US likely to phase in strict rules for green hydrogen production, suggests White House advisor

The US government is apparently edging towards a compromise position on its clean hydrogen production rules — due to be unveiled this month — which will define the steps that producers must take to qualify for tax credits of up to $3/kg.

Environmentalists have called for the US Treasury to include “additionality” — for the power used in green H2 production to come from new renewables projects — as one of the key criteria for the new regulations, while the industry has been lobbying to allow hydrogen powered by existing renewables projects.

US needs additionality criteria on renewable hydrogen because it lacks guardrails to keep grid green: BNEF
Activists argue that additionality is needed to ensure that green electricity currently being used by the grid is not diverted to hydrogen production, as that clean energy will probably replaced by fossil-fuel power plants, thus driving up overall greenhouse gas emissions. The hydrogen industry argues that taking green electrons from the grid to produce H2 is no different to clean electricity being used to power electric vehicles or heat pumps, so additionality rules would “unfairly single out and burden the development of clean hydrogen”.

While the rules around additionality — and related matters such as temporal matching and geographical correlation (see panel below) — are still being debated, the government appears to be leaning towards a compromise position of phasing in strict rules over time.

“We’re very optimistic that we can get this right and strike the right balance,” said John Podesta, White House senior adviser for clean energy innovation, according to Bloomberg.

Podesta, who has been described as President Joe Biden's point man on clean hydrogen, has further signalled that the Treasury’s rules would “create the cost reductions that we need for electrolysers, but do it in a way that puts us on a path to having the highest standards for green hydrogen going forward during the course of this decade”.

Democrat senators come out against potential additionality clause in forthcoming US clean hydrogen definition
An anonymous senior official was also reported to have confirmed that this would mean a phase-in of rules over time.