The Hydrogen Tax Credit Will Stimulate Innovation, Not Stymie Implementation

The best path forward for the clean energy transition has long divided opinion, but the extremes in the reactions to the White House’s recent hydrogen production tax credit proposal – ranging from a “much-needed win” to “horrible” – show just how deep those divisions go.

By broadly requiring that hydrogen production be low emissions to receive the credit, the proposal makes the right move to focus on avoiding huge emissions increases as production capacity grows.

More importantly, the administration has not preemptively picked a winner in the competition to produce tomorrow’s clean hydrogen supply. Keeping an open mind about the source of hydrogen should promote innovation. There are huge unexplored opportunities to find or make hydrogen that remain out of the mainstream – for now.

One underexplored source of hydrogen is natural gas. And while 95% of today’s hydrogen is produced through greenhouse gas-intensive processes, new approaches are out there if we rethink the role of natural gas in the hydrogen supply chain.

Like the reaction to the Biden administration’s hydrogen tax credit, opinion on natural gas is sharply divided. Acting as a “bridge fuel” for some, it has facilitated a transition from coal to low-carbon power. Since 2005, this shift has resulted in nearly 20% reductions in domestic carbon dioxide emissions, with numerous power plants making the transition from coal to natural gas. For others, it is a “wall” that blocks a meaningful shift to net-zero power.

At its heart, natural gas is a readily-available and cost-effective carrier of hydrogen molecules, flowing through infrastructure that is already in place, and often directly to the types of heavy industrial projects that the world is looking to decarbonize.

The key to the natural gas puzzle is separating its hydrogen and elemental composition without emissions, in a way that works energy efficiently, and at a price point that allows scalability and commercialization.

Many researchers and startups are working on innovative solutions to this challenge – we at ETCH have a new market-ready method which uses a novel closed-loop chemical process to efficiently and cost-effectively break apart hydrocarbons into hydrogen and solid carbon. By design, no carbon dioxide is ever produced.

Creative and cost-effective approaches like this, when deployed in tandem with a plentiful feedstock like American natural gas, offer a compelling pathway to creating a low-cost hydrogen market.

New technologies such as ETCH’s, which can unlock these hydrogen molecules with zero emissions, are crucial. This technology can be scaled according to need, can be installed anywhere, and can leverage existing infrastructure to provide the fastest route to mitigate emissions at the huge scale.

Where critics think the White House’s tax credit proposal will stymie implementation, our hope is that an incentive focused on emissions reduction will stimulate innovation. Keeping this open mind paves the way for natural gas to enter its grand second act – as a delivery mechanism for hydrogen power.

In a divided energy world, hydrogen has spurred rare unity among energy sector stakeholders that are usually at odds with each other. The combination of home-grown feedstock for a fuel that powers the energy transition has won bipartisan support, and the distribution of the seven national hydrogen hubs selected by U.S. Department of Energy (DOE) – from the Pacific Northwest to the Texas Gulf Coast – bears this out.

Hydrogen even produced a rare nugget of positive news from COP28, at which more than 30 countries recognized the role of hydrogen in the energy transition, and sought to collaborate on recognizing each other’s hydrogen certification schemes to create a global market.

There is no more time for division. Last year was – by far – the hottest year on record, so we must find solutions as quickly as possible. With the potential to produce clean hydrogen from natural gas through an emission-free process, we can create a cohesive global response to the climate crisis that fosters cooperation, instead of division.

This article was originally published by RealClearEnergy and made available via RealClearWire.