1 per kg by 2031. The rules also allow companies to immediately use new clean electricity added to the grid and produced in the same region as a hydrogen production facility by 2028. However, critics argue that these rules would slow the development of hydrogen projects. The regulations are available for public comment until Feb. 26.