Moderate Democrats are angered by the Biden administration's decision to propose significant climate change conditions on the use of a lucrative tax credit for hydrogen energy producers.
Sen. Joe Manchin (D-W.Va.), a frequent critic of the administration's climate policies, said the proposal “makes absolutely no sense.”
Moderates who have been more supportive of the administration, such as Sen. Tom Carper (D-Del.), also oppose Biden's rules.
The hydrogen energy issue is dividing Democrats, with more conservative Democrats pushing for flexibility that they say will help the emerging industry that could be important in the climate fight. Liberals say loose rules could make hydrogen energy a climate change problem rather than a solution.
Hydrogen energy can be produced either by using electricity to separate hydrogen from water molecules in an electrolyzer or through the reaction between steam and methane, a major component of natural gas.
Fuels can be a key tool for reducing emissions from industries where climate pollution is difficult to mitigate, including aviation, chemicals, cement and steel.
The inflation-reducing law signed by President Biden last year introduced a hydrogen tax credit that aims to incentivize the production of hydrogen made using low- or no-emitting energy sources.
But the question of who can qualify is controversial, and moderate Democrats say the administration is going too far with its new rules.
“This administration cannot stop itself from violating the inflation cap law in its relentless pursuit of its extreme climate agenda,” Manchin said in a written statement.
He said the move would “weaken the hydrogen market before it even starts.”
Manchin vowed to fight the proposal, saying: “Today’s proposed rule not only violates the law — it is completely illogical, and I will continue to fight this administration’s manipulation of the IRA.”
Manchin, who is not running for re-election but is eyeing a third-party presidential run, has criticized a number of the Biden administration's climate policies, including its handling of the tax break for people who buy electric cars, saying it was applied to vehicles as well. It is widely reported that the new directive is very loose regarding Chinese battery components.
Sometimes such criticism leaves Manchin on an island in the Democratic Party, but that was not the case Friday.
Carper, a frequent Biden ally who chairs the Senate Environment and Public Works Committee, also criticized the directives.
“In developing the Inflation Reduction Act, we wanted clean hydrogen incentives to be flexible and technology-neutral,” Carper said in a written statement.
“The draft Treasury guidance does not fully reflect this intention, which could jeopardize the ability of the clean hydrogen industry to get off the ground successfully,” he added.
Sen. Sherrod Brown (D-Ohio), who faces a tough re-election battle next year in an increasingly Republican state, also said the proposed guidance would “undermine” the law's goals of lowering energy costs and innovation.
“These proposed new rules will slow down and ultimately undermine our country’s ability to produce the clean hydrogen needed to build the energy economy of the future,” Brown said in a statement. “The proposed rules’ lack of flexibility will prevent Ohio workers and Ohio businesses from producing 21st century energy.”
This decline is not surprising. Last month, 11 Democrats signed a letter calling for flexible rules for the hydrogen industry. Carper was not on that note, but he also sent a formal letter calling for flexibility.
The issue is whether hydrogen producers should be required to build new clean energy sources to fuel hydrogen production, or whether electrolyzers should be allowed to draw existing energy from the grid.
Climate hawks warn that the latter could lead to more fossil fuel use because it could increase overall energy demand and push greenhouse gas plants offline.
They have also called for this new energy to be in the same geographical area and produced within the same hour that it is used to try to limit the impacts of hydrogen on overall energy demand.
“I applaud the Biden administration for taking this important step to ensure the development of a truly clean hydrogen industry,” Sen. Jeff Merkley (D-Ore.) said in a statement. “Hydrogen has the potential to be a key part of the climate solution, but only if we get it right.”
“Hydrogen energy production can be very greenhouse gas intensive,” he added. “I and others have pushed hard for high standards because if hydrogen is not clean, it will not be a solution for hard-to-decarbonise sectors such as heavy industry, and could even take us further.” “Wrong direction.”
Merkley led a letter in October demanding strict standards and was joined by seven of his colleagues.
Senator Martin Heinrich (D.N.M.), who signed the letter, also praised the rule in a post on X, formerly known as Twitter.
“@USTreasury: The US Treasury’s Hydrogen Tax Credit guidance includes climate safeguards that will ensure a clean hydrogen economy in the future,” he wrote.
He added: “The alternative would have made the problem worse, not better.” He added: “I commend the Biden administration's leadership here.”
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