US Senate passes bill including new hydrogen tax credits
August 15, 2022The bill also includes sustainable aviation fuel as well as other forms of clean fuel.
Last week, The US Senate passed the Inflation Reduction Act of 2022, which is a bill that includes a spectrum of benefits to clean fuel including hydrogen tax credits.
The bill passed by a vote of 51 to 51 with the tie breaker cast by Vice President Kamala Harris.
Aside from hydrogen tax credits, the bill also includes several provisions benefiting the bioenergy and biofuel industries, including sustainable aviation fuel (SAF) and a new technology-neutral tax credit for clean transportation fuels and cleaner H2 production.
Among the bill’s provisions is a goal to create additional tax credits that support SAF’s sale and use. This will achieve a reduction of 50 percent in greenhouse gas emissions, which would be set at $1.25 per gallon. A further 1 cent per gallon can be accessed for each percentage point by which the greenhouse gas emissions are reduced above 50 percent across its lifecycle. The cap would be set at $1.75 per gallon.
Also included in the bill for supporting SAF will be the establishment a competitive grant program. In part, it will provide grants to those eligible for carrying out US-based projects producing, transporting, blending or storing SAF. Almost $250 million in funding would be available through that program.
Separately, other low-emission transportation fuel and hydrogen tax credits will be made available.
A provision within the bill will form a new Clean Fuel Production Tax Credit. That will apply to clean transportation fuel such as H2 produced and sold in 2025, 2026, and 2027. For an entity to qualify, it would need to achieve at least a 40 percent reduction of greenhouse gas emissions in comparison with the emissions produced by diesel.
The new Section 45V production tax credit (PTC) was also created by the bill, aimed at clean H2. The hydrogen tax credit is meant for H2 produced at qualified facilities starting construction before the close of 2032. It would begin applying to H2 produced after the end of this year. Depending on the specific project, it could be anywhere from 12 cents per kilogram to $3 per kilogram, according to the writing of the bill.
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Great to see the Inflation Reduction Act provides incentives for hydrogen use and development. This is a major step in a US transition to a hydrogen economy. All must realize fossil fuels are a finite resource and those currently having remaining oil and gas reserves will continue to raise prices and limit access to others for political and financial gains. Best that governments now create a hydrogen alliance and work together to plan a future using hydrogen as their energy replacement for depleting oil and natural gas reserves worldwide.
Energy for the world.
Regarding a recent event, it was pleasing to read Israel will soon be moving desalinated water from the Mediterranean Sea to the Dead Sea. Thank you, Israel, for taking my suggestion years ago and making this happen. You will bring new life to the Dead Sea and bring prosperity to this region for generations to come. Please to disclose that the US is considering doing something similar for the Salton Sea. Climate warming is having a devastating impact to both seas and this solution will work in both locations.