At Its Heart, the Inflation Reduction Act (IRA) is Climate and Clean Energy-driven Legislation

Three Pillars of Green Hydrogen Production

Eric Guter, Air Products’ Vice President, Hydrogen, breaks down guidance given by the U.S. Government on clean hydrogen production, otherwise known as the three pillars of green hydrogen production.

At its heart, the Inflation Reduction Act (IRA) is climate and clean energy-driven legislation. 

This was the key theme of my remarks during the March 25, 2024 public hearing hosted by the U.S. Department of the Treasury and Internal Revenue Service (IRS) in Washington, D.C. regarding proposed federal rules for claiming the IRA’s Clean Hydrogen Production Credit (45V).

Long before the IRA, Air Products made an industry-leading commitment to invest over $15 billion in clean energy projects to accelerate the energy transition.

And we are already building clean hydrogen projects around the world. Currently, Air Products has projects that, in aggregate, represent more than $12 billion of investment under development in the U.S. and in other countries that meet the strictest standards of clean hydrogen production referred to as the three pillars, which are hourly-matching, incrementality, and deliverability. 

It can be done. 

Air Products is doing it. 

And others can do it too. 

We applaud Treasury and the Internal Revenue Service (IRS) proposed guidance for imposing strict standards for the 45V hydrogen tax credit which should deliver real and verifiable emissions reductions from Day One. 

  1. Air Products strongly supports hourly matching of electricity with hydrogen production starting in 2028. Hourly matching is critical to assuring that grid emissions won’t increase from electricity generation associated with new hydrogen production. This pillar ensures that we do not ramp up fossil-based power production to support hydrogen production and exacerbate – rather than reduce – emissions. 
  2. Air Products strongly supports incrementality of clean electricity starting Day One. Incrementality is needed to ensure there is no shuffling of renewable power resources between existing end users of power and new clean hydrogen production facilities and that we do not adversely impact grid power pricing. The incrementality pillar ensures that every new molecule of hydrogen production is generated by new clean electrons that we add to the grid. 
  3. Air Products supports the requirement for deliverability based on the regions identified in the proposed regulations. We must ensure that clean power generated in a region is actually delivered to clean hydrogen projects. Without this pillar, grid emissions may go down in one region but up in another, negating a project’s effects, and increasing local grid congestion. 

We believe that for hydrogen to truly be clean, all three pillars must be implemented together. Any deviation from the three pillars will set us on a perilous path and slow down, rather than accelerate, decarbonization. It will also unfairly disadvantage compliant projects, which Air Products is proving are possible. 

Finally, we have the opportunity with proper implementation to cement the U.S.’s global climate leadership. A robust U.S. hydrogen market will require that the U.S. hydrogen industry be able to export clean hydrogen to our allies around the globe, including the European Union. This will ensure the United States will be part of a globally harmonized clean hydrogen certification system, important for global energy trade and broader market lift-off.

– Eric Guter, Vice President, Hydrogen at Air Products

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