Landmark US Tax and Climate Bill offers tax credits for clean hydrogen production

by Aug 12, 2022

The US Senate has passed an economic package which has heightened hopes of boosting the nation’s hydrogen economy in the form of tax credits. The ‘Inflation Reduction Act’ was passed with a margin of 51 to 50, with Vice President Kamala Harris casting the deciding vote. This $369 billion package has been termed as most significant legislation in history to tackle the climate crisis by President Joe Biden. It consists of a Tax and Climate Bill that offers $3 per kg in the form of tax credits for low-carbon hydrogen production. Set at a basic rate of $0.60/kg, the bill will use a scale of credit calculation based on lifecycle emissions which means that hydrogen produced with lower life-cycle emissions will get a higher percentage of credit. Apart from this, the bill also offers a revision to the electric vehicle tax credit to include an additional $2 billion for the production of hydrogen fuel cell-electric vehicles, hybrid, plug-in hybrid, and battery electric vehicles with up to $7,500 available for new vehicles and $4,500 for used vehicles. This bill will boost hydrogen economy in the U.S. and will make green hydrogen production cheaper than grey hydrogen. Furthermore, it will also play a major role in developing the hydrogen fuel cell vehicle industry in the country.

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