Biden administration releases key guidance that could shape the future of the clean hydrogen industry

The Biden administration has issued preliminary guidance on its clean hydrogen tax credit, which favors hydrogen produced from clean electricity. The tax credit is part of the Inflation Reduction Act and provides companies with up to $3 for every kilogram of hydrogen produced. The aim is to support the development of the hydrogen industry in the US, which could help decarbonize heavy industry and large vehicles. The proposed rules give the most generous tax credits to producers who make the cleanest hydrogen, considering planet-warming pollution throughout the entire lifecycle of production. The Biden administration aims to increase hydrogen production by 50 times by 2050 and cut US planet-warming pollution by about 10%. However, concerns exist about the electricity demands and the need for clean power to produce hydrogen. The proposed guidance also sets rules to ensure that hydrogen production does not increase overall emissions. The Treasury regulation is yet to be finalized, and more information is being sought on incorporating nuclear and other forms of energy into the tax credit structure.