US 45V rules draw guarded industry, greens nods

: Hydrogen
25/01/06

Revised federal guidelines released last week for what will be billions of dollars worth of hydrogen production tax credits drew guarded approval from both industry and environmental groups.

Energy companies and associated lobbying groups hailed greater flexibility for nuclear and natural gas producers to access subsidies of as much as $3/kg of hydrogen, while climate groups cautiously cheered the administration for upholding a so-called "three-pillars" model of regulations intended to ensure hydrogen production does not increase emissions.

"This framework offers an opportunity for natural gas, when paired with carbon capture and storage, to compete more fairly in new markets," said the American Petroleum Institute.

Katie Ellet, chief executive of ETCH, a decarbonization technology company which aims to produce hydrogen from natural gas, called the updated guidelines "a significant step forward" and hailed new standards that adopt life-cycle emission assessments for projects using natural gas.

The updated guidelines also open more pathways for renewable natural gas (RNG) developers to access tax credits, which one lobbying group said could unlock thousands of potential projects.

"The final rules address key issues...including removing the first productive use penalty, which effectively treated existing sources of RNG like conventional natural gas," said the American Biogas Council.There are currently 2,400 biogas projects in operation in the US compared to a potential 24,000, said the council. "These new rules will support increased production.".

Electrolytic producers, which use nuclear or renewable power to split water into hydrogen, also responded positively to the changes.

"We are pleased that the US Treasure Department changed course and that the final rule allows a significant portion of the existing merchant nuclear fleet to earn credits for hydrogen production," said power utility Constellation Energy chief executive Joe Dominguez in a statement.

Constellation previously warned that it would be forced to cancel a proposed $900mn hydrogen plant in Illinois if the administration did not amend rules intended to prohibit new hydrogen projects from displacing other consumers of renewable power. A prior rule stipulating projects to draw power from energy assets built no more than 36 months in advance of the hydrogen start up effectively shut out nuclear producers from accessing the subsidies.

Constellation says it is still reviewing how the new rules will impact its project at the LaSalle Clean Energy Center, which is a partner at the federally funded Midwest Alliance for Clean Hydrogen (MachH2) hub.

Solid pillars

Environmental groups gave subdued praise to the Biden administration's decision to largely leave in place restrictions pertaining to the additionality, temporality and regionality of new renewable-power based projects.

"While the final rule includes several potentially concerning exemptions, it still broadly relies on the three pillars," said Sierra Club director of climate policy Patrick Drupp in a statement.

Similarly, Earthjustice nodded towards the survival of the three pillars framework but noted the tweaks still included "several significant loopholes for dirty hydrogen producers to enjoy the benefits of this important climate program."

The Union of Concerned Scientists noted that final 45V rules "firmly reject the most egregious" of the loopholes sought by industry players, but still leave room for some what they call heavily polluting hydrogen projects through ongoing questions of carbon accounting.

By Jasmina Kelemen

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25/01/06

Carbon management a must for EU clean industry: ZEP

Brussels, 6 January (Argus) — The European Commission must move beyond just renewables and electrification to a more holistic approach to decarbonisation, Zero Emissions Platform (ZEP) secretary-general Eadbhard Pernot told Argus ahead of the commission's expected Clean Industrial Deal proposal on 26 February. How important is this Clean Industrial Deal? The industrial sector is directly responsible for some 20-25pc of greenhouse gas (GHG) emissions globally. If you factor in all energy emissions linked to the industrial sector — whether in power or other sectors — then you're looking at 40-45pc of GHG emissions. Under existing tools like the carbon border adjustment mechanism (CBAM), globally traded industrial products such as steel or aluminium will still be imported at lower cost from other regions, such as China, with massive oversupply. In many cases, exporters will shift existing clean production to Europe and send other carbon-intensive products elsewhere. Or they will simply import finished products like cars here without accounting for those emissions. It's a lose-lose. What other specific concrete adjustments can the EU or Clean Industrial Deal bring? Creating a market for decarbonised cement, fertilisers, steel and aluminium, for example, should be on the list of things in the Clean Industrial Deal. In many cases, governments themselves are the ones procuring products — think of bridges and other major infrastructure. That entails reform of EU procurement rules and having long-term offtake agreements. We've got a lot of industrial sites that are going to start producing decarbonised products within the next year or so. If we look at Norway's Longship Project — with multiple emitters, including the Norcem cement plant in Brevik, fertiliser producer Yara, and Haflsund's waste to energy facility — multiple industrial producers are going to be producing decarbonised products and services in the next years, built around common infrastructure projects. We have to ensure a market exists for them. How do you see the wider industrial carbon management strategy unfolding? With the EU elections in June and the start of a new commission, 2024 wasn't an ordinary year. But things are moving in the background. So far, there's been a particular focus on where the best areas are in Europe to develop commercial carbon capture and storage (CCS) sites, like the North Sea, but now it's clear that CCS is essential for the whole of Europe. Central, eastern and southern European countries are taking action. What other legislative solutions do you want to see? Currently, there are no clear EU-wide rules on how the CCS market functions — unlike for gas, power and hydrogen. So we need to secure a regulatory framework for CO2 transport, tackling competitive issues, pricing, ownership of infrastructure and third-party access. We need rules of the game for emitters, storage sites, pipelines and shippers. We hope to see that EU framework within the next 18 months. This is really important for investors and lenders too. At the moment, we only have a patchwork with the 2009 CCS Directive. And the only country with a detailed comprehensive framework is outside the EU — the UK. Do you think the EU really has the political will to push for CCS? Given the role that CCS and carbon capture and use (CCU) will have to play in emissions reductions as well as removals, industrial carbon management is essential to meet the EU's net 90pc GHG CO2 reduction target for 2040. It's non-negotiable, and politicians recognise this now across the political spectrum. Can hydrogen help decarbonise industry? Clean hydrogen certainly has the potential to decarbonise some hard-to-abate industrial processes in the long term. The hydrogen industry is also currently responsible for a significant chunk of European emissions, and that isn't discussed enough. When making grey hydrogen, we need to stop venting CO2 into the atmosphere that could otherwise just be permanently geologically stored. Our focus in the recent EU delegated act on low-carbon hydrogen was to ensure the criteria for carbon stored outside Europe meet the same standard as ours in the EU. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

US 45V update opens door to more H2 from natural gas

25/01/03

US 45V update opens door to more H2 from natural gas

Houston, 3 January (Argus) — The US Treasury Department's updated requirements for hydrogen production tax credits amends the way upstream emissions are calculated, potentially making it easier for natural gas producers to qualify for the lucrative subsidy. Previous guidelines used fixed assumptions about the rate of methane leaked from wells and pipelines rather than accepting data from individual projects. The industry argued that using uniform figures under the existing GREET model to calculate emissions would unfairly penalize companies that had taken steps to reduce methane leakage. In final rules released Friday , the Treasury Department creates a pathway for companies to submit project-specific emissions data, an amendment that had been advocated for by ExxonMobil and the American Petroleum Institute, among others. Without this change, some companies considering ammonia export projects along the US Gulf Coast said they would instead consider applying for 45Q tax credits for carbon sequestration, which cannot be used in conjunction with 45V. Previous guidance only provided a pathway for renewable natural gas (RNG) produced from landfills to qualify for lucrative tax credits. The new rules include wastewater treatment, animal manure and coal mine methane. By Jasmina Kelemen Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

US relaxes rules for H2 production tax credits: Update

25/01/03

US relaxes rules for H2 production tax credits: Update

Adds information on state-specific additionality rules in paragraphs 6-8. Houston, 3 January (Argus) — The US Treasury Department has issued long-awaited tweaks to 45V hydrogen production tax credit (PTC) guidelines, relaxing rules in a bid to make it easier for producers to benefit from the subsidy. The final guidance released today retains the fundamental approach from the preliminary rules set out in December for the tax credits of up to $3/kg. The "three pillars" of additionality, temporal matching and regional deliverability remain in place for electrolytic hydrogen, but the Treasury has tweaked certain aspects. The additionality rule prescribes that hydrogen production facilities can only use electricity from clean power generation capacity that predated them by 36 months or less to encourage a further build-out of such capacity. But under the final rules, hydrogen made with power from existing nuclear plants can qualify for the credits under certain circumstances. Hydrogen producers can access the credits if nuclear power companies demonstrate that adding hydrogen production to their revenue stream extends the life of reactors otherwise slated for shutdown. Companies such as utility Constellation Energy have argued that using some of their nuclear capacity for hydrogen would provide a pathway for future relicensing of their reactors , but that this would hinge on access to the tax credits. The final guidelines now also consider existing fossil fuel-based power plants where carbon capture capabilities have been retrofitted within the 36-month window prior to starting up hydrogen production as additional capacity. This makes hydrogen output using electricity from these plants eligible for the tax credits. The guidelines also introduce a rule under which hydrogen production in certain states is eligible for the tax credit even if it is based on clean power generated from existing assets that do not meet the 36-month window. "Electricity generated in states with robust greenhouse gas emissions caps paired with clean electricity standards or renewable portfolio standards" that meet specific criteria will automatically be considered as additional, the Treasury said. This is because in these states "the new electricity load" from electrolysers "is highly unlikely to cause induced grid emissions," it said, adding that rules on temporal matching and regional deliverability still apply. For now, "California and Washington are qualifying states under these final regulations," but other states could qualify in the future, according to the Treasury. Hourly matching — which prescribes that hydrogen has to be made from clean power produced within the same hour to avoid increased grid emissions — will now be required only from the start of 2030 onwards rather than from 2028. Annual matching will continue to apply until the end of 2029. The new phase-in date for hourly matching at the start of 2030 brings it in line with EU rules , although the bloc requires monthly rather than annual matching before then. US industry participants have repeatedly argued that the hourly matching rules drive up production costs and stymie the nascent industry's development, while environmentalists have warned that strict rules are necessary to curb greenhouse gas (GHG) emissions. The regional deliverability rules require electrolysers to source clean power from within their operating region — as defined by the Department of Energy — to avoid grid congestions between regions resulting in use of emissions-intensive power for hydrogen production. But the final guidelines would allow for direct "cross-region delivery" of power for hydrogen production where this "can be tracked and verified… on an hour-to-hour or more frequent basis". Under certain circumstances, US hydrogen producers could now even be eligible for the tax credits if they use electricity generated in Canada or Mexico, the Treasury said. ‘Significant improvements' A lobbying group representing the interests of hydrogen producers called the updated guidance "significant improvements" and said it would allow the industry to move forward to the next planning stage. "After years of strategic engagement and persistent advocacy, the issuance of this final rule now affords project developers the basis for evaluating opportunities to scale clean hydrogen deployments," Fuel Cell and Hydrogen Energy Association chief executive Frank Wolak said. A raft of hydrogen projects were announced in the US after President Joe Biden announced billions of dollars in funding and tax credits for hydrogen with the 2022 Inflation Reduction Act. But much of that euphoria fizzled out during the long wait for clarity on the rules and concerns that the Treasury's guidelines would be too strict to allow competitive production. Many would-be producers paused or cancelled US plans in 2024 because of widespread uncertainty over which projects would qualify for PTC, leaving companies unable to make long-term investment decisions. By Jasmina Kelemen and Stefan Krumpelmann Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

US relaxes rules for H2 production tax credits

25/01/03

US relaxes rules for H2 production tax credits

Houston, 3 January (Argus) — The US Treasury Department has issued long-awaited tweaks to 45V hydrogen production tax credit (PTC) guidelines, relaxing rules in a bid to make it easier for producers to benefit from the subsidy. The final guidance released today retains the fundamental approach from the preliminary rules set out in December for the tax credits of up to $3/kg. The "three pillars" of additionality, temporal matching and regional deliverability remain in place for electrolytic hydrogen, but the Treasury has tweaked certain aspects. The additionality rule prescribes that hydrogen production facilities can only use electricity from clean power generation capacity that predated them by 36 months or less to encourage a further build-out of such capacity. But under the final rules, hydrogen made with power from existing nuclear plants can qualify for the credits under certain circumstances. Hydrogen producers can access the credits if nuclear power companies demonstrate that adding hydrogen production to their revenue stream extends the life of reactors otherwise slated for shutdown. Companies such as utility Constellation Energy have argued that using some of their nuclear capacity for hydrogen would provide a pathway for future relicensing of their reactors , but that this would hinge on access to the tax credits. The final guidelines now also consider existing fossil fuel-based power plants where carbon capture capabilities have been retrofitted within the 36-month window prior to starting up hydrogen production as additional capacity. This makes hydrogen output using electricity from these plants eligible for the tax credits. Hourly matching — which prescribes that hydrogen has to be made from clean power produced within the same hour to avoid increased grid emissions — will now be required only from the start of 2030 onwards rather than from 2028. Annual matching will continue to apply until the end of 2029. The new phase-in date for hourly matching at the start of 2030 brings it in line with EU rules , although the bloc requires monthly rather than annual matching before then. US industry participants have repeatedly argued that the hourly matching rules drive up production costs and stymie the nascent industry's development, while environmentalists have warned that strict rules are necessary to curb greenhouse gas (GHG) emissions. The regional deliverability rules require electrolysers to source clean power from within their operating region — as defined by the Department of Energy — to avoid grid congestions between regions resulting in use of emissions-intensive power for hydrogen production. But the final guidelines would allow for direct "cross-region delivery" of power for hydrogen production where this "can be tracked and verified… on an hour-to-hour or more frequent basis". Under certain circumstances, US hydrogen producers could now even be eligible for the tax credits if they use electricity generated in Canada or Mexico, the Treasury said. ‘Significant improvements' A lobbying group representing the interests of hydrogen producers called the updated guidance "significant improvements" and said it would allow the industry to move forward to the next planning stage. "After years of strategic engagement and persistent advocacy, the issuance of this final rule now affords project developers the basis for evaluating opportunities to scale clean hydrogen deployments," Fuel Cell and Hydrogen Energy Association (FCHEA) chief executive Frank Wolak said. A raft of hydrogen projects were announced in the US after President Joe Biden announced billions of dollars in funding and tax credits for hydrogen with the 2022 Inflation Reduction Act. But much of that euphoria fizzled out during the long wait for clarity on the rules and concerns that the Treasury's guidelines would be too strict to allow competitive production. Many would-be producers paused or cancelled US plans in 2024 because of widespread uncertainty over which projects would qualify for PTC, leaving companies unable to make long-term investment decisions. By Jasmina Kelemen and Stefan Krumpelmann Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Pure green steel costs almost double NW EU HRC price

25/01/02

Pure green steel costs almost double NW EU HRC price

London, 2 January (Argus) — Zero emission hydrogen-fed electric arc furnace-produced crude steel would currently cost almost double the price of northwest EU hot-rolled coil (HRC), according to data launched by Argus today. The opex cost of green hydrogen-fed direct reduced iron/electric arc furnace (EAF) route steel was €1,074/t at the end of December, compared to a northwest EU HRC price of €558.25/t ex-works. That is also €544/t more than the cost of blast furnace/basic oxygen furnace (BOF)- produced crude steel, showing genuinely green steel would require a much higher finished product price than current blast furnace-based output, assuming a similar cost structure to today. Most current green offerings from EU mills are still produced via the blast furnace, with emissions reductions achieved through mass balancing, offsetting, or by reductions achieved elsewhere in the supply chain. Buy-side desire to pay premiums for this material has been limited, particularly given the downturn in the European market in the second half of 2024. This has contributed to the market for premiums remaining immature, illiquid and opaque, and complicated by the lack of a commonly agreed definition for green steel. Automakers have shown the most interest in greener steel, given their need to reduce emissions from the wider supply chain, as well as vehicle tailpipe emissions. Some automotive sub-suppliers suggest certain mills have been willing to reduce their green premiums to move tonnes — one reported paying a €70/t premium for EAF-based cold-rolled coil for a 2025 contract, but this was not confirmed. Europe's largest steelmaker, ArcelorMittal, said over the second half of last year it would pause its direct reduced iron (DRI) investment decisions ahead of the European Commission's Steel and Metals Action Plan, and as it called for an effective carbon border adjustment mechanism and more robust trade defence measures. Market participants largely agree that natural-gas fed EAF-based production is the greenest form of output currently available to EU mills, substituted with imports of greener metallics and semi-finished steels from regions with plentiful and competitively priced energy. Argus ' new costs show BOF steel is currently just over €31/t more expensive than scrap-based EAF production fed with renewable energy. Europe's comparatively high cost of energy is one key issue for transitioning to DRI/EAF fed production. Last month, consultancy Mckinsey said mills could rely on "green iron" hubs going forward, with iron-making decoupled from production of crude steel, enabling DRI production to be located in regions with low-cost gas and ore, and raw steel production in regions with access to renewable energy. The range of production costs, launched today, include five crude steel making pathways and are calculated using consumption and emissions data provided by Steelstat , in combination with Argus price data, including hydrogen costs. By Colin Richardson Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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