API Warns Hydrogen 45V Regulations Fail To Recognize Blue Hydrogen As Climate Solution, Calls For Inclusive Approach

The American Petroleum Institute (API) today urged the Biden Administration to prioritize production of hydrogen of all types and feedstocks – including blue hydrogen produced from natural gas – to drive a lower carbon future. In comments filed on the Section 45V tax credit on clean hydrogen production with the Department of Treasury and Internal Revenue Service (IRS), API criticized the draft regulation’s focus almost exclusively on hydrogen produced using electricity generated from entirely renewable energy sources. API urged greater emphasis on all solutions that accelerate hydrogen supplies and further reduce greenhouse gas emissions.

“Simply put, we are at a crossroads with U.S leadership on hydrogen. We can either work together on innovative solutions to reach our ambitious hydrogen targets or we can follow the narrow path proposed by the Biden administration that discriminates against certain technologies and feedstocks,” API Senior Vice President of Policy, Economics and Regulatory Affairs Dustin Meyer said. “The clear intent of Congress in the 45V tax credit is to foster more development and flexibility for hydrogen expansion, not less. Instead of sidelining a key emissions reduction tool for the politics of the day, this proposal must be revised to empower individual hydrogen producers to take the risks necessary to scale these much-needed solutions.”

The current Treasury Department and IRS proposal could limit a significant opportunity to expand hydrogen – a key climate solution – and sideline hydrogen produced from lower-methane intensity natural gas by holding producers to a national or regional average for greenhouse gas (GHG) emissions. Projects that are able to meet the emissions threshold established by Congress should be able to access 45V credits. But the lack of pathways for credit for carbon capture-enabled hydrogen could chill investment and hamper potential GHG emissions reductions efforts, particularly in hard-to-electrify sectors.

The U.S. oil and natural gas industry is a leader in hydrogen and is expected to play a significant role across the low-carbon hydrogen value chain, supporting the administration’s stated goal of producing 10 million metric tons (MMT) of hydrogen by 2030 and 50 MMT by 2050 as producers, consumers and transporters of hydrogen.

Hydrogen produced with natural gas and carbon capture is a key component of several of the DOE’s recently announced regional clean hydrogen hubs, with more than half of the proposed projects in the U.S. planning to use CCS-enabled hydrogen. The Department of Energy (DOE) and the Biden administration have estimated that the seven hydrogen hubs winners alone will collectively provide 334,280 direct jobs and 111,000 permanent jobs.

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About The American Petroleum Institute (API)
API represents all segments of America’s natural gas and oil industry, which supports nearly 11 million U.S. jobs and is backed by a growing grassroots movement of millions of Americans. Our approximately 600 members produce, process and distribute the majority of the nation’s energy, and participate in API Energy Excellence, which is accelerating environmental and safety progress by fostering new technologies and transparent reporting. API was formed in 1919 as a standards-setting organization and has developed more than 800 standards to enhance operational and environmental safety, efficiency and sustainability.