Forbes Piece: How Treasury’s New Hydrogen Rule Could Undermine EPA Emissions Goals

[Note: This story is also published at Forbes.com]

As part of its latest crackdown on emissions from coal and natural gas power plants, the U.S. Environmental Protection Agency (EPA) said it would avoid negatively impacting grid reliability and increasing electricity costs to consumers by requiring “ambitious reductions in carbon pollution based on proven and cost-effective control technologies that can be applied directly to power plants.” One technology solution the agency suggests as most applicable to natural gas-fired plants is the application of what it refers to as “low-GHG hydrogen,” with the “GHG” referring to the greenhouse gas footprint of the energy source that produces the hydrogen.

“Installation of controls such as CCS for coal and gas plants, and low-GHG hydrogen co-firing for gas plants are more cost-effective for power plants that operate at greater capacity, more frequently, or over longer time periods,” the EPA’s release reads. “The proposed standards and guidelines take this into account by establishing standards for different subcategories of power plants according to unit characteristics such as their capacity, their intended length of operation, and/or their frequency of operation.”

But a draft proposed regulation from the U.S. Treasury Department (USDOT) governing the implementation of the 45V tax credits included in last year’s Inflation Reduction Act (IRA) seems poised to undermine the stated goals of the EPA rule. Critics of the USDOT proposal point out that the inclusion of so-called “additionality” requirements threaten to cause significant delays in the scaling up of low-GHG hydrogen availability, which would inevitably result in the premature closing of a high number of natural gas plants that would be unable to meet the new emissions limits when they kick into effect starting in 2030.

In a May 4 letter sent to the Treasury Department, members of the Fuel Cell and Hydrogen Energies Association (FCHEA) point out that the U.S. has seen a high degree of financial interest in investing in new hydrogen projects since the passage of the IRA last August. But the group adds that that level of interest could be curtailed with the inclusion of an additionality requirement.