US climate bill includes massive, game-changing green hydrogen incentives
The US Inflation Reduction Act is poised to kickstart a global hydrogen revolution. Among the bill's many climate-focused provisions are tax credits that will make American green hydrogen the cheapest H2 in the world, as low as US$0.73 per kilogram (2.2 lb).
Dirty "gray" hydrogen, produced using coal and/or natural gas, currently retails for around US$1-$2 per kilogram, according to KPMG. From the same report, "green" hydrogen – produced with zero emissions using renewable energy, water and electrolyzers – costs between $2.50-$6.
The USA's new Inflation Reduction Act squeaked past the Senate in a tiebreaker vote on the weekend, and will soon be passed by the House. It's a $739-billion shadow of the US$3.5-trillion Build Back Better act originally proposed by Democrats in 2021, but it still marshals more than $360 billion toward clean energy – the largest such investment in American history.
And tucked away in its arcane text is a tax credit of up to $0.60 per kg for green hydrogen – defined as hydrogen that can be proven to create less than 0.45 kg (1 lb) of lifecycle CO2e emissions per kg of hydrogen, as verified by a third party, for projects that begin construction before 2033. This 60-cent subsidy gets a 500% bonus multiplier if the laborers and mechanics employed in the construction of any new facilities are paid "wages not less than the prevailing rates [for such work] in the locality in which such facility is located."
This results in a $3 per kilogram tax credit for green hydrogen, scaling back dramatically for "blue" hydrogen. According to this excellent explanation by Recharge News, the cheapest green hydrogen in the United States at the moment is from the Northwest, where it's produced at $3.73 per kg. Factor in a three-dollar subsidy, and you're looking at $0.73 per kg green hydrogen.
As we've written before, getting a kg of green hydrogen down to $1 would have revolutionary effects. As recently as last year, the US Hydrogen Council didn't dare to project it'd hit that figure until 2050, and then only in the best-case scenario. Now, thanks to this historic bill, we're looking at 73-cent hydrogen for the foreseeable future, or until the legislation is torpedoed by some subsequent Republican administration.
It'll immediately become cheaper for any current hydrogen buyer to seek out green than gray or blue, upending the current hydrogen landscape and drawing massive investment money into the US to take advantages of the global opportunities this move will create.
A crazy-cheap green hydrogen price will also stick a heavy thumb on the scale for a range of other decarbonization projects relying on hydrogen. As Recharge News points out, "green steel" produced using hydrogen is projected to become cost-competitive with dirty coke-fired steel at a green H2 price of $1.53 a kg. At less than half that price, you're looking at green steel now that's cheaper than the dirty stuff. The green premium becomes a green incentive. Any project relying on green hydrogen can now re-work its numbers with some extremely friendly new figures.
And it's now crystal clear that any other country that wants to be a major player in green hydrogen will now need to step up to the plate with its own equally bold incentives, or be priced out of the market.
A hefty stone has been cast into the pond, folks, and its ripples could be felt for decades to come. The strongest possible message has been sent out to the green hydrogen market. It'll be fascinating to see what big moves come out of this legislation in the coming months.
Source: Inflation Reduction Act via Recharge News
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since it is highly explosive! Seriously thinking there will be never any leak/ruptures/mishandling to trigger massive explosions?
Not to mention there is no need to use hydrogen for anything!
All light vehicles are already becoming electric & all heavy/big land/sea/air (diesel) vehicles
(like trucks & trains & construction/mining/agriculture/military vehicles & ships & aircraft)
just need us to start producing biodiesel at large scales from all possible industrial/agricultural/forestry waste/biomass & even trash & sewage!
For storing energy, there are already grid-size battery solutions!
For heating homes, just produce electricity from solar & wind & nuclear!
(But also upgrade electric grids of all cities/towns, so that they can handle the full load,
even if everybody uses electricity (at the same time) for heating & cooking & charging electric vehicles!)
Open as many mines as are needed to fully electrify everything.
I love open pit mines myself.
While this strategy is often used by the government, I don't really believe it's as beneficial as they would like you to believe. Often the product being boosted really isn't capable of standing on it's own merits and when the subsidies go away, so do the products. People/businesses who are well connected to government profit handsomely in the short term and the taxpayers don't get much in the way of long term benefits.
The energy density of hydrogen is still orders of magnitude higher than that of any battery, making it very attractive for aviation and heavy freight, and the recharge times are similar to gasoline. It doesn't deteriorate like biofuels. And biofuels are severely limited by their feed stocks. Only a small percentage of the market can be served by biofuels, which are basically an interim fuel as we transition to better alternatives like hydrogen. The main advantage of biofuels are that they integrate well with the existing infrastructure, but as that changes they will become less and less relevant.
Let new energies pay for themselves, please.
The only proven long term technology for utility storage is Hydrogen. Excess electricity is used to convert water into hydrogen and oxygen. The hydrogen is then stored. The oxygen can be sold. It's "boiler plate" ready, and it's the only comprehensive solution to how to best undergo the Green Energy Transition. It offers storage, energy transport via pipeline, and many industrial thermal processes. It also does not require the exotic minerals and metals of virtually all other schemes. The latter is a great political advantage, allowing self sufficiency for a country.