What does the Inflation Reduction Act mean for clean hydrogen?
September 20, 2022
The Inflation Reduction Act (IRA) was recently passed by the House — in a historic move to fight climate change. While the bill has many different benefits, there is one piece, in particular, that may help bring clean hydrogen to the masses. The IRA will provide a tax credit for hydrogen that is being produced with renewable and nuclear energy.
This is welcomed news as the bill will make carbon capture and storage technology more economically appealing while reducing carbon emissions and helping the US move away from fossil fuels. It’s a win for all and highlights larger benefits for the cleantech industry. Not only will the bill provide cleaner air, but it also has the potential to make electricity more affordable for all.
Industry Benefits
For starters, the tax credit has the potential to turn clean hydrogen into a multi-trillion-dollar industry in the coming years and increase US investments in hydrogen. And it’s not just hydrogen that will benefit. The IRA will also provide tax credits geared to help incentivize the production of clean energy technology, which could be applied to a multitude of industries.
The tax credit also means industries that relied heavily on fossil fuels such as shipping and aviation, are now incentivized to explore new options to store and transport energy. While the tax credit is new — technology for global decarbonization is not. The IRA, and specifically the hydrogen tax credit, will put a greater emphasis on renewables — helping carbon emission reduction become a more achievable goal for leaders across industries.
Innovative Technology
One beneficial part of the IRA is the fact that it allows for the exploration and implementation of a variety of technology while making renewable technology more affordable. This means that specific regions can take advantage of the technology that best fits their needs. There is not one technology provider or sector that will benefit more than another. In fact, a recent model predicted the IRA may help cut US greenhouse gas emissions by nearly 40% by 2030 according to national models from Energy Innovation Policy &Technology LLC. This will help catapult the US forward to being a leader in renewable energy.
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