AM Briefing: Hydrogen Tax Credit Rules Finally Unveiled

Current conditions: Temperatures are about 30 degrees higher in the Plains and Midwest than what’s seasonally normal • Northern Vietnam is enduring a severe cold spell • High winds from Storm Pia helped the U.K. set a new record for wind energy generation in just 30 minutes.

THE TOP FIVE

1. Biden unveils long-awaited hydrogen tax credit rules

The Biden administration today unveiled strict rules governing the tax credits for clean hydrogen production, reports Heatmap’s Robinson Meyer. Hydrogen produces no climate pollution when burned, and could potentially replace fossil fuels in many sectors if scaled up responsibly. Under the Inflation Reduction Act, a company can get up to $3 for each kilogram of hydrogen made with clean electricity that it produces and sells. But to qualify for the subsidy, would-be hydrogen producers will have to demonstrate that they used clean, zero-carbon electricity to power their electrolyzers, the energy-hungry machines that pull hydrogen out of water or other molecules. Defining clean electricity has proven to be an enormous challenge and the subject of one of the biggest fights around the law. Under the new rules, electricity used to produce hydrogen must:

• come from a relatively new source of zero-carbon power
• be produced at roughly the same time that it is used to make hydrogen
• have been made on the same power grid that the electrolyzer itself is using

Some industry groups allege the new rules could stunt the field in its infancy. Deputy Secretary of the Treasury Wally Adeyemo was effusive about the new rules’ benefits. “We’ve developed a structure that will drive innovation and create good-paying jobs in this emerging industry while strengthening our energy security and reducing emissions in hard-to-transition sectors of the economy,” he told reporters.

2. Analysis shows U.S. battery production is on track to meet demand

New analysis from the Environmental Defense Fund, provided exclusively to Heatmap, suggests that U.S. battery production is going really well. The data shows American battery manufacturers around the country — many of them automakers — have announced over 1,000 gigawatt hours of U.S. battery production that’s slated to come online by 2028, far outpacing projected demand.

EDF

As Heatmap’s Neel Dhanesha explains, this matters because the Inflation Reduction Act stipulates that, in order to be eligible for tax credits, electric vehicle components can’t be made by a country on the U.S.’s “foreign entities of concern” list. That rules out batteries made in China. Without an increase in American battery manufacturing, we run the risk of Americans being either unwilling or unable to pay for the EVs that we’d need to hit strict new EPA vehicle emissions standards.

3. 7,000 car dealers join portal for quick EV tax credit payments

Let’s stick with EVs for a moment: The U.S. Treasury today announced that more than 7,000 car dealers have registered with the IRS Energy Credits Online portal. Many electric vehicles are eligible for sizable federal tax credits, and this portal, unveiled last month, helps streamline the crediting process by allowing dealers to apply the credit as a kind of discount at the point of sale. If the dealer is registered on the portal, they can submit the sales information to the IRS and receive payment for the value of the credits within 72 hours.

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4. India wants to use AI in weather forecasting

India is testing ways of incorporating artificial intelligence into weather forecasting to better prepare for extreme weather events, Reuters reports. The India Meteorological Department already uses supercomputers for weather models but “an AI model doesn't require the high cost involved in running a supercomputer,” Saurabh Rathore, an assistant professor at Indian Institute of Technology-Delhi, says. “You can even run it out of a good quality desktop.” The Centre for Science and Environment estimates that India saw almost one weather disaster per day this year, and that these events, exacerbated by global warming, have killed nearly 3,000 people. The U.K.’s Met Office is also exploring AI models that could forecast extreme weather events.

Centre for Science and Environment

5. Indonesia to fine some palm oil producers

Indonesia will start fining companies that own palm oil plantations in areas designated as forests. Palm oil is widely used in foods, cosmetics, cleaning agents, and other products, and palm oil plantations are a huge culprit in deforestation and habitat loss, especially in Indonesia, which is the world’s biggest palm oil producer and exporter. Last month the country identified nearly 500,000 acres of plantations in forest areas, which will be handed over to the state and turned back into forests.

THE KICKER

Researchers at the California Academy of Sciences discovered 153 new animal, plant, and fungi species in 2023, including 66 spiders, 13 sea stars, 12 geckos, one scorpion, and one legless skink.