Millions of Americans first met Washington, D.C., resident Taylor Krause when she appeared on Netflix’s dating show “Love Is Blind.” The series frames getting engaged as a type of matching problem, where contestants talk to each other, fall in love, and get engaged before they meet each other in person.
But here at Heatmap, we know Krause’s work because of a different type of matching problem: how to match clean hydrogen makers with new sources of clean electricity.
Krause works on the problem of decarbonizing heavy industry for the climate policy think tank RMI. Her team is wrapped up in a sprawling fight over how to regulate the clean hydrogen industry, a fight Heatmap followed keenly. The battle could determine how the government spends up to an estimated $100 billion in tax credits to incentivize the production of green hydrogen.
Treasury recently told Heatmap those regulations will be finalized by the end of the year. Meanwhile, the newest salvo in that fight — this being D.C., it took the form of a policy memo — was released on Monday by RMI. The white paper, coauthored by Krause, explains how developers could actually build clean hydrogen projects that are connected to the power grid while meeting the government’s stringent proposed standards.
It emerged in part from RMI’s collaboration with a “working group spanning developers, registries, and electricity forecasting experts,” according to the paper, and it proposes a series of ways hydrogen developers can meet the stringent “three pillars” standards the government has proposed. These rules would require that any electricity used to electrolyze water and extract hydrogen itself be produced by new zero-carbon sources during the same time period it’s used, and on the same power grid as the electrolyzer.
This three-step approach aims to keep the generous hydrogen tax credit from creating higher electricity prices across the power grid and generating more emissions than the hydrogen produced will mitigate, but it has been criticized by some companies for being too arduous and complicated to comply with. (Some hydrogen makers, such as the industrial gas-making giant Air Products, support the three pillars approach.)
One of the biggest topics the new memo tackles is the problem of buying clean electricity. If America regulates the clean hydrogen industry as the Biden administration has proposed, then eventually hydrogen companies will need to buy electricity credits from a “registry” — a company that can guarantee the power the hydrogen companies bought actually complies with the rules.
Those registries don’t exist right now. Until they do, the new memo argues, hydrogen makers should go straight to the source and solve the “matching problem” by contracting directly with a newly built solar, wind, or zero-carbon power source, using a two-way deal like a power purchase agreement, Nathan Iyer, a senior associate at RMI and co-author of the paper, told me. (Krause didn’t have time to talk.)
In other words: If you’re a clean hydrogen maker trying to buy electricity to power your electrolyzer, then love — or at least your procurement budget — should not be blind. Good to know. The memo ticks through a few other myths about the new standards that Krause and Iyer want to debunk. It’s a good reminder that while there might be no rules in love and war, there are more than 100 pages of proposed rules for taking advantage of the Inflation Reduction Act’s clean hydrogen production tax credit.
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