USA Hydrogen definition (Inflation Reduction Act)
The USA approach provides subsidies as part of the Inflation Reduction Act of 2022 to promote the production of low carbon Hydrogen. Depending on well to gate emissions and competitive wages, tax credits will be calculated and paid for a period of 10 years until 2032.
This aid is only available for low carbon hydrogen produced in the USA. Some states, such as California, have their own standards.
Principles
Up to 4 Kg CO2 / Kg H2
Tax credits (PTCs) depend on Wage levels and Carbon emissions with a maximum threshold of 4 kg CO2 per kg H2.
Additional incentives are available for renewable electricity generation.
Well to gate emissions
Scope 1, Scope 2 and partial Scope 3 emissions need to be taken into consideration in total emissions calculation.
Partial Scope 3 means only upstream GHG intensity of raw materials and their supply need to be taken into account.
Pathways
In pricinple, there are no restrictions on the pathways that can be used to produce qualifying low carbon hydrogen. In practice, the chosen pathway needs to be included in the GREET tools from Argonne National Laboratory to use the associated emission intensity value.
Important: A facility already receiving subsidies for carbon capture does not qualify for low carbon hydrogen tax credit under the Inflation Reduction Act
Pathways and GREET LifeCycle Analysis
The GREET tool is currently the primary source of GHG emissions intensity calculation. The tool is highly flexible in supporting many/any hydrogen production pathways, taking as inputs electricity and fuel mix inputs, to calculate GHG emissions.
The pathways below have been shortlisted in the latest release of GREET tools:
1. Low Temperature Electrolysis
2. High Temperature Electrolysis
3. Coal gasification
4. Biomass gasification (no CCUS)
5. Steam Methane Reformation of
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Natural Gas
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Landfill Gas
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Bio Gas from Anaerobic decomposition of animal waste, municipal solid waste, waste water sludge)
Note: Greet software was developed by Argonne National Laboratory. Shortlisted pathways mentioned above were sourced from Greet Software version 2022
Wages, Apprentices and other
Wages
Wages for the initial setup and ongoing repairs and maintenance of the facility must match local wages paid for similar activity and in alignment with prevailing laws
Apprenticeships
A percentage of workforce, ranging from 10-15%, who are involved in the construction and maintenance of the facility, must be qualified apprentices
Independent Verification
The law requires independent verification of production and emissions claims. Most likely a voluntary system similar to the EU approach will be followed but at this stage, no further details are available.
Correlations
The IRA delegates the responsibility of defining additional requirements such as temporal and geographical matching to the US Department of Energy, who are expected to provide guidance later this year.