US climate bill includes massive, game-changing green hydrogen incentives

US climate bill includes massive, game-changing green hydrogen incentives
The US Senate has approved legislation that will place enormous government subsidies on certain green hydrogen projects, making it cheaper than dirty hydrogen in many cases
The US Senate has approved legislation that will place enormous government subsidies on certain green hydrogen projects, making it cheaper than dirty hydrogen in many cases
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The US Senate has approved legislation that will place enormous government subsidies on certain green hydrogen projects, making it cheaper than dirty hydrogen in many cases
The US Senate has approved legislation that will place enormous government subsidies on certain green hydrogen projects, making it cheaper than dirty hydrogen in many cases

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

Using hydrogen as fuel for land/sea/air vehicles, or for storing energy, or for heating homes, is extremely bad idea,
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!)
Hopefully the money ends up actually being used for what it’s intended this time and not wasted like when Obama was trying to push his own green energy deal and all that money that was supposed to be used for solar panels got dumped into companies that failed to deliver in the end. Governments have a bad habit of losing track of their money and spending it on useless programs.
Yes yes yes.
Open as many mines as are needed to fully electrify everything.
I love open pit mines myself.
Bob B
Not that I mind reading reports of how our government is trying to help the world go green, but at least the reporter could be a bit more accurate about how it's being done. This bill is NOT going to make hydrogen cheaper. It's going to force taxpayers to fork over additional money to allow the buyers of hydrogen to not pay the full cost.

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.
Invest in Sun Hydrogen for Hydrogen made from any source of water and sunlight.
If you do the minimum amount of research online, you will find that the perception of poor hydrogen safety is exactly that: perception. Hydrogen vehicles have been on the roads for years with a great safety record, and in many ways hydrogen is much safer than gasoline. For example, a punctured hydrogen tank on a vehicle quickly dissipates harmlessly into the atmosphere, while a punctured gasoline tank will leak and pool the fuel in and under the vehicle.

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.
Yes, a bill that will kickstart a global hydrogen revolution makes me feel so warm and fuzzy inside when it comes during a recession, along with the highest inflation rates in decades and raises taxes on the middle class while allowing billionaires to maintain their current tax rates. I will feel really good about green energy as we take refuge at a homeless shelter. And, since China has the highest carbon footprint on an order that would take at least the next ten highest countries combined to match, it will be so comforting to know that my family's sacrifice will have a small net effect, if any, on climate change. With the right timing and right funding, I could support this bill. As it stands, it will go down as a significant historic mistake that harmed millions while helping few in the long run. It is a bill by the elite and for the elite.
Just another FREE bill. Just as the Infrastructure bill had no infrastructure in it, this will have absolutely zero effect on Bill's inflation. More bogus government shenanigans. Boo/Hiss.
Let new energies pay for themselves, please.
@Evan, I think some people have the "Hydrogen is explosive" mantra on their clipboard so that it can be rolled out again whenever there is a Hydrogen story. The supposed explosiveness of Hydrogen has been debunked so many times, but some people won't listen. I agree with your comments wholeheartedly.
I'm astonished at the ignorance and misguidedness of most of the posters here.

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.
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