Climate law will come with stringent environmental safeguards

Billions of dollars in hydrogen-industry subsidies from president Joe Biden’s signature climate law will come with stringent environmental safeguards, raising concerns that strict rules will stifle production of the nascent climate-friendly fuel.

Under the proposed rules laid out last Friday, the new clean-hydrogen tax credit won’t benefit existing nuclear power plants, which is a blow to reactor owners such as Constellation Energy Corp that lobbied for inclusion. Administration officials, however, said that could change when the guidelines are finalised.

The hydrogen credit, which provides as much as US$3-per-kg of production, is meant to spur a domestic industry for the clean-burning fuel, which is seen as a critical for decarbonising steel, cement and heavy transportation.

But the guidance, which is still in draft form and subject to revisions following a 60-day public comment period, has been the subject of intense lobbying in Washington over what kinds of projects will qualify.

Biden administration officials said they opted to reserve the credit for hydrogen produced using renewable power brought online within the last three years and generated at the same time and on the same power grids as the gas itself.

Senator Joe Manchin, a West Virginia Democrat who has opposed attaching strict environmental rules to the tax credits, blasted the rules, saying they’d hobble the hydrogen industry before it ever gets up and running.