Top Senate Democrats believe the Biden administration will tweak a controversial Treasury Department proposed rule on hydrogen tax credits to make it friendlier to producers.
The draft guidance, released in late December, outlined how companies can obtain benefits for clean hydrogen production established in the Inflation Reduction Act.
Environmentalists cheered the Treasury Department guidance with strict qualification rules. The win for greens, however, may be in jeopardy.
“What the administration put out initially is not written in stone,” Senate Environment and Public Works Chair Tom Carper (D-Del.) said this week. “My expectation is that there are gonna be some changes.”
Both Carper and Senate Energy and Natural Resources Chair Joe Manchin (D-W.Va.) — two of the lawmakers most involved in helping craft the Inflation Reduction Act and now lobbying the White House — said they anticipated the rule’s qualification hurdles to be lowered.
“[The guidance] has killed the whole thing that could be a tremendous transition. We’ve put four or five hydrogen hubs in limbo,” said Manchin, referring to the hydrogen energy development hubs the administration is supporting the billions in infrastructure bill dollars.
“I expect it to be modified,” Manchin said of the guidance. “It can’t survive the way it is.”
The forecast from Democratic senators matches comments from some hydrogen industry leaders and observers, who have also suggested the final product will be more lenient.
A reworked guidance could have an exemption to a requirement that hydrogen plans only use clean energy added to the grid in the last three years.
The administration could allow 5 to 10 percent of clean energy generation from an existing plant powering the grid before 2023 to count as a new clean energy source.
The noise around potential changes is loud enough to spook some of the Senate’s more stringent climate hawks, who celebrated the initial guidelines.
“We want the full scale to be truly green hydrogen … to make sure that we’re creating a hydrogen economy that is based on renewable generation,” said Sen. Martin Heinrich (D-N.M.). “We’re really hoping the Biden administration sticks to their guns.”
The proposed rule is available for comment until Feb. 26. A public hearing is scheduled for late March.
Reporter Christian Robles contributed.
This story also appears in Energywire.