US bill divides hydrogen industry
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This is a re-post from Argus News & Analysis.
September 21, 2022
The act has drawn wide praise but some groups fear the huge amount of funding on offer could prompt an exodus from Europe, writes Emmeline Willey
Washington, 23 August (Argus) — Having long called for legislative support, the US’ nascent hydrogen industry has finally gotten what it wished for in the Inflation Reduction Act, which President Joe Biden signed into law on 16 August. But the act has been met with mixed reactions, dividing those who welcome the new funding opportunities from those who say the act should have gone further, while leaving others concerned that hydrogen producers will abandon the rest of the world to flock to the US.
Many have applauded the passage of the bill, which includes a hydrogen production tax credit of up to $3/kg depending on carbon intensity. The bill sends a “strong market signal that the US is serious about hydrogen’s future”, according to French gas firm Air Liquide. German electrolyser manufacturer Siemens Energy expects the US clean hydrogen economy to “surpass all global efforts to date, making the US a frontrunner in developing a domestic hydrogen ecosystem” across the value chain. The bill could make current hydrogen consumers shift to a cleaner version and win over entirely new customers, the company says.
Some firms have announced a change in strategy following the bill’s passage. “Without this bill, more of our focus would have turned to Europe,” US hydrogen company Plug Power’s chief executive, Andy Marsh, says, but now the company could take amore balanced approach by leveraging its partnerships in Europe and pursuing a leadership role in US markets. Canadian fuel-cell company Ballard Power similarly indicated that it would revise its strategy to pursue US opportunities.
But despite the act’s substantial funding opportunities for clean hydrogen, some feel it should have gone further. “We would have liked to have seen less of a drop-off in credit amounts for some state-of-the-art hydrogen production that still has extremely low greenhouse gas intensity,” environmental group Clean Air Task Force’s hydrogen policy specialist, Emily Kent, says.
Hydrogen infrastructure start-up GenH2, is worried that the act’s “vague” wording restricts support to large firms with access to lobbyists, and that funds will be used for efforts and investments those companies have already made into decade-old technology. Small start-ups are more likely to possess the technologies needed to address the issues the act is intended to solve. If provisions were made to earmark half of funding for manufacturers with gross annual sales below $100mn and less than 500 employees, “we would see true competition and new projects could then be awarded based on the merit of the technology”, driving a faster rate of innovation, GenH2 suggests.
Outside the US, some are concerned that their regions could lose the edge. Companies may leave Europe to take advantage of the “groundbreaking regulations”, industry body Hydrogen Europe’s chief executive, Jorgo Chatzimarkakis, says. Some of Hydrogen Europe’s members have already indicated that the EU will be less of a priority, especially as the wait for the bloc to finalize its legal definition of renewable hydrogen goes on, Chatzimarkakis says. The EU’s €5.4bn ($5.4bn) subsidy package wrapped up in July triggered optimism and was widely hailed as a crucial step forward, but it pales in comparison with Washington’s measures.
The news from the US may trigger further calls for government funding, particularly in countries that are vying to compete in a future export market such as Australia, where project developers
have complained about a lack of support.
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