Paul Rodden • Season: 2023 • Episode: 275
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Welcome to The Hydrogen Podcast!
In episode 275, The Hill reports on the division that the three pillars are causing in the Democratic Party. I’ll go over the article and give my thoughts on today’s hydrogen podcast.
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Transcript:
The Hill reports on the division that the three pillars are causing in the Democratic Party. I’ll go over the article and give my thoughts on today’s hydrogen podcast.
So the big questions in the energy industry today are, how is hydrogen the primary driving force behind the evolution of energy? Where is capital being deployed for hydrogen projects globally? And where are the best investment opportunities for early adopters who recognize the importance of hydrogen? I will address the critical issues and give you the information you need to deploy capital. Those are the questions that will unlock the potential of hydrogen, and this podcast will give you the answers. My name is Paul Rodden, and welcome to the hydrogen podcast.
In an article in The Hill, Rachel Frazin writes moderate Democrats fume over Biden hydrogen proposal, Rachel writes moderate Democrats are fuming over the Biden administration’s decision to propose significant climate change related stipulations on the use of lucrative tax credit for hydrogen energy producers. Senator Joe Manchin, Democrat out of West Virginia, a frequent critic of the administration’s climate policies, said the proposal makes absolutely no sense. And moderates who have been more supportive of the administration like Senator Tom Carper, a Democrat out of Delaware are also pushing back on Biden’s rules.
The hydrogen energy issue divides Democrats with more conservative Democrats pressing for the flexibility they say will help a nascent industry that could be important in the climate fight. Liberals argue loose rules could make hydrogen energy a climate change problem rather than a solution. hydrogen energy can be made by either using electricity to separate the hydrogen out of water and an electrolyzer or, through a reaction between steam and methane a key component of natural gas, the fuel could be a key tool for cutting emissions from the industries whose climate pollutions is difficult to mitigate, including aviation and making chemicals, cement and steel. The inflation Reduction Act signed by President Biden last year provided a tax credit for hydrogen that is intended to jumpstart production of hydrogen made using low and no emitting power sources.
But the question of who can qualify is a contentious one. And moderate Democrats argue the administration is going too far with its new rules. In a quote for Manchin. This administration cannot keep itself from violating the inflation Reduction Act and their relentless pursuit of their radical climate agenda. He said that the move would quote kneecap the hydrogen market before it can even begin he’s also said today’s proposal rule doesn’t just violate the law that makes absolutely no sense. And he says that he will continue to fight this administration’s manipulation of the IRA.
Manchin who is not running for reelection but has flirted with a third party presidential bid has criticized a number of Biden administration climate policies, including its handling of tax credit for people who purchase electric vehicles, saying that it was applied to vehicles to broadly and that a new guidance is too loose on Chinese battery components. such criticisms sometimes leave Manchin on an island in the Democratic Party. But that wasn’t the case this last Friday. Carper, a frequent Biden ally who chairs the Senate Environment and Public Works Committee also criticized the guidance. He says, When developing the inflation Reduction Act we intended for the clean hydrogen incentives to be flexible and technology neutral.
He also said Treasury’s draft guidance does not fully reflect this intent, potentially jeopardizing the clean hydrogen industry’s ability to get off the ground. Senator Sherrod Brown Democrat out of Ohio, who faces a tough reelection battle in the next year. And an increasingly red state also said that the proposed guidance would quote, undermine the laws goals of lower energy costs and innovation. Brown also said these new proposed rules will slow down and ultimately undermine our country’s ability to produce clean hydrogen needed to build the energy economy of the future. The proposed rules lack of flexibility will cut out Ohio workers and Ohio businesses from creating the energy of the 21st century.
This pushback is not a surprise. Last month 11 Democrats signed a letter pushing for flexible rules for hydrogen industry. Carper was not on that letter but also set a missive calling for flexibility. An issue is whether to require hydrogen producers to build new clean power sources to fuel hydrogen production or whether electrolyzers should be allowed to pull existing power off the grid. Climate hawks warned the letter could result in more hydrocarbon use because it could drive up power demand in general and push planet warming gas plants online. They’ve also called for this new power to be in the same geographic region and produced within the same hour that is used to try to limit hydrogens impact on power demand overall, and a quote from Jeff Merkley Democrat out of Oregon.
I applaud the Biden administration for taking this important step to ensure that we develop a truly clean hydrogen industry. Hydrogen has the potential to be a key part of the climate solution, but only if we get it right. He also added creating hydrogen energy can be a very greenhouse gas intensive process. I and others have pushed hard for high standards because if hydrogen is not clean, then it cannot be a solution for hard to decarbonize sectors like heavy industry, and could even take us in the wrong direction. Merkley led a letter in October pushing for stringent standards and was joined by seven of his colleagues. Senator Martin Heinrich Democrat out of New Mexico who signed the letter also praised the rule and a post from x formerly known as Twitter saying, the US Treasuries hydrogen tax credit guidance includes the climate safeguards that will ensure the hydrogen economy of the future is clean. He also added the alternative would have made the problems worse, not better.
I applaud the Biden administration’s leadership here. Okay, so as expected the release of the US Treasuries three pillars stipulations has continued to cause more strife and division, with some applauding the decision to have strict regulations on what projects can be considered for the 45 V and others fuming over this policy and wondering if this will further strain the hydrogen industry to the point of failure. Now, we have infighting in the Democratic Party over how severe these regulations will be. And I can say firsthand that we’ve seen on the podcast, this same division in the comments we’ve received, especially after our special report with Roxana Bekemohammadi the executive director of the US hydrogen Alliance. She like Joe Manchin, is understandably upset with just how tight these regulations are. But several listeners have commented in opposition to her points, some aggressively so that these pillars must be put into place.
Now, I’ve said my thoughts on how to build the hydrogen economy, and I realized that some form of regulations are a necessity. I also see these three pillars is really just affecting electrolytic hydrogen development, if we’re currently looking at SMR and CCUS. Tech, generating hydrogen under $3 A kilogram depending on electricity costs and feedstock costs, and electrolytic from renewables at five to $6 a kilogram, even a $3 incentive won’t be enough to get to price parity. But here’s where I find the issue with the three pillars. Blue tech development doesn’t really hinge on these incentives. But there are electrolytic opportunities outside of renewable power sources that will be hamstrung by these regulations, namely nuclear and even geothermal, I separate out geothermal from the likes of wind and solar, simply because its supply isn’t intermittent. These technologies could struggle to get Treasury approval, even though they would effectively be the quote unquote, greenest options available.
So this one size fits all approach to the 45 tax credit, obviously, has rather severe blind spots that will hopefully be ironed out as these regulations get formalized next month. But there is one issue that I did see being brought up in comments. And that was the surprising animosity towards different viewpoints. I understand the frustration in dealing with others that refuse to allow certain points to be made, even when clear facts are given backing up the claims. I have that battle with my in laws all the time. But let’s all keep in mind that our ultimate goal is for the development of the hydrogen economy globally. And this is a we discussion, not a you versus us discussion. We can save the infighting for another day, because this is an all hands on deck moment to ensure the progress that’s been done so far, isn’t wasted. Put aside the animosity, and let’s move forward together.
All right. That’s it for me, everyone. If you have a second, I would really appreciate it. If you could leave a good review on whatever platform it is that you listen to Apple podcast, Spotify, Google, YouTube, whatever it is, that would be a tremendous help to the show. And as always, if you ever have any feedback, you’re going to email me directly at info@thehydrogenpodcast.com. So until next time, keep your eyes up and honor one another.
Hey, this is Paul. I hope you liked this podcast. If you did and want to hear more. I’d appreciate it if you would either subscribe to this channel on YouTube, or connect with your favorite platform through my website at www.thehydrogenpodcast.com. Thanks for listening. I very much appreciate it. Have a great day.
