The hydrogen companies pushing for strict subsidy rules
This story was first published by Energy News Network. The term “clean energy” often brings to mind gleaming solar panels, spinning wind turbines or water surging through a hydroelectric dam. Few people would imagine dark salt caverns a mile underground, but these geologic formations could play a key role in the development of emissions-free green hydrogen. Hy Stor wants to use such salt caverns in Mississippi and elsewhere to store hydrogen made by splitting water molecules with electrolysis powered by new renewable energy. The fuel could then be stored in the caverns until electricity demand spikes and then used to generate emissions-free electricity when other renewables can’t meet demand. Hy Stor is among the companies that supports proposed rules for a potentially lucrative federal tax credit for “green” hydrogen fuel production. These companies provide a counterpoint to power companies and other industry players who are pressuring the government to relax provisions that demand green hydrogen production does not use existing renewable or nuclear power that would otherwise be used on the grid. Companies, including members of federally funded hydrogen hubs, have argued that under the proposed rules governing the tax credit known as 45V, not enough hydrogen will be produced to meet demand and help develop a zero-emission economy. But environmental advocates and academics point to studies showing that hydrogen production without stringent rules can actually lead to emissions increases. They, along with some industry sources, are calling on the U.S. Treasury Department to enshrine proposed requirements that hydrogen receiving tax credits meet “three pillars”: The renewable energy used to power electrolysis must be newly added to the grid, known as incrementality or additionality; it must be generated near the hydrogen plant, known as deliverability; and it must be generated around the same time it is used, known as hourly matching. “Without the right rules in place, you’re going to see companies try to make as much hydrogen as possible, since the 45V tax credit is so lucrative,” said Dan Esposito, manager of the electricity program for the consulting firm Energy Innovation. That, in turn, would place additional demand on the existing grid, much of which would be supported by coal and natural gas. “Not only are you making [greenhouse gas emissions] worse, you’re making it more difficult to clean up our electric system,” Esposito said. “The climate community is saying if we set weak rules it will be a disaster, this will not be clean hydrogen, it will just be a huge greenwashing campaign.” Hy Stor is among the hydrogen companies and renewable energy developers that have sent letters supporting the rules as proposed. A March 1 letter to Treasury and White House officials from companies including Hy Stor says: “Clear section 45V guidance that upholds the three pillars is necessary to guard against harmful climate impacts and significant emissions increases that might be driven by increases in fossil fuel-based generation to sustain electrolysis when renewable generation sources are not available. Weak section 45V rules would permit this perverse result, thus imposing significant climate and market risk that would undermine the achievement of U.S. climate goals, further the perception of political risk in U.S. climate regulation, and upset the hard-won momentum currently driving investment in the sector.” That letter was also signed by renewable energy developers CWP Global and ACCIONA, ACCIONA affiliate Nordex Green Hydrogen, major hydrogen producers Air Products and Synergetic, geothermal energy provider Fervo Energy and others. The action followed a Feb. 26 letter from seven federally funded hydrogen hubs to the Treasury Department arguing against the three pillars. That letter touts the job creation potential of the hubs, but adds: “Unfortunately, these investments and jobs will not fully materialize unless Treasury’s guidance, in its current form, is significantly revised, as many of the projects generating these investments and supporting jobs will no longer be economically viable.” Esposito noted that when the hubs were created by the 2021 Bipartisan Infrastructure Law, the Inflation Reduction Act, including the 45V tax credits, had not yet passed; it was signed by President Joe Biden nine months later. In other words, the federal government expected the hubs to be able to succeed even without tax credits, Esposito argues. “The public evidence suggests the hubs can do this the right way from the start,” he said. “They’re supposed to be centers of innovation, the whole point is they are research and development, so we shouldn’t give them the easiest path forward.” Salt to industry Hy Stor COO Claire Behar said that the company controls 10 salt domes in Mississippi and has necessary permits from the state oil and gas regulatory body to move forward with their hydrogen production and storage project. “We like to think our location at scale can really serve as a strategic hydrogen reserve, with years worth of hydrogen storage,” Behar said. Power generation companies, “green steel” mills, and other hydrogen-hungry industries could be co-located near Hy Stor. The company says these industries would basically be powered by renewables built specifically for this purpose, fueled by hydrogen that is created by renewables then stored for when it’s needed. “It is really about having that large-scale storage that is dispatchable, we’re able to deliver a 24/7 product,” said Behar. “Those end users understand that the zero-carbon solution will have to be hydrogen. We’re focused on both the industry already existing in our region — maritime, large industrial — and also attracting new greenfield customers.” Behar said requiring new renewable generation is crucial to define hydrogen production as clean.
This story was first published by Energy News Network . The term “clean energy” often brings to mind gleaming solar panels, spinning wind turbines or water surging through a hydroelectric dam. Few people would imagine dark salt caverns a mile underground, but these geologic formations could play a key role in the…
This story was first published by Energy News Network.
The term “clean energy” often brings to mind gleaming solar panels, spinning wind turbines or water surging through a hydroelectric dam.
Few people would imagine dark salt caverns a mile underground, but these geologic formations could play a key role in the development of emissions-free green hydrogen.
Hy Stor wants to use such salt caverns in Mississippi and elsewhere to store hydrogen made by splitting water molecules with electrolysis powered by new renewable energy. The fuel could then be stored in the caverns until electricity demand spikes and then used to generate emissions-free electricity when other renewables can’t meet demand.
Hy Stor is among the companies that supports proposed rules for a potentially lucrative federal tax credit for “green” hydrogen fuel production. These companies provide a counterpoint to power companies and other industry players who are pressuring the government to relax provisions that demand green hydrogen production does not use existing renewable or nuclear power that would otherwise be used on the grid.
Companies, including members of federally funded hydrogen hubs, have argued that under the proposed rules governing the tax credit known as 45V, not enough hydrogen will be produced to meet demand and help develop a zero-emission economy.
But environmental advocates and academics point to studies showing that hydrogen production without stringent rules can actually lead to emissions increases. They, along with some industry sources, are calling on the U.S. Treasury Department to enshrine proposed requirements that hydrogen receiving tax credits meet “three pillars”: The renewable energy used to power electrolysis must be newly added to the grid, known as incrementality or additionality; it must be generated near the hydrogen plant, known as deliverability; and it must be generated around the same time it is used, known as hourly matching.
“Without the right rules in place, you’re going to see companies try to make as much hydrogen as possible, since the 45V tax credit is so lucrative,” said Dan Esposito, manager of the electricity program for the consulting firm Energy Innovation.
That, in turn, would place additional demand on the existing grid, much of which would be supported by coal and natural gas.
“Not only are you making [greenhouse gas emissions] worse, you’re making it more difficult to clean up our electric system,” Esposito said. “The climate community is saying if we set weak rules it will be a disaster, this will not be clean hydrogen, it will just be a huge greenwashing campaign.”
Hy Stor is among the hydrogen companies and renewable energy developers that have sent letters supporting the rules as proposed. A March 1 letter to Treasury and White House officials from companies including Hy Stor says:
“Clear section 45V guidance that upholds the three pillars is necessary to guard against harmful climate impacts and significant emissions increases that might be driven by increases in fossil fuel-based generation to sustain electrolysis when renewable generation sources are not available. Weak section 45V rules would permit this perverse result, thus imposing significant climate and market risk that would undermine the achievement of U.S. climate goals, further the perception of political risk in U.S. climate regulation, and upset the hard-won momentum currently driving investment in the sector.”
That letter was also signed by renewable energy developers CWP Global and ACCIONA, ACCIONA affiliate Nordex Green Hydrogen, major hydrogen producers Air Products and Synergetic, geothermal energy provider Fervo Energy and others.
The action followed a Feb. 26 letter from seven federally funded hydrogen hubs to the Treasury Department arguing against the three pillars. That letter touts the job creation potential of the hubs, but adds:
“Unfortunately, these investments and jobs will not fully materialize unless Treasury’s guidance, in its current form, is significantly revised, as many of the projects generating these investments and supporting jobs will no longer be economically viable.”
Esposito noted that when the hubs were created by the 2021 Bipartisan Infrastructure Law, the Inflation Reduction Act, including the 45V tax credits, had not yet passed; it was signed by President Joe Biden nine months later. In other words, the federal government expected the hubs to be able to succeed even without tax credits, Esposito argues.
“The public evidence suggests the hubs can do this the right way from the start,” he said. “They’re supposed to be centers of innovation, the whole point is they are research and development, so we shouldn’t give them the easiest path forward.”
Salt to industry
Hy Stor COO Claire Behar said that the company controls 10 salt domes in Mississippi and has necessary permits from the state oil and gas regulatory body to move forward with their hydrogen production and storage project.
“We like to think our location at scale can really serve as a strategic hydrogen reserve, with years worth of hydrogen storage,” Behar said.
Power generation companies, “green steel” mills, and other hydrogen-hungry industries could be co-located near Hy Stor. The company says these industries would basically be powered by renewables built specifically for this purpose, fueled by hydrogen that is created by renewables then stored for when it’s needed.
“It is really about having that large-scale storage that is dispatchable, we’re able to deliver a 24/7 product,” said Behar. “Those end users understand that the zero-carbon solution will have to be hydrogen. We’re focused on both the industry already existing in our region — maritime, large industrial — and also attracting new greenfield customers.”
Behar said requiring new renewable generation is crucial to define hydrogen production as clean.