Treasury gets an earful on hydrogen

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Apr 01, 2024 View in browser   By Arianna Skibell A rendering of "blue" hydrogen tanks. | iStock The Biden administration’s effort to jump-start the hydrogen power industry has sparked a heated debate over what constitutes “clean” hydrogen — a question that has generated as many as 30,000 answers. That’s how many comments the Treasury Department received on its draft rules for how hydrogen companies can qualify for generous tax credits included in President Joe Biden’s signature climate law, writes Christian Robles. The agency held its first public hearing on the rules last week, where industry players and environmentalists duked it out. A major point of contention emerged around Treasury’s proposed requirement that companies use new low-carbon energy sources, rather than existing generators, to make hydrogen fuel. While hydrogen is by definition carbon-free, it takes energy to make energy — meaning the gas is only as climate-friendly as its production process. The bulk of hydrogen energy produced in the U.S. today is extracted from natural gas, which releases planet-warming pollution into the atmosphere. The Biden administration’s goal is to produce 10 million metric tons of hydrogen fuel annually by 2030 using new solar, wind or other renewable power. The rationale is that using electricity from the grid — without adding new clean power to meet the increased demand — would boost fossil fuel use. But critics of Treasury’s proposal say the requirement threatens to kneecap the nascent industry. It could, for example, stymie the use of nuclear energy, which is carbon-free, to produce hydrogen, argued Dorothy Davidson, CEO of the MachH2 hydrogen hub. Building new nuclear reactors is too expensive and takes too long to be worth it for her company, which is in negotiations with the Energy Department for up to $1 billion in federal funding. Another company CEO, Andy Vesey of Fortescue Future Industries, said the requirement to use new clean power sources would take five years or more to fulfill, delaying operations and increasing costs by 20 percent. Still, at least four companies have said they plan to move forward with major hydrogen projects that comply with Treasury’s rules, said Erik Kamrath, a hydrogen advocate for the Natural Resources Defense Council. That’s enough to produce 6 million metric tons of clean hydrogen, according to the White House.   It's Monday — thank you for tuning in to POLITICO's Power Switch. I'm your host, Arianna Skibell. Power Switch is brought to you by the journalists behind E&E News and POLITICO Energy. Send your tips, comments, questions to askibell@eenews.net.   Access New York bill updates and Congressional activity in areas that matter to you, and use our exclusive insights to see what’s on the Albany agenda. Learn more.     Listen to today’s POLITICO Energy podcast Today in POLITICO Energy’s podcast: Catherine Morehouse sits down with Rob Gramlich, founder and president of consulting firm Grid Strategies, to discuss whether the grid can handle a predicted surge in power demand. Power Centers Republican presidential candidate and former President Donald Trump attends a campaign rally March 16 in Vandalia, Ohio. | Jeff Dean/AP Wanted: Republican energy nerds Republican energy professionals are positioning themselves for jobs in case former President Donald Trump retakes the White House next year, writes Robin Bravender. Conservative groups are collecting names for political appointees, prospective employees are reaching out to their allies in Trump’s orbit, and Republicans are speculating about who might nab prime energy and environment appointments in a second Trump term. Democrats rebuke Biden for fighting climate activists Democratic lawmakers accused the Biden administration of asking courts to "close their eyes" to violations of young people’s constitutional rights by trying to quash a long-running youth climate case against the U.S. government, writes Lesley Clark. In a friend of the court brief, lawmakers called on the executive branch to “cease its extraordinary and oppressive efforts … to silence youth plaintiffs’ efforts to vindicate their Constitutional rights.” Confiscating Russian assets Congress is weighing bipartisan legislation that would let the administration confiscate around $5 billion to $8 billion in Russian assets and use the money to help finance Ukraine’s recovery, writes Zachary Warmbrodt. Speaker Mike Johnson also floated the idea of expanding U.S. natural gas exports to Ukraine as a way to “un-fund” Russia’s war effort. The Biden administration has halted natural gas exports. In Other News Transportation pollution: As some countries spurn cars, the U.S. continues to embrace highways. Chocolate problems: Easter egg prices soar as cocoa crops are hit by the climate crisis and exploitation.   SUBSCRIBE TO GLOBAL PLAYBOOK: Don’t miss out on POLITICO’s Global Playbook, the newsletter taking you inside pivotal discussions at the most influential gatherings in the world, including WEF in Davos, Milken Global in Beverly Hills, to UNGA in NYC and many more. Suzanne Lynch delivers the world's elite and influential moments directly to you. Stay in the global loop. SUBSCRIBE NOW.     Subscriber Zone A showcase of some of our best subscriber content. A couple uses a canoe to transport surgical supplies after massive flooding in Montpelier, Vermont, in July 2023. | Steven Senne/AP A proposal to hold oil companies liable for billions of dollars in climate damage has picked up Republican support as it moves through the Vermont Legislature. A federal appeals court has rejected a bid by environmental groups to force energy regulators to change their process for approving timelines for fossil fuel projects. Natural disasters cost property insurers $65 billion in 2023, according to new estimates that shed light on how extreme weather threatens U.S. insurance markets. That's it for today, folks! Thanks for reading.   Follow us on Twitter Arianna Skibell @ariannaskibell   Follow us

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