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Stimulus Support for Hydrogen and Fuel Cells Passed by Congress

The National Academies of Sciences took a stand recently, saying technologies like hydrogen can help build the economy, create high-quality jobs, and address social injustice in the energy system—all of which are key goals of the Biden administration.

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“The industry needs tax credits to help scale up green hydrogen”, said Will Gassen, CEO of Zeroc Energy.

“That’s been done with other sectors, and it works,” Gassen said. “Solar and wind production tax credits have helped those industries scale up and bring down costs.”

Clean Energy for Biden, a group of industry leaders supporting the president, recently called for a credit of between 40 cents and $2 per kilogram of domestically-made clean hydrogen carriers, such as ammonia, phasing down to zero over 10 years. The group also wants a manufacturers’ tax credit of $500 per kilowatt of capacity of U.S.-made electrolyzers, the devices that convert water and electricity into usable hydrogen.

Locking down a tax credit would require the cooperation of Congress. The House and Senate did approve a range of hydrogen credits in H.R. 133 Consolidated Appropriations Act, better known as the “the Trump coronavirus stimulus bill” it’s an excellent step forward but, the first step in a long journey.

In addition to providing relief related to the effects of COVID-19, the Trump era H.R. 133 also contains crucial provisions for the hydrogen and fuel cell industry, including appropriations funding, policy authorizations, and tax incentive extensions. 

Appropriations Funding

The legislation includes funding for the Department of Energy (DOE) related to hydrogen and fuel cells. This appropriated funding includes $150 million for the Hydrogen and Fuel Cell Technologies Office located within the Office of Energy Efficiency and Renewable Energy. The legislation also provides for $30 million in funding for the Solid Oxide Fuel Cell Program within the Office of Fossil Energy.

Policy Authorizations

The legislation also provides a number of authorizations for hydrogen and fuel cell-related policies, including the following:

  • Authorizes a research, development, and demonstration program to modernize and improve nuclear facilities, which includes a focus area on hydrogen production. The legislation authorizes $20 million in FY 2021, $30 million in each of FY 2022 and FY 2023, and $40 million in each of FY 2024 and FY 2025.
  • Provides for technical assistance and grants for energy storage and microgrid projects that include hydrogen energy storage as an eligible technology. The legislation authorizes $15 million in each of FY 2021 through FY 2025.
  • Authorizes a research, development, and demonstration program and large-scale pilot program for carbon capture and sequestration that includes hydrogen steam methane reforming process (SMR) plants, as well as fuel cell technologies for modular power systems. The legislation authorizes $1,050 million in each of FY 2021 and FY 2022, $900 million in each of FY 2023 and FY 2024, and $450 million in FY 2025.
  • Authorizes a research, development, and demonstration program for gas turbines that include fuel flexibility to run with high proportions of hydrogen. The legislation authorizes $50 million in each of FY 2021 through FY 2025.
  • Directs the DOE to conduct a study on research and development needs for blue hydrogen technology.
  • Authorizes a research, development, and demonstration program for reducing industrial emissions that includes a focus area on hydrogen. The legislation authorizes $20 million in FY 2021, $80 million in FY 2022, $100 million in FY 2023, $150 million in each of FY 2024 and FY 2025.
  • Expands eligibility for the DOE Loan Program to include technologies for reducing industrial greenhouse gas emissions, including hydrogen production.

Hydrogen and Fuel Cell-Related Tax Incentive Extensions

The bill includes a “Taxpayer Certainty and Disaster Tax Relief Act of 2020,” which contains significant extensions of renewable and clean energy tax credits.  Relevant extensions for the hydrogen and fuel cell industry include:

  • One-year extensions for the section 30(B) fuel cell vehicle credit and the 30(C)-hydrogen refueling station credit that were set to expire at the end of 2020, as well as pushing out the phaseout for the section 48(a)(7)(A) fuel cell investment tax credit (ITC) by two years.
  • The investment tax credit has been extended at its current 26 percent level to construction begun by the end of 2022, and at a 22 percent rate for property that begins construction by the end of 2023.In all cases, construction would have to be completed before 2026.
  • Importantly for blue hydrogen, the Act would also extend by two years (to January 1, 2026) the deadline for beginning construction of a carbon capture facility eligible for the carbon capture and sequestration credit under section 45Q.

Industry leaders are optimistic that President Biden will expand on what President Trump began. “We need a comprehensive plan that takes the present market realities into consideration,” said Gassen. “Neither the current trajectory of consumer adoption of EVs, nor existing levels of federal support for supply-and demand-side policies, is sufficient to meet our goal of a net-zero carbon transportation future.”

Hydrogen is recognized in the latest legislative iteration; Biden’s American Jobs Plan. The new Biden plan calls for $15bn in demonstration projects for climate research and development (R&D), including hydrogen and utility-scale energy storage. Zeroc’s Gassen concluded, “Certainly nothing to frown at, but not as focused as we would like.”

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